Fall in funding just a system readjustment, startup ecosystem fine: DPIIT Joint Secretary Manmeet Nanda

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The Joint Secretary for Department for Promotion of Industry and Internal Trade (DPIIT), Manmeet Nanda has said that the drop in number of new unicorns in the first quarter of this year is only a system readjustment, while insisting that India’s startup ecosystem has been doing fine.

“There were a lot of startups that mushroomed in India during and post COVID as people sat at home ideating. This is just a system re-adjustment. Our startup ecosystem is doing fine,” she said when questioned by Moneycontrol during a press conference in New Delhi on April 11.

Her comments come a day after the report by a global market intelligence platform Tracxn showed that funding for the Indian startups in the first quarter of the calendar year 2023 fell 75 percent to $2.8 billion as compared to the same period in the previous year (year-on-year), when it stood at $11.9 billion. The report also said that not a single unicorn has emerged from India in the first quarter of 2023 against 14 unicorns the same time last year.

The official when questioned on the report responded saying, “These concerns have mostly been voiced out by international agencies. However, we have not seen any plunge. We have robust systems in place to help startups with funding.”

As per the official, schemes including Startup India Seed Fund, Fund of Funds scheme and its recently launched Credit Guarantee Scheme are all in place to help starups with funding.

“Our startup India Seed fund has already approved credit worth Rs 590 crore to selective incubators. As many as 155 incubators, working with us have selected 953 startups who have been disbursed these funds. Over 55 percent of these startups belong to tier 2 and tier 3 cities,” she said.

Meanwhile, an amount of Rs 14,820 crore has been injected in 818 startups under the Fund of Funds scheme which provides funding to emerging startups through venture capitalists.

The Credit Guarantee Scheme which was launched by the government only 10 days back on April 1, has already started giving out loans. “We have on-boarded 18 financial institutions including several reputed banks as well as Non-Banking Financial Companies to help with this. Loan sanctioning has already begun with atleast 4-5 startups already gaining from the scheme,” Nanda said.

The ministry, as per Nanda, is also in touch with Indian Banks’ Association who are reaching out to startups at various levels to ask them for their financial requirements. They are also seeking investors from abroad for Indian startups and are in constant touch with Indian representatives and Ambassadors for the same, said Nanda.