Global AI Conclave: 'Impatient' VC-led models often drive firms down unsustainable paths: Narayana Health’s Viren Shetty

Viren Shetty, executive director and senior vice president of Narayana Health

Venture capitalist-led models that seek quick returns can drive companies down an unsustainable path, Viren Shetty, executive director and senior vice president of Narayana Health, has said.

“The problem with a VC-led model is that it's not a very patient source of capital, a lot of the time you have to end up proving very quick returns on the investment. That means chasing many such companies down paths that may not be sustainable in the long term,” Shetty told Moneycontrol on the sidelines of the Global AI Conclave.

The comments come at a time when healthcare startups in India have recorded $690 million in venture capital funding, so far, in 2023 in 109 deals, down 55 percent from $1.52 billion in 264 rounds in 2022, with venture capital investments slowing down during a long-running funding winter, data curated from Tracxn shows.

Healthcare funding has also come down drastically from $3.74 billion in 357 rounds in 2021 when venture capital funding was pouring into Indian startups, with high growth ventures drawing sky-high valuations.

Shetty added that when such third-party VC investors, looking for quick wins, invest in healthcare, they mostly backed products and companies that customers could find immediate value in.

“The ecosystem is able to get a lot of encouragement from large corporations like us, where we support and fund a very large team of engineers for building complex tools,” Shetty added.

He also said large corporations like Narayana Health were able to take a five-10 year view in healthcare investments.

During the session moderated by Prashant Nair, deputy executive editor of CNBC-TV18, in which he discussed artificial Intelligence’s capabilities in healthcare with Sigtuple’s Tathagato Rai Dastidar and Healthify’s Tushar Vashisht, Shetty said there was a major necessity of prioritising investments into AI for healthcare.

“There is immense potential for AI in healthcare, there is no part of healthcare where AI cannot be embedded. Investors now need to commit to investing in such technology, especially for healthcare,” Shetty added.