According to a recent Mint report, Indian startups more than doubled their cash burn to $5 billion in 2022. Not surprisingly, deals are down and funds even more scarce. Venture capital investments dropped by a third to $25.7 billion in 2022 from $38.5 billion in 2021, according to a report by Bain and Company and the Indian Venture and Alternate Capital Association. What’s worse, the funding winter shows no signs of abating. Venture Intelligence data shows that in the first three months of this year, aggregate funding amount is down to a fifth of what it was in the same quarter last year, and 30 percent lower than in the October-December 2022 period.
Big bulge private equity and venture capital firms which have fuelled these startups' journeys to nowhere are hurting as they watch their investments turning to dust. Belatedly they are forcing their investee companies to slash costs and rejig business models and in general, calling a halt to the era of easy money. As a consequence, valuations of high-profile firms like Byju’s have been drastically slashed.
Amidst the gloom, this is perhaps an opportune time to look a little beyond, in places where real innovation has been taking place for years. It is a world of entrepreneurship away from the limelight, ignored by industry associations, media and politicians, but where need-based products and technologies are being created.
Take GenRobotics’ innovation, a robot called ‘Bandicoot’ that cleans manholes remotely with robotic arms and computer vision. Co-founded by Thiruvananthapuram-based Vimal Govind M.K., Arun George, Rashid K., and Nikhil N.P., it can perform all the tasks that a man can inside the manhole, is remotely operated and can clean up to 10 manholes a day. By the time it was acquired by Unicorn India Ventures Continuum Fund in September 2022, the robot had been deployed by the Municipal Corporation of Greater Mumbai (MCGM), Surat Municipal Corporation, Dhule Municipal Corporation, Muktsar Sahib Municipal Council in Punjab, Thanjavur Municipal Corporation, Coimbatore Municipal Corporation, among others.
Or take OralScan, an optical imaging multimodal device for the early detection of pre-cancerous lesions of the oral cavity, developed by Thiruvananthapuram-based Dr Subhash Narayanan. Surviving on grants so far, the seven-year-old startup’s product, which allows doctors to visualise and discriminate between healthy and potentially malignant sites before they perform a biopsy, is a vital development in the war against cancer, one that can be won if we are willing to commit enough resources to it. According to a new report by American Cancer Society, the death rate from cancer in the US has fallen 33 percent since 1991, which corresponds to an estimated 3.8 million deaths averted, thanks largely to new revelations for prevention, for early detection and for treatment.
Both GenRobotics’ and OralScan were awarded the Anjani Mashelkar Inclusive Innovation Awards, instituted in 2011 by Dr. R.A. Mashelkar, whose endorsement of their work is a huge plus given his prominent standing in the country’s scientific and industrial community. There are others too, including government initiatives which have done some sterling work in seeding such breakthroughs.
But for each such startup that has found backing, there are thousands of others which have been plugging away at their brainchild with little or no support. They are critical to India’s progress, much more so than the next e-commerce venture promising 10-second delivery or the nth tutorial bureau rebranded as edtech. Countries like Switzerland, US, Sweden, UK, and the Netherlands which routinely top the rankings of the Most Innovative Economies, do so thanks to their steady stream of original ideas.
The upsurge in India’s startup ecosystem over the last few years was a much-needed shot in the arm for entrepreneurship in the country. Successes, even if they are temporary or built on borrowed ideas, matter, since they hold out the promise of rewards.
But that phase is over. It needs to be replaced by a culture of what Mashelkar calls “inclusive innovation”. For that to happen, a steady stream of capital needs to flow into such enterprises. Cue for the likes of Warburg Pincus, Tiger Global and Sequoia Capital.
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