Domestic Capital In Startup Ecosystem Less Than 5% But Excited About India Opportunity: WaterBridge’s Kheterpal

Despite the rise in funding raised by India-focussed funds over the last few years, domestic capital accounts for less than 5% of the funding in the startup ecosystem, according to WaterBridge Ventures founder and managing partner Manish Kheterpal.

Speaking during a session, The Rise Of India’s Domestic Capital – Fueling The Next Wave Of Venture Capital, at MoneyX by Inc42 and Peak XV Partners, Kheterpal said it is challenging to raise domestic capital in the country.

He, however added that the situation seems to be changing now and that he was ‘excited about the India opportunity.’

The session’s panel also included International Finance Corporation’s Ruchira Shukla, Fireside Ventures’ founder & managing partner Kanwaljit Singh. It was hosted by Amit Pandey, VP, Indian Venture and Alternate Capital Association (IVCA).

Talking about family offices, which are now increasingly looking at the startup ecosystem for investments, Kheterpal advised, “… if a family office has an objective of purely financial risk diversification based investments – they can move with fund managers. If they can invest and forget, they can go with the thrill of direct investing.”

However, he said that a lot of family offices are now also aiming to understand how innovation can disrupt their business.

The panelists also shed light on the current state of domestic capital in India’s PE and VC industry, and the role of regulations in encouraging or hindering domestic capital investment.

The comments come at a time when the Indian startup ecosystem has been grappling with the funding winter since last year. Compared to $19 Bn funding raised in H1 2022, the startup funding dropped by 68% ($6 Bn) in H2 2022 and 71.5% to $5.4 Bn in H1 2023.

Compared to 900 deals in H1 2022, the number of deals fell 31.4% fall to 617 in H2 2022 and 48.6% to 462 in H1 2023

Even the mega deals have fallen to 4% of the total disclosed deals in H1 2023. It has been nearly a year since the Indian startup ecosystem minted its last unicorn in September 2022, Tata 1mg, which raised $40 Mn at a valuation of $1 Bn from its parent entity Tata Digital.

Recently, Zepto has emerged as a ray of hope and could become the first unicorn of 2023 with its $150 Mn Series E Funding on the cards.

Presented in partnership with Peak XV Partners, supported by Venture Catalysts, JSA, Samsung, IVCA Associates, Indian Angel Network, JIIF and Marwari Catalysts, MoneyX is aimed at bringing the driving forces of the Indian startup ecosystem under a single roof. 

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