Domestic Pension Funds, Family Businesses Should Invest In Indian Startups: Amitabh Kant

Domestic investors, including pension funds and family businesses, need to invest in the startup ecosystem to make the country a leading startup nation, according to India’s G20 Sherpa Amitabh Kant. 

In a post on X, Kant said that at present, almost 75-80% of the funds flowing into Indian startups are coming from foreign investors and this needs to radically change.

“Indian resources must flow into our Startup movement in a big way… We need Indian insurance companies, pension funds and Indian family businesses to fund and support India’s start-ups,” said Kant. “All of them have vast investible surpluses. They need to commit resources in the Indian startup movement.”

It must be noted that there is an increasing interest from foreign investors to infuse money into the Indian startup ecosystem. The improving regulatory environment in the country has also aided this development.

Though the war between Ukraine and Russia adversely impacted the flow of foreign direct investment (FDI) in India in FY23, Singapore, Mauritius, the US, the UAE, and the Netherlands continued to increase investments in the country.

Kant is of the opinion that for India to become the leading startup nation with a focus on innovation and deeptech, the country must provide resources to its own innovators.

“We must convert the winter into a spring season for Indian Startups,” the former NITI Aayog CEO said. 

The comment comes at a time when the ongoing funding winter has hit the Indian startup ecosystem hard, resulting in layoffs and shutdowns.

Speaking about the funding winter, Kant earlier said that it is a funding spring for good startups with better plans and goals. 

In the past, he also multiple times stressed the importance of good governance and financial management for the success of startups.

While the investments by domestic investors, including family offices and corporations, in the Indian startup ecosystem seems to be on the rise, the low participation of these investors in startup investments has been a matter of long-standing debate. Earlier this year, Paytm founder Vijay Shekhar Sharma also batted for participation of domestic investors in the Indian startup ecosystem, saying they have an obligation to do so.

Meanwhile, as per Inc42’s ‘Indian Tech Startup Funding Report Q3 2023’, over 450 investors participated in Indian startup investments with a total amount of funding standing at $1.7 Bn. The amount of funding raised slipped from $3 Bn in Q3 2022.