Founders Need To Build Unique Solutions To Stave Off Funding Winter: Narayana Murthy

Infosys cofounder Narayana Murthy has urged the Indian entrepreneurs to build unique solutions for the marketplace amid a purported funding winter that has dried capital for startups.

Noting that funding has dried up, Murthy said that founders will have to realise that the threshold for obtaining funding has also risen which has catapulted the demand for unique ideas. 

“Today the funding has dried up therefore our entrepreneurs need to realize that the threshold for obtaining funding has been raised and now entrepreneurs need to establish unique solutions in the marketplace. Once it is established, there will be enough venture capitalists interested to look at those ideas,” said the former Infosys chairman.

Speaking at ABP Network’s “Ideas of India” Summit 2023, he further added that startups that have ‘true value in India’ and are led by founders that want to control costs will quickly reach a positive cash flow situation.

Murthy also spoke on a range of topics ranging from work from home to moonlighting. Mincing no words, he called moonlighting ‘unethical’ saying that employees cannot be part of two institutions citing exchange of classified information from one company to another.

On work from home, the Infosys cofounder said that he was not enthusiastic about the concept. Addressing the event, Murthy said that culture building within an organisation is only possible if all employees come together in physical form. 

“I don’t support work from home, home is for family and office is for work,” he added. 

Challenging 2022 For Indian Startups

The veteran entrepenuer’s statement comes at a time when the Indian startup ecosystem has been bogged down by a supposed funding winter which has dried up capital. As per Inc42 data, homegrown startups raised $25 Bn in funding in 2022, down 40% from $42 Bn raised in 2021. 

While venture capital and private equity firms have accumulated a lot of dry powder, investors have tightened their purse strings as the fallout of the funding winter unravels. The crisis has largely been the result of raging market volatility, global macroeconomic pressures and the ongoing Russia-Ukraine war. 

In the case of India, matters have especially been complicated by a slew of startups that have tanked in the last year. Inc42 estimates that eight funded startups, including SaaS startup Protonn, edtech platforms Udayy and Super Learn, among others, wound up operations in 2022.

Besides, the past one year has also seen financial irregularities emerge at many of the big names in the homegrown startup ecosystem. From Sequoia-backed GoMechanic to fintech giant BharatPe, a host of local startups have been gripped by allegations of financial irregularities of startup founders.

In addition, most of the Indian new-age tech startups continue to post heavy losses with no clear path to profitability and have even laid off employees in the past one year to cut corners and increase their runway. 

Despite the downturn, many have learned the tough lesson and have now focused their energies on churning profits and skipping the break-neck growth model. With a long year ahead of the Indian startup ecosystem, it remains to be seen how the year shapes up for the country. Amid all this, operationalising a unique idea and running a tight ship seem to top on the agenda of investors looking to fund startups.