Ashneer Grover, co-founder of BharatPe and former judge on Shark Tank India, has called for swift evolution in the Indian startup ecosystem. In a LinkedIn post, Grover emphasized that the focus should shift from blaming founders to examining the role of venture capital (VC) investors in fostering startup growth in the country.
Grover’s comments were made in response to a post by Nithin Kamath, co-founder of Zerodha. Kamath had expressed concerns over corporate governance issues becoming increasingly apparent in Indian startups, attributing shared responsibility to the venture capital ecosystem. He pointed out that both founders and VCs tend to overestimate the size of the Indian markets, which is at the core of the problem.
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Kamath elaborated, stating that India, though a rapidly growing economy with the potential to become an economic superpower in the future, isn’t there yet. He stressed the need for a substantial increase in the size of the target market (Total Addressable Market, TAM) by revenue to validate the current startup ecosystem valuations in the country.
Kamath added, “Most VCs have probably miscalculated this and possibly oversold the India opportunity to their investors (Limited Partners, LPs). In a market as small as ours, with limited opportunities for mergers and acquisitions (M&A), achieving large exits within seven years (the expected lifecycle of a fund within which founders are supposed to provide exits) is challenging.”
In light of these insights, Ashneer Grover emphasis on the urgent need for an evolution in the Indian startup ecosystem becomes even more pertinent. The focus needs to shift away from blaming founders and towards a more detailed examination of the role of VC investors. This will ensure a more balanced and sustainable growth trajectory for Indian startups, ultimately fostering a healthier ecosystem.
This news update is based on reports from Business Today.
