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Indians Don't Invest in Indian Startups. Why?
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- เผยแพร่เมื่อ 12 ส.ค. 2024
- Most Indian unicorns are foreign-owned. Whether it's fintech startups like Paytm and PhonePe or others like Swiggy and Zomato, the majority of their equity is controlled by foreign funds.
In this debate, we try to understand why that is.
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00:00 India’s top startups are not Indian-owned
02:03 India is a risk-averse society
04:55 Indian Startup Ecosystem is too early
07:55 Indians play safe
11:45 Indian founders will become angel investors
18:23 Government allows banks to invest in startups
19:41 Prediction
19:52 Outro
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Indian Startups Ecosystem is fairly young. While funding structures like Angel Investing and Venture Capital was present in the US in the 1960s and 70s, in India, they became common after the 2000s.
In this way, India is around 30 years behind the US.
In mature ecosystems like the US, startups ecosystem got a lot of help from veterans in the ecosystem. For eg, People like Peter Thiel, who made his money from selling Paypal to Ebay, invested most of that money back in startups in the US.
In India, these kinds of examples are just emerging. People like Anupam Mittal, Founder of Shaadi.com, is a prolific angel investor for Indian startups and has invested in over 200 companies, including OLA.
In the last few years, another generation of Indian Angels has come up, people like Kunal Shah and Sachin Bansal, who made money from the second generation of Indian startups and gave that money to the next generation of entrepreneurs to grow.
And finally, India lacks the institutional capital that goes into the startups. In the US, venture capital funds receive a significant amount of money from Insurance funds and University endowments.
In India that sector has lacked behind when it comes to investing in startups. This is changing however now. Indian Insurance and Retirement funds like LIC and EPFO are now finding ways to invest in startups.
Another reason these institutions have stayed away from investing in startups is because of the bad experience with IPOs like Paytm and Zomato, as these companies weren't profitable before going public.
This is changing now as the new generation of Indian Startups is working on their unit economics and working towards profitability before doing an IPO.
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*Your explanation as to Indian people being naturally averse to risk taking is spot on.*
LIC leading a massive funding round for a startup would be such an interesting headline.
It can very well do so by having a separate fund dedicated for startups instead of increasing their stake in Adani group companies.
LIC is another thief company, false promises and playing on the common man's trust.
@@Kris7na startup dont give funds to political party
@@Kris7naLIC investing in startups will immediately get criticized by every opposition party. You’ll hear plenty of “humara paisa barbath” sloganeering. Adani still makes profits out of its businesses, most startups don’t. So that barbath slogans will really stick with the public.
I think time will tell. My hope is that as more people are exposed to the startup ecosystem in India, more will accept the risk, and startup.
It’s not just about startups. If you look at the Indian stock market as a whole it’s mostly affected by Foreign Institutional Investors. When their outflow increases we experience a bull market and when they pull money out we see a bear run. Has nothing to do with Indian culture, we don’t have enough investors. It’ll definitely change in the next decade or two and I hope it does.
I wonder what the comparison would be between "Donation habits" vs "Investing habits". I think Indian social ecosystem is more skewed towards donating more. My point being Indian have a habit of donating more than investing due to religious culture. I might be wrong at many levels.
Always insightful listening to you Caleb.
I think there is no comparison between both of these habits
Cellab this kind of discussion is much needed so that we can learn something
I agree with Caleb. Indian HNI's should actively invest in startups. It will be beneficial for them and the entire ecosystem.
You both have covered valid points. Nice content again🎉
I liked the first thumbnail 😂
What was it?
@@Kushagra.j it showed Adani with a (+3) indicating that he has invested into 3 startups and the showed Son- the Japanese investor with +63 or some number like that
@@Katzeblowhaha. Lol.
Though we must understand that Adani, Ambani's and others like them are equivalent to the Titans of Industry in the American gilded age. They are all 60/70 but the new crop (~30) are heavily into investing in startups.
It's just a generational change. When our cohort becomes 60 and some new kind of business practice emerges even we will be uncomfortable and hesitant with it.
Great debate, nice analysis Caleb and Pratik.
I was curious about this topic and now i understood thanks.
You guys are true gems. Its treat to watch/listen you.
Great content as always 👍🏻
Really great conversation. I have a different take on why Indian investors are averse to investing in Indian startups. Imo, it is because of fraud. If you look at the bigger picture of even current startup ecosystem, there is so much corporate malpractice happening in almost every Indian startup out there. You guys already know as you report on it.
Byjus is going to die a terrible death which is deserved. Indian founders have a habit of treating company funds like their personal gullack and Indian investors know that because they do that lr have done that themselves at some point in time. This is a very Indian thing irrespective of which part of the globe your startup is in! This is also the reason why Seqouia left India because major chunk of their portfolio companies (with big rounds) have corporate givernance issues and downright fraud(over reporting revenue, users etc. I know everys startup does that even in the US but this is special here because India is a DAU/MAU farm with no value).
Yea very nice point , makes a lot of sense. I guess this is one of most important missed out of this discussion. Overall very nice debate !
Very informative, thanks
very insightful video!
Thank you! This was a good debate. I think it was a draw debate wise, but I'm bullish on Indian money investing in Indian startup
I like this concept of debates.
Amazing, Thanks for this video
This is the kind of debate i love❤
Good debate
Indian founder will become Angel investor......
Excellent 👍👍👍👍
I enjoyed this conversation 😀
🎉 good information video
Risk aversion also depends on the history of a people. The west has been ascendant for the past 500 years with colonialism while India has been a victim of colonization and bad socialist policies. Once a country takes an upward trajectory, the psychology and risk taking capacity of its people shall also change.
Most of entreprenure in india are MSME like kirana shops. So they don't have money to invest.
The culture is not a problem as he said we are new in these startup field our parents just have to learn when to let their kids go to take risks. As much as industrialization will happen this will create an environment to take risks and do business for young generation. U can just compare the economy if USA is 7 times then everything would be in that ratio (neglecting the population because there will be lot more room approx. 4 times more then USA when compared with population).
Super explanation raaa
all points seem valid, 👍👍
business man and institutions like LIC investing in startups is fine bcoz they understand how business function . but there are many stock market investors who do understand how business function and they do have knowledge and they have made enough money from stock market even they dont like taking risk in startup why cant these guys put aside atleast 10 % of there net worth as risk capital for startup this will help entire start up ecosystem .They can take help from angle investor , venture capital, family office to understand how start-up ecosystem work bcoz its quite different from stock market and meanwhile understand it get better with time . coming to most of the public who want to invest in start-up first its better they start understanding how business function learn basic accounting stock market is a good place to begin with then later as u get experienced with business functioning and have made enough capital u can go for startup.
Who has the capital in India to do a VC-style funding in startups?
What about US has printing press ??
I have a question, can't gov. start a fund like how singapore gov. did? Like temasek is a gov. owned fund but sound like a private vc form. The problem is the moment gov. will start investing in companies there will be a lot of politics and this that. We all know the adani case gov. made huge sums of profit through LIC but people don't know about that and you can see the politics around it! Is it possible in India? why should we miss an opportunity
The large finance institutions should do this because they have the background for company structure and money making capacity they can be more accurate in risk so large banks like SBI , HDFC , ICICI can high potentials.
Really bad example to highlight your point of a govt entity investing. Everybody knows that Adani is a fraud case look at the mutual fund holdings of Adani stocks(except Index tracking bcz they are forced to do so), nobody touches them even through a 10 ft pole. And they did not make money they instead lost money on their investment. Look at Suchita Dalal's and Morning Context's reporting on Adani. Real shady shit they(Adani) do.
Are you talking about startups or adani like business??
@@tvsittare7126 no I am talking about gov.
I just started watching it.
My take may change after finishing it, but I got say that, if more than 50% of a startup is by foreign investments, I guess it shouldn't be called Indian startup, right? Should this be a rule or will there be any implications.
Stupid logic bud. By this logic so many American companies aren't actually American.
Or what about listed companies who are owned by millions of people around the world? Are they global or American?
@@Kushagra.j Names don't really matter. But what matters is where the money get circulated in the end. It ends up in the hands of foreign investors as much as Indian ones. Fortunately many employees benefit with high paying salary atleast in some of the high-brow ones.
@@Kushagra.j So many American companies actually are not actually Americans and that's true. When Govt finds out something wrong, they will intervene and place rules. So rather, they could have this common rule to make sure bad things don't happen.
It’s very simple if proposition goes to indian investors it’s micromanaging..
Where as foreign investors are very much thinks about valuation and ROI .. don’t involve day to day decisions except knowing them
There's only one side of discussion here. The other side is... why is Foreign investment more in terms of... from where is it funded, who are the final benefiting members, where did they source their money from, are they investing through debt, what is the degree of hedging that's involved. Hedging at huge scales doesn't take much time to devastate economies. If investment through debt then it should be only for socio-economic-environmentally friendly project/institution/entity/cause and not to reap heaps of profits.
I would actually say that the thumbnail is wrong, since Adani is the major stakeholder in General Aeronautics, a drone company based out of Bangalore
in India not 5% of are interponer. Top 1% of indian annually income is 16 lak INR so there fulfill their need or invest in other startup
2:30 thats not a bad thing if you look at it from a broader perspective. Look at all the numerous social issues in the West
Comparing India a third world country is compared with USA a first world country There is something known as evolution of culture it happens with Time people evolve as we become richer overall as our lives become comfortable we become less afraid but it takes few generations
People in India are very frugal, they tend to think like Yahoo when it had chance to acquire google for 5 billion dollar. Also, I would say more than half of the startups in India are overvalued imo and this is the case across the world not only India.
Many people think what you said but I disagree with you here. India didn't have the luxury to print money like USA. That's why USA can take these scam like FTX and not getting affected like other countries. Dollar based economy export their economic problems to other countries but other countries can't able to do that. That's why people of dollar based economy won't worry about risk. This is one of the main reason of some.
You have to look at income. To be in the top 1% of India net worth, you need $125,000. In the usa it's $5.5 million. This means most Indians don't have enough money to invest in high risk start-ups. Usa has a lot more disposable income that can be put into startups.
Yay
Money = Risk = Money ✓
"May be move abroad...I don't know" 😂😂
th-cam.com/video/egV9yWMFuCE/w-d-xo.html -Caleb
Caleb..I see... you just played defensive there😂. You said Indians to move abroad...then saved yourself with "I don't know". 🙂f
❤❤❤❤❤❤❤❤❤❤
LIC , BCCI creating Funds for Venture Capital would be A Great Move .
OYO sucks, cred scuks, paytm until recently sucked, zomato loss makikg and so. Im glad indians keeping these kinda startups away.
Investments in startups has to do with interest rate. Its 2% in america until recently thats why we see so much money willing to take high risks
I accept your next video focus on skills development
for the algo
Cuz They directly buy indian start-ups 😂😂
I think this is more than just "Indian people being naturally averse to risk taking". I think it more falls back to the Indian law. The amount of time sometimes it takes for cases to be closed and the corruption causes this behaviour. It became a culture because of corruption. Look at Adani and Hindenberg case. Guess who the govt is still backing. Compare that to Theranos or BTX you see the difference. Part of the reason why a lot of Indian founders have their headquarters in the US. Because it is relatively safe.
In US it takes generations to clear off debt, I don't think India wants to replicate that. Credit is only good if you are building something and eventually will turn into an income source. Credit for consumerism is a disaster.
India won the debate
I'd like to express my opinion, and while I understand it may be better if I'm mistaken, I've been a follower of this channel since it had 2,000 subscribers. Lately, it appears that the channel has become more opinionated rather than maintaining an objective stance, similar to many other content creators and influencers. I want to clarify that my intention is not to discourage the exploration of new ideas; however, I believe there is room for more experimentation.
My suggestion is to strive for a higher level of objectivity when presenting information, avoiding any inclination to adopt the role of an influencer. By emphasizing accurate and impartial content, the channel can enhance its credibility and appeal to a wider audience.
thats some good input , I neither agree or disagree to your op , but interested for their opinion on this , upvoting in hopes of their response .
Who cares 😂
@@darshan2491 literally every subscriber should care , and dont talk on behalf of others and tryna be a class clown
doesn't sound like a debate!!
SImple answer - they've learned from past experiences.
I agree with the white guy on the family thing.
Because we know first hand what shady business these startups are cooking.
it's because indians don't invest at such crazy valuations for foriegners it's cheap
We Indians don't have a habit of investing in others - All we do is complain about how the government is not supporting us!
Don't agree with the cultural thing. It is all about money and generational wealth. It will change as soon as gdp increases.
We also have a lot of issues in our msme sector. That will stop our small investors.
None of them created profitable businesses..... I rest my case
Was it a debate, I feel it more likely a one side conversation.😮🙄
9:36 Indian map shown is not correct, hope you not repeat this mistake again
Here's the map in question: www.briq-institute.org/global-preferences/maps -Caleb
@@backstagewithmillionaires yeah, I know but POK and Aksai Chin is not shown as part of India, you can ask your editor to add them, it will just take 2 mins. That's the matter of Indian sovereignty.
@@hecker8448Don't be an idiot map is not relevant here. Aksai chin and pok aren't currently under Indian administration therefore it is not important for foreigner.
Since when did Saving, being prudent & living within your means become a bad thing? Shouldn't this be appreciated rather than soulless materialist people in a consumerist society!
You don’t get Indian culture . Not every community thinks conservatively and is saving up all the time . There are multiple business based communities who invest in new businesses and startups it’s just that they are not called startups because the money stays in the family or community and they don’t have an idea of scale and are as you said afraid .
Ghar ki murghi dal barabar
Caleb won. Other guy's knowledge is good, but English is average.
Unlike USA, Bharat can't print unlimited amount of money. Those who are getting work from USA's outsourcing and getting funds in dollars are gonna hit by de-dollarisation
Low trust because of caste system 👿
You may be joking? Right?
😂😂
Your thesis about Indian society is hollow and baseless.
Please don't make wrong answers if you don't know.
This is all just speculations and theories. If you have any your own ideas kindly share with others.
Why don't you share yours then if you think you know better?
He is completely true , and is not baseless. This is how is it. But yea other factors is there is no opportunity to start on own like unemployment Benefits, lack of skills and so on