After Morgan Stanley marked down its valuation of its Flipkart shares – one of India’s most renowned start-ups – by 27 percent recently, certain reports suggested that the Indian start-up ‘bubble’ had finally burst.

A dire situation, with funds drying up and start-ups unable to secure more investments, was predicted, and the picture for the country’s start-up community was painted as bleak as possible.
All this speculation, however, has been proven untrue.

The Indian start-up community has never been stronger, and the access to more capital, if anything,has only increased over the last year. Consider this: Indian start-ups have closed more than 300 deals in Q1 2016, raising a staggering amount of $1.42 billion in the process.

This, when compared to last year’s 147 deals closed in the same duration, shows an impressive growth of 108 percent.

Early stage investments also seem to be picking up momentum – 132 deals in 2016 were early stage investments, with Pre-Series A deals amounting to 112 of the total. This is good news for start-ups, asit demonstrates that investors are now more willing to fund promising early-stage ventures to reap rich dividends later.

Artificial Intelligence is one of the sectors grabbing the most investor interest, as can be demonstrated by heavy early stage investments into AI-driven start-ups such as vPhrase Analytics, ConfirmTKT and Siftr.

All this has largely been made possible due to the increased involvement of the country’s high net-worth individuals;it is estimated that there are more than 200,000 HNIs in India at present who can, on an average, invest between INR 25 lakh to INR 50 lakh on annually.

This has largely been facilitated by novel venture funds and innovation platforms which are not only providing financial support to start-ups, but are also providing a comprehensive support ecosystem for start-up growth.

As a result, there is an increase in the co-working spaces that are now available for start-ups across the country.

Investments have also shifted away from Bangalore to other areas, such as Delhi-NCR and Mumbai, which have been emerging as hubs for start-up activity.

What is also promising for start-ups is the global outlook towards entrepreneurship in India; top B-Schools in the US are encouraging their students to take the next flight out to India to invest into promising ventures.

With government initiatives such as Start Up India incentivising investments and start-up growth, we can expect to see more and more HNIs emerging as new-age investors and angels for the start-up community as well as an increased involvement from foreign investors.

All in all, the outlook for Indian start-ups is not only positive, but also highly encouraging. We can expect to see more funding into Indian ventures in the future to drive the industry growth. A dearth of funds for Indian start-ups? Not by a long shot!

By Dr Apoorv Ranjan Sharma, Co-Founder & President, Venture Catalysts