While China has around 25,000 venture capital (VC) funds and around 820,000 startups out of which approximately 200 are unicorns and 2,500 are soon-to-be unicorns, India will be at that stage in the coming three-five years.
While China has around 25,000 venture capital (VC) funds and around 820,000 startups out of which approximately 200 are unicorns and 2,500 are soon-to-be unicorns, India will be at that stage in the coming three-five years but if you have to address this market then India needs 100 accelerator funds that should invest in around 2000 companies in seven-year period, Dr Apoorv Sharma, a prominent startup backer and Cofounder & President at leading incubator Venture Catalysts told Financial Express Online. OYO was among the companies that were incubated at Venture Catalysts.
“In order to tap this 200-unicorn market then we need to consistently make 10 investments per month that need a structured mentoring programme. Currently, India has only around 20,000 startups out of which around 500 are funded and 26 are unicorns. Also, India heavily lacks in having startup developers like Y Combinator or 500 Startups in the US,” said Dr Sharma as he launched a similar accelerator fund with a total corpus of Rs 300 crore called 9Unicorns.
“This is India’s first-of-its-kind fund, that aims to do what Y Combinator and 500 Startups did in the US — backing around 2,000 companies in around 10 years out of which 10 unicorns were created. We are also targeting to identify potential nine-10 unicorns in the next seven-10 years.”
9Unicorns will back 50 idea-stage startups every year with $100,000 in exchange for 5 per cent equity, and help them in developing proof-of-concept following which Venture Catalysts will invest $500k – 2 million in eligible startups. “India has two big problems – financing and sectoral diversity. Today not many investors want to invest in FMCG, healthcare, agri etc., but we will invest,” he added.
The sector-agnostic fund is expected to make its first close in coming three months for which it has already received interest from around 10 global limited partners. Startups will be supported for 13 weeks as part of the accelerator. The funding offered will help startups with a runway of around 18 months before they are able to secure capital from Venture Catalysts.