Lunia stated that while the entire country was doing well in terms of funding in fintech, withdrawal symptoms are only there in Koramangala, HSR, Indiranagar and Whitefield
The India Quotient founder partner, further added that besides these few areas presently, a funding freeze was visible in the entire country in 2020 and 2021
Notably, Bengaluru has been triumphant in bagging around 40% of the share of the total startup funding in India between 2014 and 2021
During Inc42’s Fintech Summit 2022, Anand Lunia, founding partner, India Quotient, stated, “We are simply having some [funding] withdrawal symptoms in a few areas of Koramangla, HSR, Indiranagar and of course, Whitefield. Besides that, the country is doing well.”
This was in response to the moderator Mukesh Kalra’s (founder, ET Money) question on whether there was a funding freeze within the country. To this, Lunia also added that good companies are actually coming back on track. There’s no FOMO, no peer pressure and in terms of opportunities, the time is better than ever, he added.
“Unless we allow startup founders to do up to 30% correction in their expenses, the ecosystem will not survive, people need to become efficient,” Lunia said.
Currently, the startup ecosystem is going through what is being termed a funding winter-wherein VCs and PEs are not too enthusiastic about writing cheques. The key reasons are the market conditions, the war between Ukraine and Russia and more.
Visibly, according to Inc42’s Fintech Report for Q1 CY2022 – Infocus BNPL, funding raised by fintech startups declined almost 45% to $1.77 Bn from $3.2 Bn Q4 CY2021.
Naturally, Bengaluru, India’s startup hub (or the Silicon Valley of India), had effects of the downturn too. According to Inc42’s latest data, Bengaluru-based startups raised less than $600 Mn in funding until May 2022 out of the total $1.9 Bn raised by fintech startups across the country.
Despite some great numbers in the previous quarters (and 2021 breaking every record in sight), Lunia was adamant that the present scenario was not a freeze.
“I believe we had a freeze in the last two years. In 2020 and 2021, investors wrote cheques with a ‘brain freeze’ and now there’s a market correction, with people being cautious of where to invest.”
Comparing the Indian financial services market to the US, Lunia added that India was insulated from the movement of stock in America. The only fluctuation, he believes, is due to the oil prices, over which the Indian government has no control. Thus reiterating that the current scenario is a market correction and not a downturn, especially in the affluent parts of Bengaluru – the startup hub of the country.
“This is the right time to start a company. It is also the time to think of how to build a business, not to think of how to raise money,” Lunia added.
