(25 Dec 2018) Pune Startups: Review and Outlook

Review for CY 2018

  • This year, investors have shown interest in investing in startups with new ideas rather than just India execution plays. This is a good trend. That said, majority of investments (by value) were in sectors where there is no technology innovation but mostly business process innovation and execution challenges (mainly in IT enabled businesses of various kinds such as food delivery, education, commerce, etc etc).
  • Early stage investments in non-IT enabled sectors are primarily happening in healthcare products, mechatronics/ IOT and certain agro and social innovation sectors. The investment size is not that large because these are early stage startups. However, they are very important to the sectors and make a huge difference in encouraging entrepreneurs. This is being driven by seed funds associated with incubators, Angel investors, early stage venture capital funds and impact investors.
  • Investments in sectors such as energy and environment are happening but using traditional models of financing (not really VC) and in late stage deployment of solutions. Not much investment is happening in early stage tech development. So the startup pipeline for investors is likely to be weak in coming years.

Outlook and emerging opportunities

  • IT enabled services/ sectors (commerce, food delivery, ride hailing, education, agro, finance, payments etc) will continue to draw the largest funding.
  • I think CY 2019 will be a good year for healthcare products startups.
  • I am also hopeful that algorithm intensive areas like cyber security will throw up new opportunities for India.
  • I am not hopeful about early stage funding in energy and environment sectors.
  • I am hopeful that the Government of India will create a vehicle like BIRAC for other sectors. If that happens, a lot of pipeline creation for future investments in knowledge intensive and IP rich startups will take place. This will create good candidates for investment say 3 years hence.
  • This year might see a boom in waste management companies. Since funding in this sector is a problem, large players with strong balance sheets will eventually dominate and probably squeeze out startups and first generation entrepreneurs.
  • The focus on startups will reduce in the election year of 2019. The government will focus more on rural areas and probably de-emphasize startups.
  • As usual, this should be a good year for corporate ventures and family businesses.


  • First generation entrepreneur interest and availability of financing always go hand-in-hand. Lack of early stage financing to spur startup creation and empower first generation entrepreneurs is still limited to only very few sectors in India. That remains the greatest challenge.
  • The funding landscape is not continuous in India and has gaps. Which means that Indian startups will either a) raise money from foreign funders or b) move overseas to raise money. This is especially likely in knowledge intensive areas where the appetite for Indian investors has been low.
  • Again a missed opportunity will be inability of the Indian ecosystem to draw upon academia and R&D institutions for new technical capabilities seamlessly to build new technologies.