Govt actively supporting startups, but regulators lagging: Vikram Gupta

The government is actively supporting the startup ecosystem but regulators sometimes lag behind in adapting to the rapidly changing dynamics of the overall space, said Vikram Gupta, Founder and Managing Partner of IvyCap Ventures, a venture capital financing firm.

During the ‘Investor Speak’ on the topic ‘The Indian Landscape: Opportunities & Challenges for Investors’ at the e4m TechManch 2024, Gupta said internet penetration has grown exponentially which opens doors for opportunities for entrepreneurs but challenges remain.

“When we started investing in 2014-15, we started taking bets in companies like Purple, Bluestone. Internet penetration and e-commerce penetration into retail was very small at that time. We're talking about less than a percent. But I think today we are talking about a pretty substantial size of that market.

“In fact, it's projected to grow from over $70 billion to almost a trillion dollars by 2030. And I think if you look at that exponential growth, this talks about the nature of opportunity we are sitting at. I think if I were to then talk about what are the key challenges for entrepreneurs, I think we're still struggling with our regulators trying to keep pace with the changing dynamics in the overall ecosystem,” he said.

He further said that the good news is that the government is taking very active measures to support the startup ecosystem and providing various measures of funding.

“But at the same time, I think most of our regulations are trying to keep pace and sometimes are also lagging. And I think some of the sectors that get majorly hit because of that are sectors like fintech, even gaming, and a few others,” he said.

The other challenge, according to Gupta, is security and privacy given the volumes of data getting generated.

“I think on the privacy front, we still have a long way to go. We are still struggling when it comes to basic information and how much of our information that we are sharing online is actually private. Security is another major issue. Our data is actually stored across different places and we don't know how much of the data is actually getting stolen or leaking out to different agencies,” he said.

As an investor, he said, one of the biggest challenges is when it comes to availability of domestic capital for entrepreneurs.

“While we've seen a substantial growth of investments happening in venture capital and private equity over years, we're talking about $135 billion which has been invested into the startup ecosystem over time. Only 15% of that capital is actually domestic.

“So we're talking about 85% of that capital actually is dollar capital. And I think the downside of that is whenever something happens at the global level, interest rates change in the U.S. or high liquidity or liquidity constraints happen in the U.S. markets, that directly impacts the startup ecosystem,” he said.