You're reading Entrepreneur India, an international franchise of Entrepreneur Media. India is the third largest startup ecosystem in the world with about more than 50,000 startups.
A key role in the growth of the startup ecosystem is played by investors, especially the venture capital firms. Chiratae Ventures is one of them. Sudhir Sethi, co-founder, Chiratae Ventures discussed about the essentials which are required for a sustainable and a better way for investing while speaking at Entrepreneur India’s Tech and Innovation Summit 2021.
“The purpose of a fund is not just to make an investment but to make an investment in the society, and to make this impact it is important that we look at society as a whole,” emphasized Sethi.
Expressing his views regarding investments that were made in the last few years and their impact on the society, Sethi said a number of LPs today ask, “You are investing in these companies. What’s the impact on the society?” And this very question made him realize that he never really thought about this.
“If you have funded an agritech company, then has the income of the farmer increased?” These type of questions are being asked about all other sectors in which the firm has invested such as agriculture, education, tech, environment, fintech and logistics, among others.
A realization dawned that there is a need to change the position. “That there is a pull between delivering outsize financial returns to the investors, supporting the ecosystem and measuring the impact,” said Sethi.
Chiratae Ventures has invested in 100 companies and are active in about 60 of them. The annual revenue from these investments is $1.2 billion and the market cap is about $14 billion, which is about 0.5 of India’s GDP. In terms of impact, Chiratae Ventures assessed that its portfolio companies have around 58 million consumers, and 37 per cent of them, i.e. around 22 million, are female. Companies that are funded by Chiratae Ventures have created 30,000 direct jobs, of which 24 per cent are female and 33 per cent are from tier II and tier III towns and 10,000 people have either been reskilled or upskilled.
Talking about the early-stage funding, he pointed out that founders usually go their friends, family or relatives and after this comes angel investors. As there is no shortage of seed funding companies in the country, one just has to find the right one whether--it is an Indian or an International fund--it is just like matchmaking, finding someone who believes in the idea and the execution.
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