What makes venture capitalists bet big money on Indian start-ups?

India Today

23-05-2025

Raising investment money is a theme that keeps entrepreneurs awake at night—a central point of discussion during the session 'Seeding Tomorrow: Big Ideas, Smart Capital' at the recent Indo-UAE Conclave 2025 organised by the India Today Group in Dubai.Rajnish Kumar, chairman of BharatPe and former chairman of the State Bank of India, highlighted how 'international capital, in particular, doesn't go anywhere for the love of that country'. 'It goes where it can earn a decent return—or rather, the best return—compared to any other opportunity,' he said.advertisementKumar unpacked the term 'smart capital' as capital that not only spots opportunities and takes risks (as venture capitalists are known to do) but also blends entrepreneurship and young energy with seasoned experience. 'People with grey hair—or no hair,' he quipped, are essential to this mix. 'If you have a blend of experience, youthful energy, and fresh ideas—especially those solving real problems—then there are good returns to be made.'Kumar stressed that each venture capital (VC) fund has its own investment philosophy, which influences the sectors it focuses on. Some venture capitalists take a long-term view, examining governance structures, founders and institutional history before making bets. Others chase quick returns, looking for short-term gains.
He elaborated on the key factors venture capitalists consider before investing in a start-up: the probability of the venture and how the company will be run and governed. Here, he noted, experienced leadership plays a crucial role in preventing governance pitfalls—something that has plagued a few Indian start-ups in recent times.advertisement'So, there is a different type of capital on the demand side and a different type of company on the supply side. You have to match your investment philosophy with the opportunities available,' he added.Siddharth Balachandran, executive chairman and CEO of Buimerc Corporation, shared his own philosophy of 'permanence', wherein he looks for democratic markets and institutions that reflect those values. His first investment in India was in the Bombay Stock Exchange, which grew from a market cap of Rs 2,000 crore to over Rs 1 trillion in just 15 years.Balachandran also addressed the idea of risk, calling it 'a clichd and often misunderstood concept'. According to him, India's true potential isn't defined by currency values but by the scale and energy of its 1.4-plus billion people.Balachandran identified banks and financial institutions as key sectors for both revenue generation and long-term wealth creation. He described them as a 'multi-tiered growth opportunity'—not limited to new-age or nationalised banks but spread across the entire sector. 'Every institution in that space is an explosion of wealth waiting to happen,' he said.'I've started accruing [investments] in this space, and my accrual process takes a few years. But I've begun—with SBI as my first, and LIC (Life Insurance Corporation of India) as my second. These are the kind of big opportunities I'm looking at.'advertisementSubscribe to India Today MagazineMust Watch