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Entrepreneur
19 hours ago
- Business
- Entrepreneur
Biggest Issue for Startups is Lack of Capital, Regulatory Reforms Needed: Mohandas Pai
Restrictive regulations of the government have resulted in inadequate domestic capital for the Indian startup ecosystem, said Mohandas Pai, Chairman at Aarin Capital, who called for reforms in policy and better investments to drive the ecosystem in an interview with PTI. Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur India, an international franchise of Entrepreneur Media. Restrictive regulations of the government have resulted in inadequate domestic capital for the Indian startup ecosystem, said Mohandas Pai, Chairman at Aarin Capital, who called for reforms in policy and better investments to drive the ecosystem in an interview with PTI. "We have 1,65,000 registered startups, 22,000 are funded. They created USD 600 billion in value. We got 121 unicorns, maybe 250-300 soonicorns, the biggest issue for startups is the lack of adequate capital," said Pai. India ranks third globally, behind the US and China, where startups investments recorded USD 2.32 trillion and USD 835 billion respectively. "We just put in USD 160 billion, out of which possibly 80 per cent came from overseas. So local capital is not coming in," he added. Pai also said that changes in the regulatory realm will allow insurance companies to get involved in fund-of-funds, and also called for better flexibility in investment structures. Pai also suggested that the government's fund-of-funds be expanded to INR 50,000 crore from the existing INR 10,000 crore. According to an EY-IVCA monthly PE/VC roundup, private equity and venture capital (PE/VC) investments in India declined by 20 per cent in April 2025 compared to March 2025 in value terms. Vivek Soni, Partner and National Leader, Private Equity Services, EY said that April 2025 recorded USD 4.7 billion in PE/VC investments, 6 per cent lower than investments in April 2024 and 20 per cent lower than in March 2025 with the number of deals in April 2025 being 4 per cent lower year-on-year. Pai also suggested that the country eradicate barriers for startups to do business with public sector units. "Even though the government has reformed it, it doesn't work in actual practice. It must be opened up, and I think that has to be a mind shift. The problem in India is that all the big companies try to beat down the small startups and give them less money, and force them to sell the technologies and use them, and often don't pay them on time. This culture of hurting the small people should change," Pai added. The EY report also said that PE/VC investments in April 2025 totalled USD 4.7 billion, 6 per cent lower than the US$4.9 billion recorded in April 2024. The number was also 20 per cent lower than the USD 5.9 billion recorded in March 2025. The number of deals in April 2025 declined by 4 per cent year-on-year, with 108 deals compared to 113 in April 2024, while remaining consistent with the deal count in March 2025 (108 deals). Somdutta Singh, Founder and CEO, Assiduus Global, said that there's no denying that the Indian startup ecosystem has had its share of funding challenges. But what's unfolding now is less a crisis and more a shift, a recalibration that's making space for more thoughtful, resilient growth. "Yes, seed and early-stage startups are finding it harder to raise funds this year. Deal volumes in that bracket have dipped, and capital is flowing more freely into later-stage ventures. But that doesn't mean early innovation is being ignored. What we're seeing is a market that's becoming more selective, more focused. Investors are looking for stronger fundamentals, clearer business models, and long-term viability. For founders who are prepared, this is not a drought, it's a filter," said Singh.
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Business Standard
2 days ago
- Business
- Business Standard
Mohandas Pai flags lack of domestic capital for startups, calls for reform
Indian startups are being held back by a lack of adequate domestic investment due to restrictive regulations of the government, according to industry veteran and Aarin Capital Chairman Mohandas Pai, who called for policy reforms and R&D investments to strengthen the ecosystem. Despite India being the world's third-largest startup hub, Pai cautioned that the country risks falling behind in global innovation unless these challenges are addressed. "We have 165,000 registered startups, 22,000 are funded. They created $600 billion in value. We got 121 unicorns, maybe 250-300 soonicorns. "The biggest issue for startups is the lack of adequate capital. For example, China invested $835 billion in startups and ventures between 2014 and 2024, US invested $2.32 trillion. We just put in $160 billion, out of which possibly 80 per cent came from overseas. So local capital is not coming in," Pai said in an interview to PTI. Pai pointed out that, unlike the US, where insurance companies and university endowments are major sources of startup funding, Indian endowments are prohibited from investing in startups by government policy, and insurance companies remain largely absent due to incomplete regulatory reforms. He advocated for regulatory changes to allow insurance companies participate in fund-of-funds and called for greater flexibility in their investment structures. Pai also suggested expanding the government's fund-of-funds programme from Rs 10,000 crore to Rs 50,000 crore. He further noted that India's pension funds, with a corpus of Rs 40-45 trillion, are unable to invest in startups because of conservative approaches and restrictive regulations. Pai stressed the importance of substantially increasing R&D funding in Indian universities and encouraged organisations like DRDO to make their technologies accessible to the private sector. He observed that current R&D spending in public universities is significantly below international benchmarks and inadequate to drive meaningful innovation. "We need to remove barriers for startups to sell business to the government and public sector though the government has reformed it, it doesn't work in actual practice. It must be opened up, and I think that has to be a mind shift. "The problem in India is that all the big companies try to beat down the small startups and give them less money, and force them to sell the technologies and use them, and often don't pay them on time. "This culture of hurting the small people should change," Pai said.
Time of India
2 days ago
- Business
- Time of India
Mohandas Pai flags lack of domestic capital for Indian startups; urges policy overhaul; calls for stronger R&D support
NEW DELHI: Indian startups are struggling to grow due to limited domestic investment and restrictive government regulations, warned industry veteran and Aarin Capital Chairman Mohandas Pai, calling for urgent policy reforms and increased R&D funding to boost the ecosystem. He cautioned that despite India's position as the world's third-largest startup ecosystem, the nation could lose ground in global innovation if existing issues remain unresolved. "We have 1,65,000 registered startups, 22,000 are funded. They created USD 600 billion in value. We got 121 unicorns, maybe 250-300 soonicorns," Pai said in an interview to PTI. "The biggest issue for startups is the lack of adequate capital. For example, China invested USD 835 billion in startups and ventures between 2014 and 2024, US invested USD 2.32 trillion. We just put in USD 160 billion, out of which possibly 80 per cent came from overseas. So local capital is not coming in," he added. He further highlighted that while American insurance firms and university endowments significantly fund startups, Indian regulations prevent endowments from such investments, and insurance companies remain uninvolved due to incomplete regulatory framework. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Bu bankalar başvuran herkese kredi kartı veriyor mu? Kredi Kart Şimdi Keşfet Undo He recommended regulatory adjustments to enable insurance companies' participation in fund-of-funds and suggested increasing the government's fund-of-funds programme from Rs 10,000 crore to Rs 50,000 crore. Additionally, he noted that India's pension funds, holding Rs 40-45 lakh crore, cannot invest in startups due to conservative policies and regulatory restrictions. Pai emphasised the need to increase research funding in Indian universities substantially and urged organisations like DRDO to share their technologies with the private sector. He indicated that current research expenditure in public universities falls considerably short of global standards. "We need to remove barriers for startups to sell business to the government and public sector though the government has reformed it, it doesn't work in actual practice. It must be opened up, and I think that has to be a mind shift," the industry veteran continued. Pai further criticised the prevailing business culture in India, stating that, "The problem in India is that all the big companies try to beat down the small startups and give them less money, and force them to sell the technologies and use them, and often don't pay them on time.' "This culture of hurting the small people should change," Pai added. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
2 days ago
- Business
- Mint
Mohandas Pai flags lack of domestic capital for Indian startups, calls for policy overhaul
New Delhi, Jun 8 (PTI) Indian startups are being held back by a lack of adequate domestic investment due to restrictive regulations of the government, according to industry veteran and Aarin Capital Chairman Mohandas Pai, who called for policy reforms and R&D investments to strengthen the ecosystem. Despite India being the world's third-largest startup hub, Pai cautioned that the country risks falling behind in global innovation unless these challenges are addressed. "We have 1,65,000 registered startups, 22,000 are funded. They created USD 600 billion in value. We got 121 unicorns, maybe 250-300 soonicorns. "The biggest issue for startups is the lack of adequate capital. For example, China invested USD 835 billion in startups and ventures between 2014 and 2024, US invested USD 2.32 trillion. We just put in USD 160 billion, out of which possibly 80 per cent came from overseas. So local capital is not coming in," Pai said in an interview to PTI. Pai pointed out that, unlike the US, where insurance companies and university endowments are major sources of startup funding, Indian endowments are prohibited from investing in startups by government policy, and insurance companies remain largely absent due to incomplete regulatory reforms. He advocated for regulatory changes to allow insurance companies participate in fund-of-funds and called for greater flexibility in their investment structures. Pai also suggested expanding the government's fund-of-funds programme from ₹ 10,000 crore to ₹ 50,000 crore. He further noted that India's pension funds, with a corpus of ₹ 40-45 lakh crore, are unable to invest in startups because of conservative approaches and restrictive regulations. Pai stressed the importance of substantially increasing R&D funding in Indian universities and encouraged organisations like DRDO to make their technologies accessible to the private sector. He observed that current R&D spending in public universities is significantly below international benchmarks and inadequate to drive meaningful innovation. "We need to remove barriers for startups to sell business to the government and public sector though the government has reformed it, it doesn't work in actual practice. It must be opened up, and I think that has to be a mind shift. "The problem in India is that all the big companies try to beat down the small startups and give them less money, and force them to sell the technologies and use them, and often don't pay them on time. "This culture of hurting the small people should change," Pai said.
Time of India
2 days ago
- Business
- Time of India
Mohandas Pai flags lack of domestic capital for Indian startups, calls for policy overhaul
Indian startups are being held back by a lack of adequate domestic investment due to restrictive regulations of the government, according to industry veteran and Aarin Capital chairman Mohandas Pai , who called for policy reforms and R&D investments to strengthen the ecosystem. Despite India being the world's third-largest startup hub, Pai cautioned that the country risks falling behind in global innovation unless these challenges are addressed. "We have 1,65,000 registered startups, 22,000 are funded. They created USD 600 billion in value. We got 121 unicorns, maybe 250-300 soonicorns. "The biggest issue for startups is the lack of adequate capital. For example, China invested USD 835 billion in startups and ventures between 2014 and 2024, US invested USD 2.32 trillion. We just put in USD 160 billion, out of which possibly 80 per cent came from overseas. So local capital is not coming in," Pai said in an interview to PTI. Pai pointed out that, unlike the US, where insurance companies and university endowments are major sources of startup funding , Indian endowments are prohibited from investing in startups by government policy, and insurance companies remain largely absent due to incomplete regulatory reforms. Live Events He advocated for regulatory changes to allow insurance companies participate in fund-of-funds and called for greater flexibility in their investment structures. Pai also suggested expanding the government's fund-of-funds programme from Rs 10,000 crore to Rs 50,000 crore. Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories He further noted that India's pension funds, with a corpus of Rs 40-45 lakh crore, are unable to invest in startups because of conservative approaches and restrictive regulations. Pai stressed the importance of substantially increasing R&D funding in Indian universities and encouraged organisations like DRDO to make their technologies accessible to the private sector. He observed that current R&D spending in public universities is significantly below international benchmarks and inadequate to drive meaningful innovation. "We need to remove barriers for startups to sell business to the government and public sector though the government has reformed it, it doesn't work in actual practice. It must be opened up, and I think that has to be a mind shift. "The problem in India is that all the big companies try to beat down the small startups and give them less money, and force them to sell the technologies and use them, and often don't pay them on time. "This culture of hurting the small people should change," Pai said.
