Funding gap for start-ups to be filled by private equity companies: KV Subramanian, CEA, India
The increased scrutiny of funds from China will hit Indian startup funding but its impact is likely to be temporary. CEA KV Subramanian:
The increased scrutiny of funds from China will hit Indian startup funding but its impact is likely to be temporary and the gap filled up soon by other private equity firms, said KV Subramanian, Chief Economic Adviser (CEA) of India, on Wednesday.
“There will be some impact, especially on startup funding in the short run. But I think within some time that space will get filled by others. There are a large number of private equity firms from other countries that are interested in funding and participating in the Indian startup ecosystem,” Subramanian said during a virtual conference hosted by the Federation of Indian Chambers of Commerce and Industry for the private equity firms.
The CEA was responding to a question regarding the government’s decision in April requiring direct and indirect investment from Chinese firms or benefactors to go through the government route, amid rising border tensions. While speaking on the theme of opportunities in India’s distressed assets market, Subramanian highlighted the need for an improved price discovery mechanism in the market for distressed assets along with a deeper corporate bond market.
Countries like the US were able to take advantage of the creative destruction process through a vibrant corporate bond market, unlike in India where largely only top rated bonds are traded, he added.