Sanjay Nayar, Founder of Sorin Investments and President of ASSOCHAM, recently discussed the changing landscape of the Indian startup ecosystem. He emphasized that while there is no shortage of capital, the funding game has evolved, with founders taking a more strategic approach to fundraising. Nayar highlighted India’s entrepreneurial spirit is deeply rooted in its diverse culture and economy.
Government initiatives focusing on ease of business, tax benefits, and digitization have significantly accelerated entrepreneurship over the past decade. The country now has a strong ecosystem connecting founders, investors, and mentors, fostering success and resilience. When asked about early-stage funding, Nayar noted that while capital is available, firms are more selective, focusing on specific verticals.
Large early-stage fundraises have slowed, and many family offices are pulling back or opting for direct investments over funds. Entrepreneurs now have to work harder to secure funding. Nayar also observed a shift in how CEOs and companies approach growth, moving away from aggressive fundraising and rapid scaling toward a more sustainable, profitability-focused strategy.
India’s startup ecosystem trends
Founders are making smarter choices, focusing on strategic partnerships and scalable growth. Nayar expressed caution regarding the recent IPO activity and markets.
He believes this isn’t the time to list unless a company has a rock-solid business model. Rushing to list without proving long-term viability is a mistake, in his opinion. Nayar also addressed the reliance of Indian startups on foreign capital, noting that domestic investment hasn’t kept pace.
While Indian family offices are stepping up to bridge the gap, they are still learning about allocation and liquidity. He emphasized that growth takes time and that per capita GDP needs to rise for the economy to deepen. Lastly, Nayar acknowledged the increasing interest from Tier II and III cities in driving manufacturing momentum in the startup landscape.
He affirmed that real businesses from these cities are getting funded, reflecting the growing entrepreneurial spirit across India.
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