The problem with India's startup culture

India's startups have a major setback: they can't get funding.
Written by Tyler Falk, Contributor

India has its share of well-established startups, from makemytrip.com to Flipkart.

But there's something holding back startups in India from thriving: a lack of funding, AFP reports.

While there is no lack of ideas among the country's vast young population, funding is declining from venture capitalists and rich "angel" investors, as they are known, who are often crucial to a young firm's success.

"Risk-taking appetite from investors is low," said Internet entrepreneur Nameet Potnis, who is trying to address the problem by setting up Nurtured.in, a platform to connect startups with early-stage investors.

"It is easy to set up an online business in India but very difficult to do business," he told AFP.

India saw venture capital investment drop from $1.09 billion for 222 deals in 2011 to $762 million for 206 deals last year. And what's astonishing is that only a fraction of the funding--an estimated 5 percent--for thousands of startups in India comes from sources outside friends and family. That's not a good recipe for startup success.

Fortunately, "10,000 startups," an initiative by Nasscom, an IT trade firm, is pushing for more startups and more startup funding. But until there are more projects like this one and Nurtured.in, it will be a challenge for India’s startups to reach their full potential.

India's startups lacking guardian 'angels' [AFP]

Photo: Flickr/Pankaj Startup Weekend

This post was originally published on Smartplanet.com

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