₹5,000 crore set to rain down on India’s start-up space

A storm of activity in the Indian start-up space is likely to result in an inflow of at least ₹5,000 crore by the end of this calendar year.

BusinessLine spoke to at least 25 companies across sectors such as gaming, education, fashion and retail, e-commerce, consumer internet and logistics that are scouting for funds. The companies are looking at raising anywhere between $2 million and $50 million each (₹13 crore and ₹325 crore) in the next six months.

The good news for them is that investors, including angel funds, venture capitalists and private equity firms, are waiting in the wings with a war-chest to fund interesting ideas.

“Many students of IITs and IIMs are now looking at being job creators by setting up start-ups, rather than being job hunters,” said ah! Ventures Founder and Chief Executive Officer Harshad Lahoti. ah! Ventures is in the process of closing three more investments in the coming weeks.

Similarly, Rehan Yar Khan, investor and founder of Orios Venture Partners, is set to invest in at least five companies in the coming months.

The growth in the start-up space is aided by factors such as rising internet penetration and data consumption, and increasing affordability of smartphones. But the driving force behind any start-up is the initial idea.

“For the past couple of years, investments in start-ups have been more than doubling year over year. India is one of the fastest growing markets for investors and venture capital funds across the world,” said Mayank Jain Chief Executive Officer and co-founder of TalentPad, an online recruitment platform, which recently received its first institutional funding from Helion Advisors.

The e-commerce sector, a part of the start-up ecosystem, has already received a total of $1,633 million during the first five months of 2015, according to a study by Grant Thornton India.

Says Harish HV, Partner at Grant Thornton: “The success stories of the start-ups, which have come up over the last few years, is boosting the investment sentiment. …some private equity players, who invested in start-ups only after 2-3 funding rounds, are eager to write bigger checks in the first round itself.”

According to Harish, the number of start-ups entering the ecosystem has also increased manifold in the last five years.

“About 20 people are trying to start a new venture in Bangalore every week,” he said.