Here’s Why Social Startups in India Fail to Attract VC Funds

Monday, July 22, 2019

By Sandeep Soni

Ideas in the impact or social space take time to be adopted by their end-users, who are usually the base of the pyramid (BoP) segments. Hence, time to scale is longer than an urban business-to-consumer business and consumers cannot be bought through discounts in this space, Paul Basil, Founder and CEO at Villgro — India’s oldest and among the largest incubators for social startups — told Financial Express Online in an interview. “Investors are few in this space in India but they are growing their realization. More foreign investors are looking at India now. But crucially, all look primarily for solid unit economics and gross margins. The parameters to gauge this space is profitability and technology innovation, not paper valuations,” Basil said.

Social startups in India haven’t been able to get the spotlight of investors to attract billions of dollars much like regular technology startups. Moreover, the number of social startups pales in comparison to the number of technology startups. While there were up to 7,700 tech startups in India, according to a Nasscom report in October last year, social startups were just more than 400 but growing at more than 20 per cent year-on-year, IANS reported in November last year citing Nasscom’s Senior VP Sangeeta Gupta.

Photo courtesy of Satish Krishnamurthy.

Source: Financial Express (link opens in a new window)

Base of the Pyramid, scale, social enterprise, startups