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The Indian start-up and venture investor ecosystem remains largely insulated from US political shifts, however stronger fund flow between India and the US is expected as Donald Trump becomes the 47th US president.
India’s start-up ecosystem, known for its resilience and innovation, stands well-positioned to adapt to shifts.
“Growth, for most Indian businesses, is rooted in robust local demand, a strong digital economy, and supportive domestic policies. A buoyant US economy will also provide some tailwinds to SaaS players selling to US businesses,” said Dushyant Singh, Managing Director, Playbook Partners.
A Bengaluru based VC firm partner said that there will be some policy clarity with the Republicans controlling the White House, Senate as well as Congress. Tax cuts would be a major plus for companies as well as large crossover funds.
In 2021, US Federal Reserve adopted a low-interest regime to stimulate economic activity amid Covid-19, it helped start-up funding in India reach an all-time high of $36 billion. Later, as the US central bank increased rates to curb inflation, fund flow tightened to a seven-year low of $8.8 billion in 2023.
US market has always been one of the most attractive destinations for building global scale for Indian start-ups.
“With the shift in political ideology, while the overall approach may be leaning towards localised innovation, what is more significant is that the new government will have a far more capitalistic economic framework; this will catalyse business growth in the US market leading to even more opportunities for Indian software players to tap into. And the above will be further underscored by the camaraderie between the leadership of the two nations,” said Abhishek Prasad, Managing Partner, Cornerstone Ventures.
Industry experts also noted that stricter US immigration policies might limit opportunities for Indian tech talent in the US, which could in turn strengthen India’s domestic talent pool and benefit local start-ups.
“With a competitive cost structure, expanding infrastructure, and a vibrant and enviable large talent base, India could strengthen its role as a key Technology and Deeptech provider for the Global South, a viable alternative to US technology solutions. As global dynamics evolve, optimism in India’s start-up ecosystem and innovation capabilities remains high, suggesting a new growth phase reinforcing India’s appeal as a top investment destination,” said Somshubhro Pal Choudhury, Partner, Bharat Innovation Fund.
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