The Limitations of Venture Capital in India

U.S. venture funding helped create a startup boom in India. Competition from U.S. companies, however, makes an Indian Silicon Valley unlikely.

Blume Ventures cofounders Karthik Reddy (left) and Sanjay Nath (right) with partner Ashish Fafadia (center) in 2022. Photo by Blume Ventures. Source.

In 2021, venture capital investments in India reached an all-time high of nearly $40 billion.¹ This was far above the previous peak of $11 billion in 2019 and an order of magnitude higher than the $3 billion of investments in 2013. The same year, India surpassed the United Kingdom to become the country with the third-most unicorns—privately-held startup companies valued at over $1 billion.² As of January 2023, India has 70 unicorns, compared to China’s 172 and the United States’ 651.³ India has a young and growing population of 1.4 billion people and an information technology industry that makes up an estimated 7.4% of GDP, despite still being relatively poor overall.⁴ Indian economic growth is key to expectations of future global growth and, unlike Africa, has the prerequisite of being politically stable.