Venture Capital: Reason for Rising No. of Entrepreneurs

In Business
April 27, 2023

Venture capitalism is a form of private equity financing where investors provide capital to startups or early-stage companies that have the potential for high growth and profitability. In exchange for their investment, VCs typically receive an equity stake in the company and have a say in the management and direction of the business. VCs also provide expertise, mentorship, and strategic guidance to help the company grow and succeed.

 VCs typically take a more hands-on approach and may require a seat on the board of directors, as well as significant input into the company’s strategy and decision-making. Private funding, on the other hand, may involve less direct involvement from the investor, with a focus on providing capital and potentially some strategic guidance.

The Impact of Covid 19 on VC Funding 

The COVID-19 pandemic has had a significant impact on the venture capital (VC) industry and the funding landscape for startups. Some of the key ways in which COVID-19 has affected VC funding include:

  • Reduced deal activity: The pandemic has caused a slowdown in deal activity, with many VCs adopting a more cautious approach to investing. According to data from Pitchbook, global VC deal activity fell by around 20% in the first half of 2020 compared to the same period in 2019.
  • Shift in focus to existing portfolio companies: With the economic uncertainty caused by the pandemic, many VCs have shifted their focus towards supporting their existing portfolio companies, rather than making new investments. This has led to a reduction in the number of new deals being made.
  • Focus on essential sectors: The pandemic has also led to a shift in focus towards sectors that are considered essential, such as healthcare, e-commerce, and education technology. Startups in these sectors have seen an increase in funding, while those in other sectors have struggled to attract investment.
  • Greater emphasis on resilience: The pandemic has highlighted the importance of resilience and adaptability in startups. VCs are now placing greater emphasis on companies that have a strong track record of weathering economic downturns and are better equipped to withstand future shocks.

Control, it is likely that VC funding will once again pick up, albeit with a greater focus on risk management and resilience.

Why early-stage startup go for VC funding 

Early-stage startups often turn to venture capital (VC) funding as a way to finance their growth and accelerate their development. There are several reasons why startups might choose to seek VC funding, including:

  • Access to capital: VC funding provides startups with access to large amounts of capital that they may not be able to obtain through traditional financing options such as bank loans or personal savings.
  • Strategic guidance and mentorship: VCs often provide strategic guidance, mentorship, and industry expertise to help startups navigate the challenges of growing their businesses. This can be particularly valuable for early-stage startups that are still in the process of developing their products or services.
  • Increased credibility: By securing funding from reputable VCs, startups can increase their credibility and attract the attention of other investors, customers, and potential employees.
  • Faster growth: VC funding can help startups accelerate their growth by allowing them to hire additional staff, invest in product development, and expand their marketing and sales efforts.
  • Access to networks: VCs often have extensive networks of industry contacts, including other investors, potential customers, and key industry players. By partnering with a VC, startups can gain access to these networks, which can help them build partnerships, find customers, and gain valuable insights into their markets.

What are the past present and future of VC in India

The venture capital (VC) industry in India has undergone significant changes over the past few decades, with a growing number of startups and increasing interest from investors. Here is a brief overview of the past, present, and future of VC in India:


In the 1990s, the Indian government liberalized its economy, which led to an increase in entrepreneurship and a growing startup ecosystem. However, VC investment in India was still relatively limited, with most funding coming from government agencies or corporate investors.

In the early 2000s, a number of global VC firms entered the Indian market, including Sequoia Capital, Accel Partners, and NEA. These firms helped to professionalize the VC industry in India and bring best practices from Silicon Valley to the country.


Today, the VC industry in India is thriving, with a growing number of startups and a large pool of investors. According to data from Venture Intelligence, Indian startups raised a record $14.5 billion in VC funding in 2021, up from $11.6 billion in 2020.

A number of factors have contributed to the growth of the VC industry in India, including the government’s Startup India initiative, which provides support and incentives to startups, as well as the increasing availability of capital from domestic and international investors.

However, the VC industry in India still faces some challenges, including a shortage of skilled talent, regulatory hurdles, and a lack of exits for investors.


Looking ahead, the future of the VC industry in India is likely to be characterized by continued growth and evolution. With a large and growing pool of startups, a strong talent pool, and increasing interest from investors, the potential for the Indian startup ecosystem is enormous.

However, there are also some risks and challenges that could impact the industry’s growth, including the ongoing COVID-19 pandemic, geopolitical tensions, and regulatory uncertainties.


The Venture Capitalist industry in India has come a long way over the past few decades, and the future looks bright for startups and investors alike. As long as the ecosystem continues to evolve and adapt to changing conditions, India has the potential to become a global hub for innovation and entrepreneurship.