Over the last two years, Indian startup founders have faced pressures from the global downturn and corrections in the technology ecosystem. These pressures range from demands for capital-efficient growth and longer fundraising timelines to lower valuation multiples. However, according to Nitin Sharma, Partner at Antler India, the opportunities in 2024 are far larger than the challenges.
Sharma emphasises that, particularly for early-stage tech, the enthusiasm for generational platform shifts like artificial intelligence and digital public infrastructure will likely outweigh other concerns. He highlights the addition of
Open Network for Digital Commerce (ONDC) to the "India Stack" alongside Aadhaar and interoperable payment systems (UPI), predicting significant growth as millions of new buyers and sellers are expected to transact via the network in 2024.
“In 2024, this (ONDC) could go BIG, as we expect millions of new buyers and sellers to come online and transact via the network,” he said. Notably, Antler India launched a platform in 2023 to support and fund founders with ideas for building businesses on the ONDC protocol. In addition to Gen AI and DPI, Antler India’s strategic focus areas in 2024 will include new-age SaaS, climate solutions, Web3 infrastructure and “underserved areas for consumer tech and brands, including female health, senior care and petcare.”
In an exclusive conversation, Antler India's Nitin Sharma also revealed the strategy behind the firm's structured investing approach, as it backs startups out of its maiden $75 million India-dedicated fund.
Navigating 2024: The Challenge Of Slower Deal Making In An Era Of Fast-Moving Tech
How do you anticipate 2024 unfolding for startups and investors? When do you see clarity emerging, and what notable developments are on the horizon?
Nitin Sharma, Antler India: In India, we are fortunate to be currently operating in the world’s fastest growing major economy, one that is digitising feverishly with a palpable sense of this being India’s “tech-ade”. Demographics, robust growth, geopolitics and maturing of the tech ecosystem have increased India’s attractiveness as a destination for capital, talent and innovation.
In this context, while Indian founders would of course be subject to the same pressures from the global downturn or correction in tech (need for capital efficient growth, longer fundraising timelines, lower valuation multiples), in totality, the opportunities are far larger than the challenges.
I believe we are past both the macro cycle for interest rate hikes, as well as the bottoming of the startup fundraising markets, at least in India. There is plenty of dry powder in venture capital that will get invested in 2024-25. We will not go back to the unhealthy bubbles of 2020-21, so fundraising timelines and valuation multiples will likely remain challenged, but there is no dearth of capital for strong founders building with good fundamentals.
For early-stage tech in particular, the enthusiasm for generational platform shifts (AI, DPI, etc.) will likely outweigh other concerns.
Our message to all the Day Zero founders in our portfolio and programs continues to be the same: Every sector in India creates opportunity for tech-led innovation, and the potential to build in India for the world has never been clearer. As long as the focus is on innovation, customer value and sustainable growth, there is absolutely no reason to worry. In fact, this is the best time in history to build a company in/from India.
In India, we have produced a $200 billion services industry (1990s onwards), and now a large software products industry ($50 billion in SaaS ARR by 2030), but we still haven’t produced a large platform company (like Google or Amazon). It finally feels like the seeds are being sown for such a $100 billion or a $1 trillion platform to emerge in the next 10 years. Perhaps in AI, digital public infra, climate or Web3. Three Other Observations:
Regulation: 2024 is an election year in India, so we may not see landmark legislation, but as we saw in 2023, the government will (often rightfully) play a far more active role in regulation especially around fintech (all forms of credit and P2P).
Domestic SaaS: The conventional view has been that Indian businesses will not pay for software, but this is changing significantly and 2024 might be a year when the domestic SaaS opportunity becomes clearer.
Sustainability: 52% of India’s population is made up of millennials or GenZs and India now has 116 million GenZ customers who are far more conscious of climate change and sustainability as they spend their disposable income. The pie for sustainability-focused ventures in India is growing faster than many realise.
Startup Spotlight: The Top Three Platform Shifts In India
Any 3-5 startups and sectors catching your attention in 2024? Share your thoughts on emerging trends and potential disruptors.
Nitin Sharma, Antler India: We can look through the lens of 3 platform shifts that will affect most sectors in India.
Firstly, Generative AI (no surprise), where we are excited not only about new copilots, middleware and developer tooling ventures built in India for the global market, but also areas like Indic (local language) LLMs and completely new ways of engaging Indian consumers in education or agritech, for example. Another angle is how India’s SaaS (projected to be $50bn in ARR by 2030) and IT services industries adapt to an AI-first world.
Secondly, Digital Public Infrastructure (DPI), which started with the creation of the world’s largest biometric identity (Aadhaar) and interoperable payments systems (UPI) is becoming India’s unique superpower of sorts. One area where Antler dove deep (and first in the market) in 2023 was Open Network Digital Commerce (ONDC), and related protocols for e-commerce, mobility, educational skills and the new energy economy. In 2024, this could go BIG, as we expect millions of new buyers and sellers to come online and transact via the ONDC network. Third, we expect infrastructure for Web3 to mature and for the space to make a comeback after the “cleaning up” of the last 24 months, and Indian talent will continue to play an important role in the next phase.
Finally, consumer tech and D2C brands in India evolved a lot in 2022-23, and many showed the path towards efficient acquisition, profitability and value creation. We’re excited for what comes next, especially in massively underserved or emerging spaces like female health, senior care or petcare in India.
AI's Trajectory: Finding New Ways Of Engaging Indian Consumers & Enterprises
What's your perspective on the future of AI? In which directions do you see it expanding? And, in your view, can any business remain unaffected by the impact of AI?
Nitin Sharma, Antler India: We are in the early days of a new "platform shift", just like it happened with PCs, mobile or cloud. Discriminative AI has been maturing for years, and now Generative AI is leading us to rethink how any consumer engagement or enterprise workflow should work. Just like every tech cycle, we will overestimate it in the short-term and see many spectacular failures and disappointments, and we will underestimate its impact in a 8-10 year timeframe.
At Antler India, we are excited not only about new copilots, middleware and developer tooling ventures built in India for the global market, but also areas like Indic (local language) LLMs and completely new ways of engaging Indian consumers in education or agritech, for example.
Another angle is how India’s SaaS (projected to be $50 billion in ARR by 2030) and IT services industries adapt to an AI-first world, and avoid major disruption.
Investment Strategy: From New-Age SaaS & Gen AI to Old-Age Senior Care
Could you share insights into your current fund size and the areas where you are strategically allocating capital?
Nitin Sharma, Antler India: We are investing in ~100 ventures out of the Rs 600 crore fund (~$75 million) as the first institutional cheque and then also reserving significant capital to fuel their growth in later stages. We have currently committed to 51 investments and actually increased our pace in 2023. We expect the same in 2024.
We invest primarily through a structured investing approach (the Antler India Residency) which helps new startups validate their ideas, complete their founding teams and figure out go-to-market as part of an intensive, cohort-based experience. In 2024, we hope to expand our pan-India footprint via physical presence in Delhi NCR as well.
Strategic focus areas include Generative AI, new-age SaaS, Digital public infrastructure (especially ONDC), climate solutions, Web3 infrastructure and underserved areas for consumer tech and brands, including female health, senior care and petcare. (Edited by : Anand Singha)
