ET Startup Awards 2025: There is a need to expand startups’ capital pool: IDFC First Bank CEO
Speaking at the ET Startup Awards, Vaidyanathan expressed concern over the low funding rate for new ventures and said even the most innovative ideas fail without adequate financial backing.
“In a recent meeting with a venture capital firm, I was told that out of approximately 1,000 startups that pitch to a VC, only about 40-50 receive financing. This conversion rate is disturbing, and hundreds of viable, good ideas are likely going unfunded,” he said.
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India, which has a thriving startup ecosystem, needs to expand its capital base, Vaidyanathan said in his closing remarks at the event. There is huge potential for more disruption, especially from campuses and tier-2 and -3 cities.
He suggested that entities like colleges, which are currently unable to invest in venture capital funds due to their Section 8 (not-for-profit) status, be permitted to do so to expand the pool of capital. Vaidyanathan acknowledged the government’s work in improving India’s global image over the last decade. IDFC First Bank is working on developing a technology stack to cater to India’s startups, he said.
