AI is enabling startups across sectors in India: RTP Global's Nishit Garg

RTP Global's Nishit Garg discusses India's evolving startup ecosystem, AI's role as an enabler, and the firm's investment focus on climate, EV, SaaS, and fintech amid improving market conditions

With the funding environment in India’s startup ecosystem on the mend, global venture capital firm RTP Global is bullish on making investments in technology-led startups in India. According to Nishit Garg, the firm’s Asia partner, AI-led businesses in up-and-coming sectors like climate, electric vehicles (EV), and software-as-a-service (SaaS) are ripe for investments. In an interview with Aryaman Gupta, Garg – who has previously had stints at Flipkart and Tiger Global – talks about RTP’s investment thesis in India, the current funding environment, and lingering concerns. Edited excerpts:  

 

How has your investment strategy evolved over the years in India?

 

RTP is a global fund. We started 24 years ago, generally investing in technology-led businesses. The fund started exploring India as a geography in 2011, when a lot of consumer startups in e-commerce and fintech were emerging. That's when the fund also invested in companies like Freecharge, Snapdeal, Rebel Foods, and Practo. We were also seed investors in Cred and early investors in MPL.  

 

In 2020, we decided to establish a much deeper presence in India, after which I joined in 2022 and built the local team here. We are a ten-member team based in Bangalore. Our portfolio in India and Southeast Asia consists of about 37 companies, and 120 companies globally. We launched a $1 billion global fund in June last year, with roughly one-third allocated for India. Our investment pace is seven to eight deals a year in pre-series A and series A rounds. However, we occasionally invest in early series B rounds.  

 

What are some of your focus areas for investments? And how do you view artificial intelligence (AI) as an investment area?  

 

The India consumption and fintech story continues, and we will maintain our bets in these sectors. The three sectors that are upcoming and we are really focused on are climate, electric vehicles (EV), and software-as-a-service (SaaS).  

 

We don’t view AI as a separate sector. Whatever startups do today, across sectors, AI is the enablement layer. A lot of SaaS, fintech, and consumer enablement businesses are AI-led. So, we look for AI/ML as enablers in existing sectors.  

 

The macroeconomic environment is steadily improving. Will the pace of your investments increase?  

 

The macro environment impacts VCs more than startups from a liquidity point of view. Startups are playing out a 10-year journey. Even in 2022, which was probably the worst time for startup funding, we continued to make investments. We made fewer investments than our usual planned pace because we did not see many opportunities due to inflated valuations. But largely, the macro environment, even in 2022, was good for India.  

 

For us, the pace of investments was not significantly affected. We made five in 2023 and six in 2024 so far. It is still very early days for our global fund. Only 10 per cent has been deployed to date. Our investments this year have come from that fund, which we plan to continue deploying over the next three years.  

 

While the macro environment is improving, are there any lingering concerns among investors?  

 

A lot of corporate governance issues have arisen over the last two or three years. Investors have become much more cautious in this regard. Secondly, the hype around AI is becoming real. Yet, investors’ understanding of how AI can help and enable startups is improving daily. However, there is still room for further understanding of what AI can do for every business.  

 

We have seen a resurgence in startup funding this year. Is the funding winter at an end?  

 

A lot of companies today that were funded in the 2021 period are now at a stage where they have built sustainable business models with the right valuations. That is why funding has increased. It’s not that funding wasn’t available last year—there was simply a dearth of good companies. That is what has changed this year.  

 

Businesses are now a bit more mature and fit for later-stage funding, which wasn’t the case in previous years. The Indian IPO market is also becoming more liquid, which in turn is giving everyone a benchmark for valuing companies and expecting exits. Previously, there was a lot of ambiguity.  

 

What is your investment thesis while taking bets?  

 

Whatever the stage, we operate with a core philosophy of “backing the jockey”—investing in founders with the vision and resilience to build transformative businesses, irrespective of the market conditions. Apart from that, we definitely consider the potential of the market. Depending on the stage of the company, our criteria change slightly, but what does not change is our commitment to backing impressive founders.