BS Manthan: Plenty funds for right startups, Rajesh Magow on funding winter

Business Standard Manthan 2024: Rajesh Magow, the CEO of MakeMyTrip, on Thursday said he disagreed with the perception that there was a fund crunch in the startup ecosystem

As the startup industry grapples with a prolonged period of funding challenges, Rajesh Magow, the CEO of travel company MakeMyTrip, provided reassurance on Thursday that there is ample capital available for the “right” type of startups.

Magow made these remarks during a fireside chat with Suveen Sinha, the chief content editor of Business Standard, at its annual summit - ‘Business Standard Manthan 2024’.

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Offering advice to aspiring entrepreneurs, Magow emphasised the importance of adopting a long-term perspective when starting a business. “Whoever is looking at starting the business, you can't think in terms of two, three, five, or 20 years…The three, five, or 10-year view is from the investors’ lens. They have fund compulsions, they look for exit periods, etc., but not for the founding or management team," he said.

No dearth of capital

“(Funding winter) It's a popular term today…but if you ask me, the amount of liquidity that we have in the system..there is no dearth of capital for the right people,” he added.

He characterised the current phase in the startup ecosystem as a necessary “correction,” citing an overdue adjustment and noted that it was a “good” thing to have happened. “…It was long overdue…because a lot of that funding money was coming easy to a lot of people and with fewer questions asked.”

“People were just going berserk as they saw India as a large opportunity, which it is but at the same time just going…may be…a little casual in doing their due diligence before writing massive cheques…I don't think that is great, it did not do good to the founders,” Magow said.

'Right questions being asked now'

He noted a positive shift in the landscape, with heightened scrutiny and discernment in investment decisions. “…the level of due diligence has gone up. Therefore, if you pass all of that test, and if you are a serious founder, thinking about the long term and have a long-term vision with a solid product, there is no way that you will not get the money,” the MakeMyTrip CEO said.

The funding received by the Indian startup ecosystem in 2023 was the lowest in the last five years at around $10 billion. The value stood at $25 billion in 2022, according to data intelligence platform Tracxn’s data.