Indian VC Ecosystem Maturing Fast & Experiencing Exponential Growth

By: Surabhi Washishth, Founding Partner, Paradigm Shift Capital

Surabhi Washishth is India’s youngest female General Partner. Formerly the youngest HR Director at WeWork India, she established and expanded the People Practice team to 500+ since inception.

In a recent conversation with Women Entrepreneurs Review magazine, Surabhi discussed impactful trends in the Indian VC ecosystem, the influence of emerging technologies on venture investment decisions, and the importance of diversity and inclusion in decision-making and team composition.

What is your perception of the current state of the Indian Venture Capital (VC) industry? How has the industry evolved post-2023, which was a difficult year that saw the number of deals and deal size decrease drastically?

I am extremely optimistic about the current state of the industry. We're in the middle of a much-needed correction in the markets. What we saw in 2021-22 was an anomaly and deal volumes/sizes were both too high to sustain. We will see the pace pick up some more from the current state and have a healthy volume over the next few years which we're very excited about.

What are some of the most impactful trends that you see developing in the Indian VC landscape? Which trend are you betting on to affect a paradigm shift in the VC industry?

More than a trend, I am glad to see the growth and maturing of the ecosystem. This is the biggest aspect that will create a Paradigm Shift in the VC industry. In this next phase of growth, we will see the rise of Indian startups thinking about not just Indian markets, but scaling globally. VCs who have been there in the Founder's shoes themselves and younger fresher blood in the VC industry will fund bolder founders from India, and not have inhibitions that get set into the mindset of investors who have experience on their side, but also scars that cause them to overcorrect/learn lessons which may not be relevant anymore in this fast dynamic world. As the industry that fuels innovation, it’s high time we see innovation and changes in the VC industry! At Paradigm Shift Capital, we embody this change and are a team of 3 Operators and Entrepreneurs who came together to build India’s first truly global VC fund! We back Founders building products for the World.

In your opinion, how are emerging technologies impacting decision-making in the field of venture investment?

A lot of decision-making in the venture capital industry is an art, not a science, so while the decision-making process cannot be outsourced to technology, it certainly can be powered by technology to become more effective. There’s more data than ever before which can enable investors to be more data-driven, well-informed, and structured in their decision-making process. Due diligence today is much easier thanks to the prevalence of AI and data as well. Emerging technologies are also creating new fields and areas of investment and of course driving more innovation than ever before since mundane tasks are decreasing, and innovative, creative work can take priority!

What impact do you anticipate from the rise of alternative funding sources, such as crowdfunding and corporate venture capital?

It is good to have various sources of funding for different types of Founders/startups. Not every startup is a fit for the VC model of blitzscaling.

About VC funds, how crucial is diversity and inclusion both in the decision-making process and the composition of the team?

Diversity and Inclusion a key facets of the future of work across many if not all, industries! Speaking about VC funds particularly, diversity and inclusion are becoming an increasingly important area of improvement given the current demographic of the industry. Having a diverse team directly helps in removing unconscious bias, facilitates better decision-making, and most importantly, mitigates groupthink. It also helps attract and gain access to differentiated deal flow, and sets a role model for other VC funds as well as startups! A diverse team in a VC fund is also able to reflect a fresh and progressive way of working as opposed to having archaic structures in place. Some studies also talk about how a diverse VC fund has higher chances of outperformance and better returns to LPs!

How does the venture capital industry navigate the balance between rapid growth and sustainable business practices while emphasizing the role of sustainability and impact investing?

Many new VC firms have a specific focus on sustainability and impact investing. Just like the market is growing for other businesses, it is rapidly growing for impact and sustainability ideas too! There is also increasing importance of building resilient, responsible businesses that can weather economic downturns and contribute positively to society over the long term - the market correction we spoke about earlier will help ensure more businesses focus on balancing rapid growth and building sustainable business practices.