There is no shortage of capital, but the funding game has changed, says Sanjay Nayar of Sorin Investments
In a conversation with YourStory, Sanjay Nayar, Founder, Sorin Investments, and President of ASSOCHAM, discusses the evolving founder mindset and emphasises the need for companies to strengthen their fundamentals before setting their sights on public markets.
The Indian startup ecosystem has evolved significantly over the years, changing the way the country looks at entrepreneurship. At the helm of this evolution are founders who are spearheading this change.
These founders, located across various cities and towns in India, have the potential to understand local challenges and leverage technology to solve these issues. Investors, on the other hand, are on the lookout for these founders, now that India has put the funding winter behind.
India is also at the intersection where semi-retired business leaders are dedicating their time to mentor and nurture emerging entrepreneurs, bringing in wisdom and helping them build new companies, according to Sanjay Nayar of Sorin Investments. Nayar is the President of Associated Chambers of Commerce and Industry of India, an industry apex body.
He is also on the organising committee of Startup Mahakumbh, which is bringing together more than 3,000 startups and over 1,000 investors for its second edition, scheduled to take place between April 3-5, at Bharat Mandapam, New Delhi
Nayar spoke to YourStory about how the Indian government is fostering innovation and how the changing startup landscape signals a new age of founders and companies.
Edited excerpts from the interview:
YourStory (YS): You are part of the organising committee at Startup Mahakumbh. What do you think are some of the factors that are working for India when it comes to fostering entrepreneurship?
Sanjay Nayar (SN): I think India’s entrepreneurial spirit is deeply rooted in its diverse culture and economy. Our vast population, tiered cities, and varied needs create a natural demand for innovative solutions. Over the past decade, government initiatives have also significantly accelerated entrepreneurship, focusing on ease of business, tax benefits, and digitisation across sectors.
Today, we have a strong ecosystem that connects founders, investors, and mentors, fostering both success and resilience. The rise of venture funds and the “fund of funds” initiative has further enabled startups to secure capital.
Additionally, there’s a cultural shift—many MBA students are choosing entrepreneurship over traditional jobs, and experienced business leaders are actively mentoring the next generation. People like me, who are semi-retired business builders but not entrepreneurs, are able to give a lot of our time to this generation to help guide them in their business pursuits.
With increasing access to capital, a supportive ecosystem, and a surge in entrepreneurial energy, India’s startup landscape is poised for sustained growth.
YS: Do you think early-stage funding will start picking up this year as opposed to last year when growth and late-stage deals were in the spotlight?
SN: From what I’m seeing in my fund, there’s no shortage of capital, but the funding game has changed. Founders have stopped taking money for granted, and they’re casting wider nets and taking longer to close rounds.
The days of easy fundraising, where investors lined up with checks, are over. Capital is available, but firms like Sequoia and Peak XV are now more selective, focusing on specific verticals. Large early-stage fundraises have slowed, and many family offices—after burning their fingers in seed and pre-IPO deals—are pulling back or opting for direct investments over funds.
In my understanding, today, entrepreneurs just have to work harder. The ice hasn’t melted, but it’s definitely thinner.
YS: Do you think the recent trend of family offices directly investing in startups compared to coming onboard as limited partners (LPs) have rolled back?
SN: Many family offices have ventured into startup investing, writing large checks without a clear strategy. While some established industries and players ran it systematically, others, such as new-money founders, backed dozens of startups only to realise that managing over 100 investments is far more challenging.
The reality is now hitting. They’re seeing lockups, illiquidity, and market crashes. Some family offices are stepping in to actively run and manage struggling startups, while others are shifting towards more controlled deals instead of making passive bets.
For fund managers, the pressure is on—just multiples won’t cut it anymore. Investors want real exits. The market is maturing, but it needs deeper, more disciplined VC participation.
YS: Have you noticed a shift in how CEOs and companies approach growth—moving away from aggressive fundraising and rapid scaling toward a more sustainable, profitability-focused strategy?
SN: From what I have observed after I set up Sorin Investments is that founders today aren’t just chasing valuations—they’re far more strategic about who they take money from. They actually listen, focus on sustainable and scalable growth, and care about governance.
So, instead of wild, high-burn ideas, they’re asking the right questions: Can you help us with strategic M&A? Can you support our expansion into Europe? They’re making smarter choices, and I think investors are also doing the same.
There is no hurry to sign term sheets and there is no flurry of calls back and forth to seal the deal quickly before another investor swoops in. Startups and founders are being extremely cognizant of growth and scalability and what the venture firm and its LPs bring to the table.
YS: What are your thoughts on the recent IPO activity and the markets?
SN: I’m pretty cautious about the IPO market right now.
For one, there is a lot of uncertainty on how these companies are priced today. FIIs (foreign institutional investors) aren’t keen on India, partly because of underlying growth concerns, but mostly because they’re getting 4.5% on long bonds in the US—why take the risk here when they need to clear 10% just to break even?
Right now, IPOs are being driven by fast local money chasing quick exits. SEBI and RBI are already watching because we’re seeing crazy valuations, insane volumes, and then—boom—it all vanishes. Something seems to be off.
Unless a company has a rock-solid business model, this isn’t the time to list. Some delay IPOs to optimise, while others just need to cash out their VCs.
David Solomon said it best—why IPO unless you’re a $20B company? Otherwise, you’re stuck in a cycle of quarterly targets, losing creative energy, and answering investors instead of building.
Rushing to list without proving long-term viability, in my opinion, is a mistake. Quick commerce, for example—does anyone really need toothpaste in 10 minutes for ₹85? If it works at a 6% margin, sure, go public. But there’s no need to jump the gun.
YS: Indian startups have long relied on foreign capital, but domestic investment hasn’t kept pace. Do you see this as a policy gap, or are there other factors limiting the flow of local capital into startups?
SN: Foreign investments are down on the startup side and from what we are observing, Indian families are the ones bridging this gap. Sorin, for instance, is about 85% Indian money. So, Indian family offices are stepping up, but they’re still a small, concentrated pool. The top 10 control most of the liquidity, while others are largely marked to market. Many jumped in, saw their portfolios marked up, but when it came time to exit, they realized nothing was truly liquid.
The challenge, however, is that they are still learning about allocation and liquidity and how to navigate these complexities. Unlike foreign investors, who trust experienced fund managers and understand long-term bets, Indian family offices are still figuring it out—learning the hard way.
At the end of the day, there’s no shortcut. Per capita GDP needs to rise, the economy has to deepen. The infrastructure—digitisation, financial systems, UPI—is world-class, but growth takes time.
YS: There is increasing interest from Tier II and III cities in driving manufacturing momentum in the startup landscape. How do you think the government and the investor landscape is addressing the needs of this sector?
SN: Absolutely, that is happening. And these are real businesses that are getting funded. Take manufacturing, for instance, I’ve seen a stellar panel manufacturer in Guwahati supplying to global studios. I got to know them through my daughter, who runs Nykaa Fashion.
You’d never expect it, but in Assam, young entrepreneurs are running fast fashion supply chains with cutting-edge demand forecasting and automation. And it’s not just fashion—there’s a wave of agile manufacturing, with founders studying Taiwan and Korea to bring those models here.
Manufacturing is critical because it creates real jobs and has sustainable margins. If someone in Guwahati can manufacture for ₹400 and sell for ₹600, that’s a solid business. No marketing overhead, just direct contracts with brands.
But here’s the challenge—starting from scratch in a smaller city is still tough. Ease of doing business has improved, but we’re not there yet. I’ve worked on ASSOCHAM (Associated Chambers of Commerce and Industry of India) studies for the Ministry of Commerce and PMO (Prime Minister’s Office), and the biggest concern is FDI (foreign direct investment) just isn’t flowing in.
Invest India, single-window clearances—they help. But if you ask a new manufacturer if setting up is actually easy? Not quite. We've got a ton of compliance red tape, but there’s still a long way to go. But we are definitely improving, one step at a time.
Edited by Megha Reddy
