Budget 2022-23: Venture Capital, Investors & Angel Investor Reactions

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Investor, Venture Capital & Angel Investors reactions on Budget 2022-23: As Finance Minister Nirmala Sitharaman on Tuesday made an announcement outlining the economic growth for India over the next 25 years. 

Here’s what the Investor, Venture Capital & Angel Investors are saying about the Union Budget 2022:

PVSLN Murty, Chairman & Managing Director NEDFi and Chairman, NEDFi Ventures:

The Indian startup industry has got recognition from our Hon’ble Prime Minister recently and announcing the establishment of an Expert Committee for VC/PE funding reinforces that the government has a vision and agenda to give the best facilities for boosting the growth of the startup industry. In addition to that, I am happy to see that govt. see the potential of the entire North East region and announce the Prime Minister’s Development Initiative for North East (PM-DevINE). 

For growth of any region, growth startups and corporates play a big role with their disruptive business ideas. We have been mentoring startups in the entire eight Northeastern states – Assam, Meghalaya, Manipur, Mizoram, Nagaland, Tripura, Arunachal Pradesh and Sikkim. Coming more and more startups from the region is likely to create more job opportunities and help improve the employment sector. We have mentored 26 startups from the NorthEast region till now through NEVF who are doing innovative work in D2C, Tech, Automobile, Agri-tech, Tourism, Infrastructure etc. We can expect a healthier credit line for budding entrepreneurs, and better penetration in North East regions reaching innovative businesses.

Vikas Singhania, CEO, TradeSmart:

Investors were relieved that the Finance Minister Nirmala Sitharaman has not announced any increase in taxes, especially on long-term capital gains tax on equity investments, in her Budget speech. The FM has capped the LTCG on equity at 15 percent, which should be beneficial for shareholders of unlisted companies. No new taxes have been imposed on corporate India too.

Capping LTCG on unlisted companies is good for HNIs and also for venture capitalists.”

Bhaskar Majumdar, Managing Partner, Unicorn India Ventures:

This budget shows that technology enablement for transparency and roll-out at scale remains at the heart of the Government. Every aspect of the Budget speech has this aspect in mind. At the macro level, this tech enablement as an integral part of governance will be a boost for all new age tech companies and would further enhance the environment of new age digital and tech companies. Drones have now become an Integral part of the implementation of schemes be it in agritech, in defence and other areas. Creation of the Nabard Agritech Fund for “Kisan Drones “ shows the Government’s recognition of a new view on how to upgrade farming. Recognition of digital assets and bringing them under the tax structure is an excellent initiative as this would bring these into the mainstream. 

The tax on crypto/ NFTs will now make it legalised and users won’t be able to circumvent tax and other financial regularities. In addition to this, Defence, Artificial Intelligence (AI), geospatial systems, drones, space economy, genomics & pharmaceuticals and clean mobility have immense potential to achieve sustainable development and offer employment to millions. The government will enable development in these sectors through the startup community.This is a long term directional growth budget and can be called the “digital future growth budget”

Neha Indoria, Co-founder & CEO, Boeing:

The domestic furniture market has grown at a CAGR of 10-11% in the last 5 years. Yet, 80% of this market remains unorganised. With the focus on increasing consumption and capital expenditure that this budget has brought in, furniture manufacturers who are focused on ‘Make in India’ can expect to increase their organised market base, bring economies of scale and in turn make themselves cost competitive for the international export market as well.

Anup Jain, Managing Partner, Orios Venture Partners: 

The Union budget has been very positive in recognising the role being played by tech startups in India’s present and future. The biggest step towards removing an anomaly between taxation on capital gains from unlisted and listed shares has been taken with LTCG surcharge being capped at 15%. An expert committee being set up to examine ways to attract investments is the right step as India cannot grow to a 5 Trillion economy without more capital. 

The government has also pushed the digital agenda further during its tenure with multiple initiatives on payments and even e-passport issuance. Policy for driving clean energy with battery swapping interoperability is a big boost to the EV sector. Rolling out a national health system ala Medicare/NHS in developed markets is a firm foot forward to aggregate data to improve productivity in this sector. All in all, it is a positive budget aimed at a single objective- driving growth, driving digitisation and driving investments to enable both.

Padmaja Ruparel, Co-founder of Indian Angel Network & Founding Partner, IAN Fund:

IAN is glad that our demand for an expert committee to look at regulatory frameworks for the VC industry is addressed in the Union Budget 2022. This budget opens up huge opportunities for start-ups across Defence, Agriculture, Drone, Fintech and mobility sectors. 

The focus on digitization across sectors will lead the way towards innovation for start-ups. Introduction of digital rupee using blockchain and other technology will further boost opportunities for start-ups in India. We appreciate the FM’s empathy, in light of covid, by extending the period by a year for startups to avail tax incentives.

Mohamad Faraz, Founding Partner, Upsparks:

The startup ecosystem in India is the third largest in the global market and the Budget 2022 has brought in some positive moves to help drive growth in the start-up sector in India. Extension of capital gains exemption for investments in start-ups by a year comes as a relief and will boost investor sentiment towards start-ups in India. The inclusion of 30% tax would help to regulate the cryptocurrency sector in India however it could also result in a decline in retail investor interest and further clarity on the same could help boost investor confidence. Bringing digital assets into the tax regime is a welcome move from the government and it is important to see how the implementation will be done. 

The government should also instruct other stakeholders such as financial institutions to support cryptocurrency players to operate with ease. Currently, several roadblocks from banks make it difficult for cryptocurrency players to function smoothly. The move of bringing digital records, one portal for logistics movement across the country will also boost health-tech, logistics start-up sectors. Enabling the digital interoperability in banking and payments will further boost fintech innovation and opportunities and boost penetration beyond Tier 1 cities to small towns and cities. Interoperability through post-office and scheduled banking will enable fintech adoption in smaller towns.

Aneesh Rayancha, Co-founder, AppyHigh:

The government’s effort towards setting up an expert panel to focus on PE/VC investments and remove friction in private investment will definitely draw more investors to India. There are many policy areas where specific attention can supercharge the fund raise activity in the startup ecosystem, which is already at an all-time high. According to EY nearly $77 B was raised through VCs & PEs in 2021, which is 66% higher than 2020. 

Appropriate measures addressing Indian portfolio startups listing abroad, tax treatment of ESOPs, tax treatment of carry for VCs, tax parity with domestic investors etc. would go a long way in accelerating VC/PE fund flow into India’s already fast-growing startup ecosystem. Like any other startup looking at raising capital in the future to fulfil our growth ambitions, we would be keenly watching how this development unfolds.

Gaurav VK Singhvi, Co-Founder, We Founder Circle:

Indian startup industry has earned itself acknowledgement globally with funding on an all time high, and unicorns shining on the stage. Now that the Budget has announced the establishment of an Expert committee for VC/PE funding, it is clear that the government has adopted a progressive inclination towards further boosting the growth of the startup industry. 

The expert panel will analyse the industry and guide the government to accordingly scale up the funding, form favourable policies, and nurture the segment at national level. We can expect a healthier credit line for budding entrepreneurs, and a better penetration in tier 2 and tier 3 cities reaching innovative businesses.

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