Narayana Murthy exhorts pension funds, banks to invest in Indian startups

N R Narayana Murthy, the co-founder of software giant Infosys who chairs a Sebi panel on alternate investment policy advisory, on Tuesday pitched for pension funds and banks to invest money in Indian startups.

Speaking at the annual Tiecon event, Murthy said a bulk of the money which gets invested as risk capital in the upcoming companies is from abroad and there is a need for domestic money to play an important role in this.

At the same event, Murthy's former colleague at Infosys T V Mohandas Pai, who is now associated with Ispirit, an advocacy group for startups, said only a tenth of the USD 60 billion invested into Indian startups since 2014 has come from domestic investors.

Pai warned that "we risk the prospect of turning into a digital colony" by 2025, seeking to draw parallels with imperialism.

He said there will be 1 lakh startups in India with a collective valuation of over USD 500 billion by 2025. There will be at least 100 unicorns among them and over 65 of them will be majorly owned by foreign investors.

"This is one of the most important issues that we have been discussing (at the Sebi panel). That is, what are the policy changes that are required to make sure that there is more of Indian and domestic money coming into the startup sector because today it is by and large from abroad," Murthy said.

"To do that, pension funds must be allowed, corporations must be allowed, banks must be allowed," he added.

Pai sounded more disappointed with Indian billionaires who are willing to invest in real estate and even bank deposits, but have a tendency to overlook the startup sector.

In an apparent reference to the spate of frauds, Pai said the billionaires also tend to pass the risk on money invested to banks.

He said the biggest letdown has been from financiers in Mumbai, and asked startup entrepreneurs to educate such professionals on the need of the hour.

Pai said why Indian pension funds or insurance companies cannot invest, questioning how companies in the same sector from abroad are coming in and taking interests here.

Meanwhile, Murthy also clarified on a recent controversy over cutting short his speech at an event where he shared stage with American e-commerce giant Amazon's chief executive Jeff Bezos.

He said Bezos had come on time to the venue, but the "indisciplined" crowd at the venue in New Delhi mobbed the entry gates which resulted in the delayed start for the event.

Bezos was very understanding and smiled at the act of cutting short the speech, Murthy said, adding that this is so because the visiting honcho is himself a disciplinarian.