Start-up ecosystem hits back at Goyal’s 'reality check'

Bengaluru: Union Minister Piyush Goyal's “reality check” on Indian startups focusing on food delivery and ‘fancy ice creams and cookies’, while China's startups make strides in deep tech and artificial intelligence has sparked a lot of outrage, as well as introspection.

Founders such as Zepto's Aadit Palicha and BharatPe's Ashneer Grover hotly defended Indian startups as job creators and contributors to economic growth.

“There are almost 1.5 lakh real people who are earning livelihoods on Zepto today - a company that did not exist 3.5 years ago,” Palicha said on X. He underlined Zepto’s significant tax contributions and foreign direct investment brought in.

Grover echoed on the platform, “China also had food delivery first and then evolved to deep tech. It’s great to aspire for what they’ve done - maybe time for politicians to aspire for 10% plus economic growth rate for 20 years flat before chiding today’s job creators.”

At the same time, investors at venture capital (VC) firms that DH spoke to, while admitting that the comments are far-reaching, have pointed out there is a kernel of truth in Goyal's remarks.

Goyal had said on Thursday that India is focused on food delivery apps, turning unemployed youth into cheap labour so the rich can get their meals without moving out of their homes. In comparison, China’s startups are working on electric mobility and battery technologies, building semiconductors and large language AI models.

“I know at least three or four billionaires whose children make one brand or the other, very fancy ice creams and cookies, and run a very successful business,” he said at the Startup Mahakumbh event in New Delhi.

“Do you think a guy who delivers in the smoke-filled environment of Delhi, if he had a better job opportunity, would be going around and delivering? No. And who is responsible for that? The startups are not responsible. It is our governments throughout history responsible for not providing the opportunity,” said Parag Dhol, General Partner at Athera Venture Partners.

He remarked that the governing ecosystem needs to improve, taking the example of the manufacturing sector’s reduced share in GDP. He highlighted the need for an ecosystem with high capex requirements, time and research and development (R&D) investment, areas in which India lags the US and China.

“There are very many small deep tech start-ups in chip design, IOT, robotics, EV charging, BMS in India, growing rapidly but where is the capital? Long term investors like endowments, insurance still do not invest despite their efforts,” said former Infosys CFO TV Mohandas Pai on X.

Anil Joshi, Founder and Managing Partner at Unicorn India Ventures, pointed to a dearth of access to domestic capital.

“We need more patient capital, where people are willing to invest in a fund in 10-12 years. Domestic investors repeatedly question when their capital will be returned, which puts pressure on investors, so we don't have that type of access,” he explained.