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Young Turks: Will UHNIs continue to invest in startups?

Updated : June 11, 2020 10:13 PM IST

Over the last few years, India’s startup ecosystem has seen the rise of a new class of investors, the family office. These ultra-high net worth families, flush with capital, were used to investing in equities and debt and real estate, but over the last decade, India’s startup boom meant that these investors were ready for a piece of this new asset class.

From Ratan Tata to Infosys founders NR Narayana Murthy and Kris Gopalakrishnan, from Azim Premji to the GVK Reddy and TVS Group, from entrepreneur-investors like Sachin and Binny Bansal, Vijay Shekhar Sharma and celebrities like Deepika Padukone, Virat Kohli and MS Dhoni, this group of well stocked investors is now using their wealth to further the cause of the India startup story.

According to an Edelweiss and Campden Family Connect Report, in 2018, India was home to 1.5 lakh high net worth families with a cumulative net worth of USD 2 trillion. This number is expected to rise to 4 lakh with a net worth of USD 5 trillion by 2025.

However, the family office space is still quite nascent in India. As of 2018, there were only 45 formal family office structures in India compared to an estimated 5,300 single family offices worldwide. Having said that, the lack of transparency and information, asymmetry in the private market does not make investing easy.

While traditionally this group prefers to take the private equity and LP route to invest, recently we have had a slew of UHNIs investing directly into startups. But the COVID-19 crisis has changed the paradigm and it will be no different for India’s high net worth investors.

CNBC-TV18’s Shereen Bhan spoke to Gopal Srinivasan, Chairman of TVS Capital Funds, Rahul Chandra of Arkam Ventures, KC Ganesh, President of Prayog Advisors, Arihant Patni, MD of Patni Family Office and Nimesh Kampani, President of LetsVenture Plus and discussed about the way forward for family offices and what they make of the startup story in India.
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