India's recent move to repeal the "angel tax" is a good first step, but the government needs to do a lot more to simplify investment policies and procedures for early-stage start-ups, and the very fact that companies need a level of certification to avail of start-up focused benefits will likely lead to additional red tape in the system, Brij Bhasin, principal, investment lead, Rebright Partners, a Singapore- and Japan-based venture capital firm, said in an interview.
Rebright has a dedicated fund for India that has made seven investments over the past 18 months. Edited excerpts:
Big picture: India has witnessed massive deal activity over the past 18 months. Yet, are there some sectors/industries that investors are still undervaluing?
It's true that certain sectors such as hyper-local commerce, food delivery and consumer Internet in general saw a lot of investment in a very short period. But there are new sectors like IoT (Internet of Things), agri-tech that are opening up with massive potential... at the same time, investor interest is returning to enterprise tech and software as a service for SMEs (small and medium enterprises). Indian start-ups are now on the path to solving uniquely local problems on the back of what iSpirit calls the "India Stack" of Aadhaar-based KYC (know your customer), unified payment interface and mobile banking. Hence, we are starting to see fintech emerging as an important sector attracting the next wave of investments.
When one looks at the venture capital (VC) scene in India, the talk is largely about valuation markdowns, down rounds, business model pivots, shutdowns and investment write-offs. What are the positives, if any, from these developments?