Investors pour millions into startups despite regulatory hurdles
Investors believe that they can engage with the government to find an appropriate regulatory framework to operate in.Investors say that if you take a long-term view, these regulations will come and go, and they are careful to examine whether these are temporary and narrow in scope, or long term and nationwide
- While Indian startups across sectors are going through regulatory turmoil, including outright bans, their investors are committing large amounts to these startups and others in the sector, as they take a long-term view and look for outsized returns from risky bets.
- "Investors know that an emerging market like India will have a certain amount of risk, with an evolving regulatory landscape, and that is the risk-reward argument that leads them to take these bets," said Rohan Ghosh Roy, partner at Trilegal who advises on technology deals.
- Even startups such as Uber , currently filing for an IPO, have constantly battled with regulators across the globe in order to find a middle ground, and have generally looked to capture the market first in order to have an advantage when regulators come knocking.
- How will we impact long-term change unless you can back innovation while working around such challenges (like regulation)?" he added.
- When we invest, we examine carefully whether a regulatory ruling or development is a temporary blip or something potentially long lasting.