The promised Rs 10,000 crore Fund of Funds might sound impressive, but venture capital insider Shubham Jhuria warns it's insufficient for India's rapidly expanding startup landscape. As HealthTech and DeepTech sectors compete for limited resources, Jhuria reveals what's really needed to attract global investment and prevent more startup casualties in an ecosystem where 'only the fittest will survive.

1. Do you think the FFS corpus of Rs 10,000 crore will suffice to cease the funding woes of health tech startups?

The additional ₹10,000 crore allocated to the Fund of Funds for Startups (FFS), as announced in the 2025 Budget, is undoubtedly a boost for the Indian startup ecosystem. However, I don’t believe it will be sufficient. A similar amount was allocated nearly a decade ago when the Indian startup landscape was a fraction of what it is today. While HealthTech startups will benefit from this corpus, they are just one of many sectors vying for these funds. The allocation will be distributed across industries, making it unlikely to single-handedly resolve funding challenges in any specific sector including HealthTech. That said, the Government’s plan to introduce a DeepTech Fund of Funds will provide additional support to HealthTech startups, particularly to sub-segments like medical devices, smart equipment, surgical robots, Biotech, etc.

While HealthTech startups will benefit from this corpus, they are just one of many sectors vying for these funds.

2. What suggestions do you have to channelise more PE /VC funds towards helping early stage and deep tech start ups flourish ? 

Beyond the ₹10,000 crore SIDBI FFS, the proposed DeepTech Fund of Funds is a positive step, as it will require VCs and PEs to deploy at least twice the allocated amount into DeepTech startups. This should help attract more capital into the space.

Additionally, Indian companies and the media must do a better job of amplifying positive global narratives about Indian innovation. This is crucial for rebuilding investor confidence, particularly in the wake of multiple high-profile startup failures.

On the investor front, Indian fund managers need to build conviction early and provide sustained support to DeepTech startups. Government-led initiatives such as easing IP registration, subsidizing incorporation and patenting costs, and providing state-run incubators with advanced testing facilities can further create a nurturing environment for these startups to scale.

3. How is this mandate going to impact the healthtech startup space that is already grappling with funding issues ?

The Government has significantly increased its healthcare budget compared to previous years, which creates a strong tailwind for the HealthTech sector. With a focus on improving healthcare infrastructure, making medicines more affordable, and enhancing accessibility, this is likely to drive greater investor interest in HealthTech. As funding and policy incentives align, the sector could see improved long-term viability, making it more attractive for both founders and investors.

4. Several start up's in the healthtech space in recent times have wound up operations. What are your thoughts on this ? 

Shutdown in the Indian startup ecosystem will continue to take place, this is a sign of a mature ecosystem where only the fittest will survive. The failure rate in HealthTech has not been disproportionately higher than in other sectors—it has been in line with broader market trends. These shutdowns have occurred due to various reasons including reduced VC Capital since the revenge investment phase of 2021, regulatory hurdles, and unsustainable business models with high burn rates and limited value addition. One notable HealthTech shutdown in 2024 was Kenko Health, which struggled due to a variety of operational, capital, and market factors. While such closures can be disheartening, they serve as learning opportunities for future startups to build more sustainable models.

These shutdowns have occurred due to various reasons including reduced VC Capital since the revenge investment phase of 2021, regulatory hurdles, and unsustainable business models with high burn rates and limited value addition.

5. In terms of efficacy and execution do you see this policy transforming the status quo of healthtech startups ? 

I don’t see this policy single-handedly transforming any industry, including HealthTech. However, the broader infusion of capital into the startup ecosystem is likely to create a ripple effect. With increased funding, improved infrastructure, and government-backed incentives, the sector will receive a much-needed push, but fundamental transformation will still depend on execution, innovation, and regulatory support.

6. Will this corpus of Rs 10, 000 crore help to scale up start up's? Will it be enough to support mid and late stage start ups?

While the ₹10,000 crore corpus provides a much-needed boost to the Indian VC and PE ecosystem, it is not enough, given the scale and pace at which Indian startups are growing. In a globally competitive innovation landscape, substantially larger pools of capital are required to support mid and late-stage startups effectively. This corpus will certainly provide momentum, but beyond private, additional institutional investments will be crucial for scaling startups beyond a certain stage. 

7. Why are investors shying away from investing in healthtech startups ? Do you foresee a shift in this trend?

HealthTech has seen fluctuations in funding trends, but recent data suggests a positive shift. Compared to 2023, funding in the sector has tripled from $233 million to $716 million in 2024, indicating renewed investor confidence.

Historically, challenges such as long R&D cycles, regulatory hurdles, and capital-intensive business models have made investors cautious. However, India's reputation for cost-effective innovation with global applicability makes it an attractive market. Given the government's increasing focus on healthcare, along with the growing demand for tech-driven medical solutions, I don't think Indian HealthTech startups have to worry about declining investor sentiment.

Compared to 2023, funding in the sector has tripled from $233 million to $716 million in 2024, indicating renewed investor confidence.