India lacks enough angel investors to fund start-ups, says Nasscom

Unlike the west, India does not have enough number of angel investors who can fuel the growth of the country's thriving start-up ecosystem, industry body Nasscom has said.

"For a successful start-up ecosystem there is need for enough angel investors who can support the budding entrepreneurs from early stage. But this is not happening in India and there is a serious lack of it," Nasscom Vice-President Rajat Tandon told PTI.

"High net-worth individuals and corporate executives among others should come forward and participate in this growth story," he said.

A recent report by Nasscom had said that India ranks third among global startup ecosystems with more than 4,200 new-age companies.

Tandon said, "The case is very different in countries like the US. People are just waiting to invest in some good companies. We should also have something like that."

"Mainly, investors (in India) are afraid because there is a high risk of failure in these investments and also there is lack of policy for such investments," he added.

"Why will investors put money in such companies? They need tax benefit and lot of other things for putting in their money. We have already written about this things to the government I am sure that the government is taking right steps in the direction and we can expect something by this year-end," he said.

In his Independence Day speech, Prime Minister Narendra Modi had announced a new campaign 'Startup India; Stand up India' to promote bank financing for startups and offer incentives to boost entrepreneurship and job creation in the country.

"At Nasscom, we are not only encouraging investors but also asking people to mentor start-ups. Like someone has a business of designing, they can help some startups to develop UI and guide them in the process. In return they take some equity," he said.

"And there are people like Ratan Tata and Azim Premji, who are making a slew of investments and helping these young entrepreneurs. They are the inspiration," he said.

Ratan Tata has invested in a number of companies including Ola, Snapdeal, Paytm, Urban Ladder and Bluestone.

While, Wipro boss Azim Premji has funded companies like Myntra and Amagi, among others, through his investment arm Premji Invest.

National Association of Software & Service Companies (NASSCOM)