Investment Opportunity In Healthcare And Pharma Start-ups Sector

Investors betting on start-ups through investment at an early stage would always be in dilemma to understand which of the start-ups are likely to be successful and worth investment.

India has entered golden phase where Millennials want to be job-providers rather than being job-seekers. US, Israel and China have created very supportive and successful ecosystem for start-ups by first generation entrepreneurs and now over the last one decade, India too has joined this club. Risk of failure is not a taboo in India, like it still exists in certain societies like in Japan.

'This idea will never work' is normally the initial response to a start-up entrepreneur from friends, relatives, well-wishers and even potential investors; True entrepreneur does not get discouraged and gives up, rather he or she listens to everyone, fine-tunes the model, if and as required, and pursues the idea like a dedicated mother does for her new-born child with full bonding, love, ownership, commitment and determination.

Entrepreneurial journey is rarely smooth in the formative years but motherly commitment to 'creating history' out of business idea converts pain of initial years into pleasure that increases exponentially when the properly executed idea eventually succeeds.

Investors betting on start-ups through investment at early stage would always be in dilemma to understand which of the start-ups are likely to be successful and worth investment. Because it is a known fact that for every successful idea there are many which do not succeed despite best efforts and intentions. Failures will continue to happen even in future.

But then, 'No risk no reward' or 'Low risk low reward'.

Is the investment in start-ups like buying a lottery ticket or is there some scientific-art for identifying high probability and high intensity successful start-ups?

Is there a way to optimize Risk-Reward ratio?

Low risk and high reward opportunity is what everyone looks for before investing and despite that even best of the investors experience bad investment.

There has to be some criteria for investor to follow for not eliminating risk totally but enhancing probability and intensity of success.

Business model being pursued by start-up must be innovative, futuristic, scalable and must not be of me-too kind; entrepreneur must have big picture vision, ethical, committed, hungry and passionate to make it work; big successes are not one-man shows so ability and openness to create good committed team around is must. Finally, cost of entry for the investor should be fair in risk-reward equation.

Disruptive ideas, capturing newer opportunities emerging due to changing global scene, deploying new age technologies, predicting and addressing emerging customer behavior needs, solving current problems faced by society or creating new experiences for people would throw open new business models that never existed. Such models require visionary foresight, large resources and devotional persistence to succeed. And, when they succeed, they succeed big time and create enormous wealth for the investors. For great ideas, there is never shortage of resources including funds as good ideas can multiply investments by 100 times or even higher in less than 10 years.

Our society is progressing economically, more health conscious, higher comfort oriented, highly data and digitalized world driven. COVID has accelerated the journey may be by five years and thrown open opportunities which today are either on drawing board or are in execution phase by start-ups; so many unicorns are in the pipeline, who are pursuing such opportunities.

Many of recent and upcoming Unicorns are in their twenties or thirties and some of them are first generation entrepreneurs from families with extremely modest background. They are not just creating wealth for themselves, they are contributing to national exchequer and are providing employment. India needs more of them.

In first four months of 2021 itself in India, more than 10 start-ups have got Unicorn status; while in 2020, twelve unicorns were born despite we are in Pandemic years. It is estimated by 2023, India will have more than 100 Unicorns. We are at around 3 trillion US$ GDP with plans to go to 10 trillion; one can imagine the kind of role start-ups will play in accelerating national GDP growth process.

Whilst, it is very fertile area to invest in start-ups, one should not expect each investment to be successful; there will be some start-ups which will fail, or will take longer to succeed and with right assessment of the business model, entrepreneur/team and favorable entry valuations with patience has potential to create enormous wealth far higher than what one can make by investing in regular stock market. Recognizing this, lot of investable funds are increasingly available from High net-worth individuals, Angel investors and Private equity funds.

Recognizing its responsibility, Government is also making regulations/taxation friendly to start-up ecosystem and that facilitates funds flow from rest of the world to India. A recent survey has estimated 30 Billion US$ investment by 2025, just in Indian tech start-ups.

'Dreaming small is a crime' and good new-gen start-up entrepreneurs know that they are not criminals, so they dream Big.

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