‘Scarcity is one of the strongest drivers of innovation,' says 3one4 Capital's Siddharth Pai at BT Tech Today Congress

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‘Scarcity is one of the strongest drivers of innovation,' says 3one4 Capital's Siddharth Pai at BT Tech Today Congress

In this session, the panelists discussed about the challenges and strategies for weathering tech winter storm and opportunities for entrepreneurship and innovation.

The Business Today Tech Today Congress hosted a session titled ‘Catching a Cold: Tech Winter. Weathering the Storm' today

Talking about the relationship between innovation and profitability during the ongoing tech winter, Siddharth Pai, Founder, 3one4 Capital said that scarcity is one of the strongest drivers of innovation. Speaking at the Business Today Tech Today Congress, Pai said, “When you have constraints artificially placed upon you, you turn quite innovative as how you can maximise the limited resources that you have. The start-ups have actually proven that to a large amount of extend. There will be immense amount of innovation that will come out of India and will be transmitted to the rest of the world. Innovation will always thrive in scarcity as the moment you have unlimited resources, you turn lazy and complacent.”

The Business Today Tech Today Congress hosted a session titled ‘Catching a Cold: Tech Winter. Weathering the Storm' today with panelists including Pai, Mahankali Srinivas Rao, CEO T-Hub and Anas Rahman Junaid, Founder & MD, Hurun India. In this session, the panelists discussed about the challenges and strategies for weathering tech winter storm and opportunities for entrepreneurship, innovation and emerging stronger in the face of adversity.

Talking about innovation in the start-up ecosystem, Rao said, “I think there are large untapped opportunities in several sectors like deeptech, spacetech, healthcare, fintech and insurance. I think there are opportunities for good viable businesses to be built.”

Talking about the ongoing tech winter and current implications, Pai told Sourav Majumdar, Editor, Business Today, “Valuation, as I see, is a function of fundamentals, potential and market sentiment. Market sentiment is macro factor that has adversely affected the startup ecosystem to a large extent. In 2020, federal governments across world ended up printing a large amount of money and interest rate came down to zero. Hence, larger institution investors started chasing the alpha. In order to generate that sort of alpha fixed income giving zero yields and the stock market was severely dislocated because the sentiments was bad. Private companies started emerging as the hottest asset, followed by crypto.”

He added, “Now that fixed income has increased in terms of yield, we are seeing massive pullback of capital from these particular areas. Hence, the market sentiment factor has affected the startup ecosystem strongly.”

However, Pai believes that every winter is followed by spring and he is fairly certain that the spring is in the offing. He states, “The startups that come out of this will be far more resilient than actually what we have seen in the past.”

Will this tech winter be followed by spring? To this, Rao opined, “I think push now is to get your unit economics in place and figure out if there is a path to profitability. We are starting to see some sanity return. I believe good businesses will continue to get funded.”

Discussing about role of governance in the startup ecosystem, Anas Rahman Junaid said , “There was a fear of missing out earlier when it came to signing a deal. This is not the case now. Now we have the flexibility to take time to do the due diligence or even backout if it doesn’t work out. For both investors and startups, one good thing that has happened that the DD is more extensive and there is much better awareness in terms of how do you price innovation.”