New Delhi followup: G20 discussing proposal for $1 trillion-a-year startup fund

The proposal is set to be taken up under the upcoming Brazilian presidency of the G20, said Vaishnav, who is mission director at Niti Ayog’s Atal Innovative Mission.

The proposal, made by the Startup 20 engagement group in Goa in June, called for G20 nations to make available $1 trillion annually for startups from 2030.

At present, startups across G20 nations, comprising 98% of global startups, see annual investments of $300-400 billion.

Startup 20 is a platform for entrepreneurs and innovation leaders from G20 countries to collaborate and formulate policy recommendations to support the development of startup ecosystems.

A consensus was reached by Startup 20 members to put the proposal on the 2023 Startup 20 communique. However, it was not included in the final New Delhi declaration by world leaders in September.

“The details of the proposal were not included because each (member country) required internal negotiations to make it happen," Vaishnav said in an interview.

“We are still discussing ways to create a $1 trillion fund and how to formulate it. The platform for this will be ready in the next three-to-four months. However, it will require efforts to make sure all the heterogeneity is addressed," he added.

Saudi Arabia was the first country to endorse the proposal.

“Creation of a global network will also require a focussed effort. However, what is on paper is being turned into action," he added.

India, the world’s fifth largest economy, is likely to overtake Japan to become the third-largest with a GDP of $7.3 trillion by 2030, according to rating agency S&P.

Directing about 1% of the GDP toward startups will not only catalyze the growth of the ecosystem but also lead to a growth in private investments that too will fuel growth.

A large chunk of the funding is expected to be in the form of private capital, Vaishnav said. The Startup 20 working group, introduced by India under its G20 presidency, will be continued by future presidencies.

“Towards Brazil, we have formed a working group to transfer all the know-how so that Startup 20 succeeds under Brazil’s presidency. It is important for Brazil and then South Africa to make a success of it, so that these groups are on a solid footing," Vaishnav said.

Vaishnav said the ongoing high interest rate regime in most economies, including advanced economies which fund startups, will impact the weaker startups. That meant even startups with strong fundamentals and value proposition may face funding difficulties.

“To that extent, there will be a corrective impact, because the exuberance of investors has toned down. It could also have an impact on the scale-up case, when a startup is looking to grow at a larger scale," Vaishnav said.

“However, this is not a scenario (that will last) forever," he added.

Vaishnav, who’s the chair of the Startup 20 engagement group under New Delhi’s G20 presidency, will pass on the chairmanship of the group to his Brazilian counterparts on 30 November.