The Need For An Alliance Of Govt And Tech Startups | Mint – Mint

Covid and its multiple waves have not only raised ‘persistent uncertainty’ and ‘agnostic anxiety’, but it has also made us rethink our priorities. In addition to the waves of infection that we have successfully combated through an effective public-private partnership approach, going forward, we will probably continue to experience new mutations of the covid virus that are currently in stealth mode.

As we reflect on our journey so far, we must understand that the pandemic has been a double-edged sword for India. While some sectors have had a bumpy ride, businesses operating in the horizontal B2B SaaS space, Web3, HR Tech, biotech, niche sectors of edtech and consumer plays like gaming and D2C with positive unit economics, healthy margin profiles and good repeat rates have been resilient.

This is no different from the great duality that India is experiencing. On one hand, we have a cocktail of despair: an uneven recovery and rising inflation fuelled by rising raw material costs (impacting corporate margins), internet poverty (worsening existing social divides), and the middle class being squeezed into making choices that curtail consumption rather than propelling it (which makes recessionary pressures persist). On the other hand, Indians were also gifted with abundant opportunities, as the pandemic gave entrepreneurs a chance to build brands that could capture unexplored spaces, which in turn fed a startup boom. Emerging sectors like Web3 and crypto saw many new ventures sprout. Also, nature, briefly relieved of human pollution, got some breathing space.

At this crossroads, for investors to go truly long on India, the country’s surging startup ecosystem will need to work in sync with the government, and the latter will have to be amenable to integrating new technologies in traditional frameworks of governance and public policy. Doing so could deliver widespread economic benefits.

While we need to correct the great Indian duality, many pockets of India (like Bengaluru) are going through what I call their ‘San Francisco moment’: a large section of citizens, businesses and institutional capital is on the verge of being crowded out of regions that are impacted by frequent flare-ups of communal tension (the hijab row, halal meat controversy and vigilante attacks on inter-faith couples), poor civic infrastructure and tax terrorism on virtual digital assets.

In order to sustainably move forward, India will need to focus on getting major tech startup players and institutional capital (investors) to work with the central and state governments to build a ‘Gov-Tech’ alliance. This handshake can help us move away from the shackles of scarcity and act as a catalyst for a future of abundance. This partnership could give a fillip to a big chunk of policy issues that are waiting to be resolved. These have been pending due to a lack of technical capabilities and infrastructure support or the fact that the government doesn’t have the funds needed to implement them in a timely manner.

Additionally, the government needs to learn from the positive-sum game that the venture capital (VC) industry espouses. This attunement to a world of opportunities would detract from the notion of scarcity that has been a running theme of economic analysis for far too long. The government is capable of achieving moonshots in domains of healthcare, sanitation, education, clean-tech and biotech, provided it transitions towards a Gov-Tech model of development.

With this shift towards a new model, the government would be well positioned to strategically capitalize on the innovation that entrepreneurs across the country are generating. SIDBI’s Fund of Funds and the setting up of an expert committee to look at a regulatory framework for the private equity and VC industry are two notable steps that could facilitate this process. Citizens would benefit as this Gov-Tech partnership scales up and reduces the prices of many services.

Further, one must note that while the physical realities of India and Bharat remain divergent, largely because the implementation of government schemes is not as efficient as that of election slogans, I trust that a large proportion of Indians will adapt to emerging sectors and learn to collaborate, engage and transact even in mixed-reality settings.

While the metaverse might give citizens partial relief to modern day troubles like roads full of pot holes, rising fuel prices and jammed traffic, it will not be able to deliver on the promise of on-ground development. Hence, governments will need to ally with multiple startups. Think of it like an API integration for a SaaS venture in order to service a product (which in this case would be developmental programmes approved by governments), so that citizens’ ‘monthly subscription’ to developmental programmes can smoothly be fulfilled.

In conclusion, by adopting a Gov-Tech model of development, as proposed, India will be well poised to become a global economic powerhouse over the next 3-5 years. In order to achieve this feat, Indians will simultaneously need to actively protect the cultural fabric of India, preserve the social capital that Indians inherited from their forefathers, and keep a check on the moral compass of leaders that are mandated to frame policies for citizens.

The broad idea is to immerse India in a technology-enabled growth journey. In my view, this strategy will help India prosper.

Shahan Sud is an investment banker-turned-venture capitalist. He tweets at @shahan_sud

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