Infosys Founder Narayana Murthy Believes Start-Up Funding is Becoming Like a Ponzi Scheme
Infosys co-founder Narayana Murthy has expressed his concerns about the state of start-up funding in India, stating that it is becoming increasingly like a Ponzi scheme. In a recent interview, Murthy spoke about the need for start-ups to focus on profitability rather than simply raising more funds.
He also emphasized the importance of investors doing their due diligence before investing in a start-up. Murthy’s comments come at a time when start-up funding in India has been on the rise, with a record $10.5 billion raised in the first half of 2021 alone. While this growth is certainly impressive, it has also led to concerns about the sustainability of the start-up ecosystem. Murthy’s concerns echo those of other industry experts who have warned about the dangers of “over-funding” start-ups and the need for investors to take a more cautious approach. Murthy went on to explain that start-ups should not focus solely on raising funds, but rather on building sustainable businesses that can generate profits in the long term.
He believes that many start-ups are getting caught up in the “funding frenzy” and are neglecting the fundamentals of business. Murthy’s advice to start-ups is to focus on building a strong team, creating a unique product or service, and delivering value to customers. In addition to his comments on start-ups, Murthy also spoke about the importance of due diligence when it comes to investing. He emphasized the need for investors to thoroughly research the start-up they are considering investing in, including looking at the team, the product, and the market potential. Murthy believes that investors should not simply invest in a start-up because it is the “flavor of the season,” but rather should carefully evaluate the potential risks and rewards.
Murthy’s comments have been met with mixed reactions in the start-up community. While some have praised his emphasis on profitability and caution when it comes to investments, others have argued that start-ups need a certain amount of funding to grow and scale. Some have also pointed out that many start-ups are not profitable in their early stages, and that it is common for companies to raise multiple rounds of funding before becoming profitable. Despite these differing opinions, Murthy’s comments are a reminder of the importance of sustainable growth in the start-up ecosystem.
While funding can certainly be a valuable tool for growth, it should not be the sole focus of a start-up. Instead, companies should prioritize building a strong foundation that can support long-term success.