Saying that there is 'Unlimited Headroom for Entrepreneurs', Accel partner Prashanth Prakash announced that the venture capital firm would deploy its recently raised USD 650 million fund within the next two-three years to invest in start-ups dealing with AI and industrialisation driven by technology.

The firm is targeting investments in 20-25 start-ups this year as it embarks on an aggressive drive to take advantage of India's budding innovation ecosystem.

"If you're an entrepreneur starting up, there can be no better time. The number of industries in which start-ups are making their presence felt is also 10-fold.it is more multi-dimensional and multi-industry", Prakash explained to PTI in an interview.

"There are huge opportunities for entrepreneurs who possess the ability to visualize and see what products the world and India require. There is unlimited headroom for entrepreneurs", he added.

While US tariff effects are still unclear, India certainly has the strong potential to be an IP-led innovation and high-value manufacturing hub of the world, especially in areas such as defence, EVs, aerospace and energy, Prakash added.

It can do that by leveraging the prowess of its enormous talent pool, start-up flexibility, and increasing capacity to tap into global supply chains through innovation and strategic partnerships, he added.

According to the entrepreneur, philanthropist and venture capitalist, who was among the Padma Shri awardees announced earlier this year, Indian start-ups have matured post-Covid and are striking a stronger balance between growth and profitability.

Prakash said he is upbeat about the potential of startups, particularly in AI, tech-led industrialisation as well as Indian ventures driving smart innovation in areas such as sustainability, EVs, aerospace and space tech.

He added that early-stage investment has a robust momentum, with considerable available capital, including money from Indian family offices -- organizations in charge of running the investments of high networth families who are now also looking at start-ups as an attractive asset class. The entire ecosystem has essentially grown up as a healthier, more stable and better-aligned founders-investor environment.

"We have come to a very nice sweet spot in the ecosystem where entrepreneurs understand how and what to build and investors also know what they are looking for, and there's enough of a matchmaking that is happening in terms of this opportunity," Prakash said. Entrepreneurs as well as investors have identified the right module for India and the right type of start-up that can be built for India.

"We have just closed a USD 650 million fund. And we are aggressively deploying the fund. we make 15-25 investments per year, and our expectation is that we will make 20-25 investments this year in the three sectors of AI, industrialisation led by technology, and 'Bharat' (start-ups serving the top 30 per cent of Indian tier 2 plus households)", he says.

"The deployment of the USD 650 million war chest would take place over the course of next two-three years," he said.

With a 16-year strong history in India and Southeast Asia, Accel has been working with firms that have transformed industries from e-commerce and SaaS to manufacturing. It has made significant investments in firms from sectors such as Amagi, Acko, BlackBuck, BlueStone, BrowserStack, Cult.fit, Flipkart, Freshworks, Swiggy, Urban Company and Zetwerk.

For Prakash, the Padma Award award in the Trade and Industry sector in a way is the coming of age of the start-up ecosystem itself. He believes it is an acknowledgement of the power and potential of start-ups to revolutionize the Indian economy.

The Accel partner added the start-up ecosystem has changed hugely and bumper IPOs by start-ups going public have made sure that there is mass participation in start-up phenomenon. Further, the start-up ecosystem is reaching further beyond the city centres, going deeper into tier 2 and tier 3 cities and making entrepreneurship a pan-India movement.

"The next decade will hold even bigger promises, with start-ups likely to touch even more sectors, with a critical role to play in nation-building". AI's ability to revolutionize and disrupt businesses is raising up enormous opportunities, Prakash emphasized.

"I think that businesses have been observing and willing to implement AI, but I don't think they've been able to really leverage it to the fullest. And that's where the Indian ecosystem, through our ability to develop applications on foundation models, will be a gigantic space that Accel and other investors will focus on", he says.

Industrialisation led by deep-tech, he added, is another place to look out for. Start-up founders increasingly no longer feel "intimidated" to establish manufacturing capacity, or construct actual products.

"Hi-tech AI driven industrialisation, or AI combined with physical asset based manufacturing. is going to contribute to the country a great deal of import substitution. And once you sort of use that for import substitution and construct for the nation, the potential for us to construct frugally and at a very low-cost base in India will assist us in tapping into this fresh multipolar complex supply chain which is being developed from in the US and everywhere", Prakash stated.

He called upon Indian tech entrepreneurs to seize the opportunity to connect with such value chains, marrying their deep knowledge of AI, of new age manufacturing and IP leverage.

Referring to the defence ecosystem as one of the prime opportunities, he called upon start-ups to take advantage of iDEX (Innovations for Defence Excellence) and similar initiatives, and investors to fund innovations in this segment.

"In electric cars, can we make the parts that can plug into the EV system? Is it just going to come from China? No, it's not just BYD that's going to ship all the stuff to the rest of the world. They have the lead in battery and do that, but there are plenty of other parts that go into an EV supply chain and that we see as something entrepreneurs here building", he says.

Prakash is optimistic about this industrialisation prospect, and about start-ups taking a central role in segments of sustainable products, EV products, aerospace products, space technology and defence. Accel has invested in more than 27 AI start-ups in India or started by Indian-origin entrepreneurs within the past two years alone. Over the last few years, it has rolled out some flagship initiatives to enable a founder's journey to be as frictionless as possible and drive the ecosystem's growth.

The company's open-source community platform and open-source content, SeedToScale, makes knowledge on building companies democratic with insights from successful industry leaders, operators and founders. Its early-stage scaling program, Accel Atoms - currently in its fourth iteration - has already backed 36 start-ups that have collectively raised more than USD 200 million.

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