India’s startup ecosystem has evolved dramatically over the past two decades, moving from early internet-led ventures to globally competitive SaaS companies and now toward deep technology and scientific innovation. At the forefront of this transformation are investors who combine entrepreneurial experience with a long-term vision for innovation.
One such leader is Naganand Doraswamy, Founder and Managing Partner of Ideaspring Capital, an early-stage venture capital firm focused on backing IP-led and technology-driven startups from India. Before becoming an investor, Naganand built and exited technology companies and spent years working with global technology firms, giving him a unique perspective on what it takes to build and scale successful startups.
In this conversation with Sandhya Bharti, Deputy Editor at Indian Startup Times, Naganand shares insights into how Ideaspring evaluates founders, the evolution of India’s startup ecosystem, emerging opportunities in deep tech, and what entrepreneurs should keep in mind when building venture-backed companies.
Evaluating Founders and Ideas in Early-Stage Startups
As an early-stage investor, Naganand explains that Ideaspring Capital focuses heavily on IP-differentiated companies, particularly those built around strong technology or scientific innovation.
At such early stages, most startups are either pre-revenue or just beginning their journey, which means investors must rely heavily on the quality of the founding team.
According to him, the founding team is the single most important factor in the investment decision. A startup’s direction can change, markets can evolve, and products can pivot, but a capable and resilient team can navigate uncertainty.
Ideaspring typically evaluates founders based on several key factors:
- Founder capability and domain expertise related to the problem they are solving
- Depth of market understanding, including research and conversations with potential customers
- Product differentiation, especially whether the technology offers a clear advantage over competitors
- Early market entry strategy, including how the company plans to reach its first million dollars in revenue
- Ability to raise the next round of funding, which determines whether the startup can sustain long-term growth
Naganand also emphasizes that venture investing is ultimately a two-way relationship. Founders must feel comfortable working with investors just as investors must trust the founders.
Interestingly, he appreciates founders who ask investors difficult questions during the process. For him, that signals alignment and professionalism that will be crucial when startups inevitably face challenges.
How Ideaspring Capital Discovers and Supports Startups
Over the years, Ideaspring Capital has invested in 33 companies across two funds, often discovering founders through unconventional channels.
Sometimes the connection begins at conferences or seminars, while in other cases founders reach out directly or come through referrals from other venture investors.
For example, one of Ideaspring’s recent investments, Accelequant, emerged after Naganand attended a seminar where a professor presented his idea for building a quantum acceleration software layer. After several conversations and further analysis, Ideaspring partnered with other investors to support the company.
Another example is MuHup, a company specializing in voice recognition technology. Initially focused on contact center applications, the startup has since expanded into the automotive sector and is now working with major automobile manufacturers in India.
Ideaspring has also invested in LatentForce, a startup building AI-driven tools for code modernization. The company was founded by researchers from IISc and focuses on leveraging advanced AI models to transform legacy software systems.
These examples highlight how Ideaspring approaches investments with long-term conviction, often engaging founders through multiple discussions before making a decision.
The Vision Behind Ideaspring Capital
After exiting his own entrepreneurial ventures, Naganand faced an important career decision: start another company or support other entrepreneurs.
He chose the latter.
Working closely with mentors and leaders in India’s startup ecosystem, he recognized a gap in the market. While many funds were backing consumer startups, very few were focused on product innovation and deep technology coming out of India.
That insight became the foundation for Ideaspring Capital.
The firm launched its first fund in 2016 with ₹118 crore, focusing on early-stage product companies. After successful early investments, the firm launched Fund II in 2022 with ₹265 crore, expanding its investment capacity and portfolio.
Today, Fund II is fully deployed, and the team is preparing for Fund III, continuing its focus on early-stage technology startups.
One philosophy that Naganand frequently shares with founders, particularly in early stages, is simple but powerful:
“Money without mentoring is useless, and mentoring without money is also useless.”
Ideaspring aims to combine both capital and hands-on guidance to help founders build scalable companies.
Two Decades of India’s Startup Ecosystem
Having been involved in India’s startup ecosystem since the mid-2000s, Naganand has witnessed its transformation firsthand.
He describes the ecosystem’s growth in three major phases.
1. Replication Phase (2007–2014)
In the early years, many Indian startups replicated successful business models from the United States.
Companies like Flipkart and Ola adapted global ideas to the Indian market. While these were not entirely new concepts, they helped build the foundation of India’s startup ecosystem and proved that large-scale startups could emerge from the country.
2. Enterprise and SaaS Expansion (2015–2022)
The next phase saw the rise of B2B and SaaS companies, selling globally from India.
Organizations like iSPIRT, NASSCOM, and SaaSBOOMi played a major role in developing playbooks for Indian founders to sell products internationally.
During this period, founders also became more ambitious, with better access to capital and stronger global market awareness.
3. Deep Tech and Science Innovation (Current Phase)
Today, India is entering a new phase driven by deep tech, AI, semiconductors, and scientific innovation.
Naganand believes this area holds immense potential but also requires a different approach. Deep tech startups typically have longer development cycles and require patient capital and strong research ecosystems.
Government Support and Policy Evolution
Government initiatives have also played a significant role in strengthening India’s startup ecosystem.
One of the most impactful initiatives, according to Naganand, has been the SIDBI Fund of Funds, which helped catalyze venture capital investment across the country.
The government’s focus on Startup India, Atmanirbhar Bharat, and emerging programs for research and development funding has further encouraged innovation.
Importantly, he notes that policymakers have become increasingly open to engaging with the startup ecosystem and incorporating feedback from founders, investors, and industry groups.
Where Ideaspring Sees the Next Opportunities
While fintech has been one of India’s fastest-growing sectors, Ideaspring’s investment focus remains largely on B2B technology and deep innovation.
Some of the areas the firm is most excited about include:
- Biotechnology and life sciences
- Semiconductors and deep hardware innovation
- Quantum computing software and sensing technologies
- AI infrastructure and specialized language models
- Enterprise technology platforms
Naganand believes India has a strong advantage in scientific research and technical talent, making it well-positioned to build globally competitive companies in these domains.
Advice for Founders Building Venture-Backed Startups
Drawing from his experience as both an entrepreneur and investor, Naganand offers several key lessons for founders.
First, building a startup requires long-term commitment. Founders should be prepared to dedicate years of intense work, often working long hours under uncertainty.
Second, entrepreneurs must understand the venture capital cycle. Venture-backed startups must grow quickly because investors operate within fixed fund lifetimes and need to generate returns.
Third, founders should focus on real market problems, not just technology.
While strong engineering is important, success ultimately depends on whether customers are willing to pay for the solution.
As Naganand notes from his own career journey:
“You can build whatever technology you want, but if you cannot sell it, what’s the point?”
A strong product may be necessary, but it is not sufficient without market demand.
Conclusion
India’s startup ecosystem has come a long way from its early days of experimentation to becoming one of the world’s most vibrant innovation hubs. As the ecosystem enters its next phase driven by AI, deep tech, and scientific breakthroughs, investors like Naganand Doraswamy are playing a crucial role in supporting founders who aim to build globally impactful companies.
Through Ideaspring Capital, he continues to back entrepreneurs building IP-driven products and breakthrough technologies from India for the world.
And as he emphasizes, success in this journey ultimately comes down to strong founders, differentiated technology, and the ability to turn innovation into real market value.
-Interview conducted by Sandhya Bharti
