The trouble that some Indian startups are facing is being touted as the harbinger of a coming apocalypse. What happened at TinyOwl in Pune with employees holding the founders hostage was an embarrassment to all of us.

Dazo shutting down. Zomato laying off employees. Foodpanda, well, just Foodpanda. These are normal occurrences at startups. Most of them are, in any case. Some things are hard to comment on without knowing details.

Six months ago, almost all of the bloggers and reporters were writing about how foodtech is the second coming of the Indian startup economy and how VCs are falling over themselves trying to get into as many deals as possible. Today, those same folks are pontificating on “the bubble” and the coming apocalypse.

I recently read a post on Quartz about how the demise of food delivery will result in the end of the Indian startups. It’s difficult to comprehend the reasoning behind a small sector setting off a domino effect of collapses across startups.

According to my research on CBInsights, there have been 83 angel, seed, series A, B, and C deals in foodtech and logistics this year in India, totalling just over $400 million. I’ve tried to be very broad in including as many foodtech companies as possible in this number including companies like Hector Beverages (Paper Boat), RedCarpet and LogiNext.

More Diverse Than Some Think

Contrary to what people would like to think, food/grocery delivery is a very, very small part of the much larger Indian startup world. PayTM is going after everything from m-commerce to taxi booking payments on Uber to hotel bookings to hyperlocal to movie tickets. Flipkart, Snapdeal (though far from startups any longer) have changed the way Indians fundamentally think about purchasing products. Freshdesk, FusionCharts, Wingify and many others are going after global markets and are seen as serious threats to incumbents. Even some of our Indian companies are changing the way people think about hiring, education, commerce, gaming and finance. Companies like CultureAlley and OnlineTyari are taking language learning and test preparation to the masses at affordable prices thru the only device they need – a smartphone. Consider how Kraftly is allowing cottage industries where men, women, and even children are making baked goods, clothing, or art at home and able to reach and transact with customers worldwide. SwitchMe is making refinancing a home loan quick, painless and cost effective.

My point is that the Indian startup scene is far broader and diverse than some critics would like to admit. Going back to my research on CBInsights, I have found that there were a total of 583 deals across all kinds of industries done in India this year totaling almost $8 billion. Foodtech and logistics make up 5% of the total amount of money that’s been invested in Indian startups in 2015.

Overfunding Food

While the food and grocery delivery space do not take up the bulk of Indian investments, it does appear that these verticals are overfunded. If you look at the table above (it’s based on the same data as the first graph), you will see that 60% of the deals in foodtech and logistics were done at the angel and seed level and 22% at the Series A level. The average deal size and median deal size at the series A were also significantly higher than the broader market.

If you look at this table, it shows that only 53% of all the deals done in India were at the seed or angel stage. Venture rounds were more consistent. This means there was an overweighting of foodtech at the angel/seed and series A stages or a concentration of risk in a particular sector.

There are amazing entrepreneurs, developers, designers and financial wizards building solid businesses and it’s not going to stop. But not every team is strong and knows how to utilize investment dollars to build a great business.

Would I invest in a pure food or grocery delivery business that picks up veggies from the local market or from three restaurants in my neighborhood and deliver it to me? Not likely. But I would definitely consider investing in entrepreneurs that understand warehousing, logistics and supply chain to provide grocery delivery via distributed warehouses in a city, like the team behind ChalDal or a food company that understands how to manage large centralized kitchens, and has an expertise in logistics. The Harvard Business Review wrote about a cooperative that does this in India.

Learning to Hit the Target

There are fearmongers talking about the foodtech rot in Indian startup land. These stories will get clicks, likes, shares and eyeballs with sensationalist headlines. They may also create an environment where some young dreamer’s aspirations of becoming an entrepreneur (there are a few Quora threads on this) or getting married are stifled because they aren’t working at Microsoft, Infosys or TCS. How does any of this help drive innovation or help any one?

One has to let loose a lot of arrows before learning to shoot and hitting the target. Even after learning to shoot, we may still miss. Often. At 500 Startups, we know that for the many investments we make, we are going to miss a few targets. But that isn’t going to slow down our investment activities in India.

I am excited about the future of not just foodtech, but the overall startup ecosystem in India. As shown by the above stats, the Indian startup environment is diverse, rich, and full of opportunity and with the 500 team, I look forward to maturing the growth of the local ecosystem.

Photo Credit: Sergii Figurnyi, Artwork by Yiying Lu