Funding challenges being faced by Indian start-ups is a "temporary phenomenon" and the sector is expected to turnaround in 1-2 years, IT industry veteran Senapathy Gopalakrishnan said on Wednesday.

"A significant number of new companies are in the early stage. Funding is lot more challenging. And, hence, the number of companies migrating to series A, B, C is slowing down. This is a temporary phenomenon, these are cycles. I expect that a year from now, may be two years from now, things will turnaround," Senapathy told.

"These are cycles. One, as things get heated up, they have to cool down. Second, global environment itself is challenging," said the Infosys co-founder.

Popularly called ‘Kris’, he is also a co-founder of venture capital firm Axilor Ventures.

"If one were to look at the positives, India is the only country where one can now get 7-8 per cent returns.

"So, more investments must come to India. If the dollar appreciates, again some money will go out. So, these are complicated macroeconomic issues, and since we are part of the global economic scenario, all these things will play out in India too," Kris said.

"We (Indian start-ups) are going through a difficult period at this point in time. But that’s part of the cycle. I wouldn’t be alarmed," he said.

He added: "Right now it’s a difficult period.

Start-ups are finding it challenging. On the positive side, a large number of new start-ups are coming up."