New Delhi: Last week marked a watershed for technology startups in India, as record bouts of fundraising drew attention in the world’s second most populous market, such as investor fears over a crackdown on internet companies in China. Had gone.
food delivery app Zomato Limited became the country’s first unicorn To make a stock-market debut, raising $1.3 billion with support from Morgan Stanley, Tiger Global and Fidelity Investments. The parent of digital payments startup Paytm filed a draft prospectus for what could be India’s biggest IPO for $2.2 billion, while retailer Flipkart Online Services Pvt raised $3.6 billion at a valuation of $38 billion, Which is a record funding round for an Indian startup.
Hans Tung, Silicon Valley-based Managing Partner, GGV Capital, said, “Indian entrepreneurs have been quietly building startups for a decade now, with the country’s internet infrastructure improving significantly and a great appetite for tech stocks globally. is.” which manages assets of $9.2 billion. “Investors are seeing a huge jump and expect India to become China.”
Lenskart, an online eyewear retailer, also said on Monday that it raised $220 million from investors including Singapore-based Temasek Holdings Pte. and Falcon Edge Capital. It had earlier raised money from KKR & Co and Japan softbank group corporation
Unlike China, where online usage is highly developed, many of India’s 625 million Internet users are finding their feet in the worlds of video streaming, social networking and ecommerce. Online shopping opportunities are particularly attractive, as e-commerce accounts for less than 3% of retail transactions. Tech startups in India are still paying to build supply chains and distribution networks.
India’s population is expected to overtake China in this decade and the mood among investors now could not be more different than in neighboring countries. China is reining in its tech companies, wiping more than $800 billion from market valuations since February’s peak and shaving billions from the net worth of its most famous entrepreneurs. This month, the government abruptly pulled ride-hailing service Didi Global Inc from the App Store, months after regulators forced Jack Ma’s Ant Group company to halt a blockbuster IPO at the eleventh hour. The clampdown is expected to continue, as regulators curtail the power of Internet companies and take back control of user data.
Nilesh Shah, Group President and Managing Director, Kotak Mahindra Asset Management Company in Mumbai, said, “Indian tech companies can attract global investors who have tried their hand at Chinese tech companies. He said that successful listing of some loss-making startups could lead to re-rating of many existing companies and give rise to the market.
record funding
India saw $6.3 billion in funding and deals for technology startups in the second quarter, according to data from research firm CB Insights, while funding to China-based companies fell 18% from a peak of $27.7 billion in the fourth quarter of 2020.
Flipkart, one of India’s two major ecommerce players along with Amazon.com Inc., is one of the startups planning to tap into the public markets over the next 24 months, with a line-up that includes insurance marketplace PolicyBazaar’s core eTechS Marketing & Consulting Pvt. Ola ride-hailing service of logistics provider Delhivery Pvt and ANI Technologies Pvt. The IPO will give retail investors an opportunity to hold stake in the startup, which was available only to global private investors.
Among those private markets, India has been mining startups worth $1 billion or more at an unprecedented pace in recent months. In April, half a dozen unicorns were born within a span of four days, while for many startups the interval between fundraising rounds has reduced to weeks. A report by Credit Suisse Group AG this year found that there are about 100 unicorns in India with a combined market value of $240 billion in sectors ranging from e-commerce and fintech to education, logistics and food delivery.
“$1 billion is the new $100 million,” said Krishnan Ganesh, a serial entrepreneur who now promotes companies that have attracted investors such as Sequoia Capital, Lightspeed Venture Partners and Qualcomm Ventures. “Global investors see potential upside in India’s vast, under-penetrated market and capital inflows have increased 10x.”
Optimism about India facing one of the worst coronavirus outbreaks in the world threatens to destroy decades of economic gains, with more than 31 million infections and more than 400,000 deaths. According to the Pew Research Institute, the Azim Premji University, Bangalore, estimates that at least 200 million Indians earn less than the minimum daily wage of $5, while the middle class is down by 32 million in 2020.
Nor are investors in India free from political risk. Technology startups also face a stringent regulatory regime, with the Narendra Modi government cracking down on foreign retailers, social media giants and streaming companies. The administration is expected to introduce a bill on data ownership and storage that will restrict the ways user information is handled during the month-long parliament session that begins on Monday.
In addition, some analysts worry that the stock market is a bubble waiting to burst and that many company valuations are far above their fundamentals. They caution that retail investors in new-age companies that have yet to make profits will need to look beyond traditional value measures such as EPS and P/E and invest in building a loyal customer base as startups scale. Must be able to assess factors. UP.
habit forming
“Many of these businesses are in the habit-forming stage of acquiring customers and hence losses can be carried forward,” said Mumbai-based investment director Ramesh Mantri. White Oak Capital. “What really matters is the ability to generate cash flow.”
New ventures have a competitive advantage over many traditional bricks and mortar rivals, which have high real estate costs and often suffer from broken distribution chains and complex structures. Those barriers mean that many retail, banking and healthcare chains haven’t even reached small towns, let alone millions of people living in remote rural areas.
Entrepreneur Ganesh said, “The proliferation of smartphones and the Internet has allowed tech entrepreneurs to create new-age business models to reach even the remotest corners of the country.”
And the promise of lucrative returns for major investors could lead to further rounds of funding as startups increase the number of public share sales. For example, SoftBank, which spun off from Flipkart for profit three years ago, returned to investing in last week’s round.
“India’s consumer internet companies have come of age,” said tech tycoon Nandan Nilekani, president of outsourcer Infosys Ltd, whose 1993 IPO introduced investors to an IT services industry that now has nearly $200 billion in annual sales. And its founders have become billionaires. “When these new startups convert their pole positions into earnings and cash flow, their future is assured,” Nilekani said.
food delivery app Zomato Limited became the country’s first unicorn To make a stock-market debut, raising $1.3 billion with support from Morgan Stanley, Tiger Global and Fidelity Investments. The parent of digital payments startup Paytm filed a draft prospectus for what could be India’s biggest IPO for $2.2 billion, while retailer Flipkart Online Services Pvt raised $3.6 billion at a valuation of $38 billion, Which is a record funding round for an Indian startup.
Hans Tung, Silicon Valley-based Managing Partner, GGV Capital, said, “Indian entrepreneurs have been quietly building startups for a decade now, with the country’s internet infrastructure improving significantly and a great appetite for tech stocks globally. is.” which manages assets of $9.2 billion. “Investors are seeing a huge jump and expect India to become China.”
Lenskart, an online eyewear retailer, also said on Monday that it raised $220 million from investors including Singapore-based Temasek Holdings Pte. and Falcon Edge Capital. It had earlier raised money from KKR & Co and Japan softbank group corporation
Unlike China, where online usage is highly developed, many of India’s 625 million Internet users are finding their feet in the worlds of video streaming, social networking and ecommerce. Online shopping opportunities are particularly attractive, as e-commerce accounts for less than 3% of retail transactions. Tech startups in India are still paying to build supply chains and distribution networks.
India’s population is expected to overtake China in this decade and the mood among investors now could not be more different than in neighboring countries. China is reining in its tech companies, wiping more than $800 billion from market valuations since February’s peak and shaving billions from the net worth of its most famous entrepreneurs. This month, the government abruptly pulled ride-hailing service Didi Global Inc from the App Store, months after regulators forced Jack Ma’s Ant Group company to halt a blockbuster IPO at the eleventh hour. The clampdown is expected to continue, as regulators curtail the power of Internet companies and take back control of user data.
Nilesh Shah, Group President and Managing Director, Kotak Mahindra Asset Management Company in Mumbai, said, “Indian tech companies can attract global investors who have tried their hand at Chinese tech companies. He said that successful listing of some loss-making startups could lead to re-rating of many existing companies and give rise to the market.
record funding
India saw $6.3 billion in funding and deals for technology startups in the second quarter, according to data from research firm CB Insights, while funding to China-based companies fell 18% from a peak of $27.7 billion in the fourth quarter of 2020.
Flipkart, one of India’s two major ecommerce players along with Amazon.com Inc., is one of the startups planning to tap into the public markets over the next 24 months, with a line-up that includes insurance marketplace PolicyBazaar’s core eTechS Marketing & Consulting Pvt. Ola ride-hailing service of logistics provider Delhivery Pvt and ANI Technologies Pvt. The IPO will give retail investors an opportunity to hold stake in the startup, which was available only to global private investors.
Among those private markets, India has been mining startups worth $1 billion or more at an unprecedented pace in recent months. In April, half a dozen unicorns were born within a span of four days, while for many startups the interval between fundraising rounds has reduced to weeks. A report by Credit Suisse Group AG this year found that there are about 100 unicorns in India with a combined market value of $240 billion in sectors ranging from e-commerce and fintech to education, logistics and food delivery.
“$1 billion is the new $100 million,” said Krishnan Ganesh, a serial entrepreneur who now promotes companies that have attracted investors such as Sequoia Capital, Lightspeed Venture Partners and Qualcomm Ventures. “Global investors see potential upside in India’s vast, under-penetrated market and capital inflows have increased 10x.”
Optimism about India facing one of the worst coronavirus outbreaks in the world threatens to destroy decades of economic gains, with more than 31 million infections and more than 400,000 deaths. According to the Pew Research Institute, the Azim Premji University, Bangalore, estimates that at least 200 million Indians earn less than the minimum daily wage of $5, while the middle class is down by 32 million in 2020.
Nor are investors in India free from political risk. Technology startups also face a stringent regulatory regime, with the Narendra Modi government cracking down on foreign retailers, social media giants and streaming companies. The administration is expected to introduce a bill on data ownership and storage that will restrict the ways user information is handled during the month-long parliament session that begins on Monday.
In addition, some analysts worry that the stock market is a bubble waiting to burst and that many company valuations are far above their fundamentals. They caution that retail investors in new-age companies that have yet to make profits will need to look beyond traditional value measures such as EPS and P/E and invest in building a loyal customer base as startups scale. Must be able to assess factors. UP.
habit forming
“Many of these businesses are in the habit-forming stage of acquiring customers and hence losses can be carried forward,” said Mumbai-based investment director Ramesh Mantri. White Oak Capital. “What really matters is the ability to generate cash flow.”
New ventures have a competitive advantage over many traditional bricks and mortar rivals, which have high real estate costs and often suffer from broken distribution chains and complex structures. Those barriers mean that many retail, banking and healthcare chains haven’t even reached small towns, let alone millions of people living in remote rural areas.
Entrepreneur Ganesh said, “The proliferation of smartphones and the Internet has allowed tech entrepreneurs to create new-age business models to reach even the remotest corners of the country.”
And the promise of lucrative returns for major investors could lead to further rounds of funding as startups increase the number of public share sales. For example, SoftBank, which spun off from Flipkart for profit three years ago, returned to investing in last week’s round.
“India’s consumer internet companies have come of age,” said tech tycoon Nandan Nilekani, president of outsourcer Infosys Ltd, whose 1993 IPO introduced investors to an IT services industry that now has nearly $200 billion in annual sales. And its founders have become billionaires. “When these new startups convert their pole positions into earnings and cash flow, their future is assured,” Nilekani said.
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