Why Investors are so bullish about India’s startup ecosystem
While the Covid-19 pandemic has landed a blow to macroeconomic activities in India, country’s startup ecosystem has shown amazing resilience and quickly leveraged changing customer behaviour to its advantage. Currently, India is the world’s third-largest startup ecosystem and it is surely the fastest growing. Investors continue to bet big on the new-age emerging businesses backing them with record funds.
In the first half of the 2021. Indian startups have raised a record USD 10.46 billion, up from USD 4 billion during the same period in 2020 and USD 5.4 billion in the first half of 2019. The startup ecosystem has also churned out 15 unicorns in the first half of the year. We have already surpassed the projection made by a NASSCOM report that India will have 50 unicorns by the end of 2021. Indian ventures are attracting both investment and incubation process like never before. So, why investors are so bullish about Indian startup scene what has put India on the map as a global startup and investor destination.
When the pandemic struck, there was large information vacuum as how the contagion would affect people and it may impact startups working in food delivery, last mile connectivity and other services. The pandemic affected not only large players as well as small companies to previously unseen levels, the startups adopted agile business models in a dynamically chnaging world and showcased great innovativeness. With people forced to stay at homes due to covid-induced curbs, the country witnessed a rapid growth for all online services – from commerce to payments to software. While sectors like travel and hospitality were majorly affected, edtech and health tech space saw an unprecedented boom.
A few years back, startups would have rarely shown any desire to go public but there has been a change in dynamics now. It could be attributed to a variety of reasons such as expansion, clearing debt and funding corporate expenses. With the big ticket startups like PaytM and Zomato going for public listing, investors are getting attractive exit routes, which in turn is attracting even more investors both local and global.
Chian and US
India is the third largest consumer market in the world. It is largely underserved due to its vast size and varied demographics. The urban India has certainly benefited from the tech boom but invetsors see a huge potential for startups to tap into suburban and rural markets. The ecommerce platforms, technology-enabled delivery system, digital payments, new logistics and reverse logistics platforms could be real gamechanger and create a level playing field for them.
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China’s growing assertiveness
With China’s increasingly assertive stance on the world stage followed by its crackdown on its domestic tech companies, many investors are reevaluating their strategies. From Venture Capitalists to Hedge Fund owners, they seem to see India as the next big emerging market with its vast consumer base. The early startups have also proved their mettle, fading away the initial investor scepticism. Also, US and China are highly mature and already dominated by incumbents.
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