Business

Why investors remain optimistic about India’s startup prospects for 2022


A restaurant advertises the use of Paytm digital payment system in Mumbai, India, on Saturday, July 17, 2021.

Dhiraj Singh | Bloomberg | beautiful pictures

India’s tech startups will continue to attract capital from both the private and public markets next year as they grow and mature, investors told CNBC.

There is a notable change in the country’s startup environment in 2021, with several well-known companies going public. These include food delivery apps Zomato, huge payment Paytm and Parent company of online insurance aggregator Policybazaar. More startups are in the process of IPOs, including ride-hailing company Ola and Indian hotel chain Oyo.

India’s tech startups have also raised record amounts of capital from venture capital and private equity firms. These investors have injected $28.2 billion in technology investments this year through 779 deals, according to information provided by AVCJ, a European provider of venture capital and private equity capital. ASIAN. The figure marks a 200% jump in capital from $9.4 billion invested last year.

Rajan Anandan, managing director at Sequoia Capital India, told CNBC this month that the venture firm is “very optimistic” about India’s tech ecosystem and its ability to create long-term value for its parties. involve.

“The success of the companies in both domestic and international exchanges has made investors more interested around the world,” said Anandan. Sequoia Capital India has seen eight portfolio companies go public in 2021, he added.

“It has validated the fact that great companies can be built from this region – and create substantial shareholder value,” said Anandan. And with some promising IPOs set for the year ahead. Going forward, we expect this trend to continue.”

Investor appetite for new tech IPOs

Reception of some of India’s top tech IPOs has varied among investors. While Zomato’s stock had a stellar debut and was up about 5.44% from its first day of trading on July 23, Paytm is down more than 13% from its November 18 launch. .

Another digital payment company, Mobikwik, delay its IPO after Paytm’s disappointing start. As a result, there is increasing scrutiny of fintech companies and their ability to generate revenue and ultimately profits, local media reports say.

However, according to Nikhil Kamath, co-founder of Indian brokerage platform Zerodha, there is still a good chance that there will be demand for future IPOs. The bigger question, however, will be how those companies will perform in the long term, he told CNBC.

Kamath points out that many tech startups, including some already listed, are still overvalued.

“Most of these [companies] There are no returns and they don’t look like they’ll be in the next four or five years, so it’s a bit hard to justify the valuation,” he said.

According to Sandeep Naik, regional head of India and Southeast Asia at global investment firm General Atlantic, when looking at a startup, investors should separate the company’s valuation – which is determined by the mass market – and its fundamentals.

Tell CNBC’s “Asian street signs“Earlier this month, Naik said early-stage and growth-stage investors have made a lot of money in India over the past two years. That’s in part due to exiting, he said, which gives allowing them to inject more capital into India’s tech ecosystem and help startups grow.

An exit occurs when a founder sells their startup to a larger company or takes it public through an IPO.

Zomato’s food delivery partner in Kolkata, India.

Debarchan Chatterjee | NurPhoto | beautiful pictures

“From the last 18 to 24 months you’ve seen the number of IPOs going on, the companies on the IPO roadmap, how companies trade and they’ve launched, which gives you a great confirmation. Our region is one of the most attractive regions to invest in growth, says Naik.

What’s next?

While startups are expected to continue to attract capital into 2022, the pace of fundraising and growth could be relatively slow.

That’s because there’s been a lot of pent-up demand this year around funding rounds slated for 2020, but postponed because of the Covid-19 pandemic, according to Amit Anand, creative partner. founded at Jungle Ventures.

“If I look at all the fundraising that has taken place this year and possibly spread to 2020 and 2021, the picture is different,” he told CNBC.

The picture still shows India as a growing market, but indicates a more steady, long-term year-over-year growth rather than a one-time spike, Anand explained. For international investors like Singapore-based Jungle Ventures, he said India is a strategic market and bets are often made over the long term.

Select stocks and investment trends from CNBC Pro:

.



Source link

news7f

News7F: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button