Indian tech startups took off in 2021 with capital gains on the private and public markets. The year saw some leading companies, including Zomato and Paytm, debut on the stock exchange.
Indian tech startups have been successful in raising a record amount of capital from private equity and venture capital firms. Investors, according to AVCJ, a private equity and venture capital intelligence provider, injected $ 28.2 billion in technology investments this year in 779 deals. It marks a 200% jump in capital from the $ 9.4 billion invested in 2020.
Rajan Anandan, managing director of Sequoia Capital India, said the venture capital firm is very optimistic about the country’s tech ecosystem and its ability to generate long-term value for stakeholders. He said Sequoia Capital India has seen eight portfolio companies debut on the stock markets in 2021. “The success of companies in domestic and international markets has certainly attracted increased interest from investors around the world. He validated that great companies can be built from this region and create significant shareholder value. Anandan said that with several promising IPOs slated for 2022, the company expects this trend to continue.
However, the reaction of investors to IPOs of the best Indian technologies varies. Zomato shares have made a strong debut and are up around 5.44% since their first day of listing on July 23, while Paytm is down more than 13% from its debut on November 18. Taking advantage of Paytm’s poor response, Mobikwik delayed its IPO.
Nikhil Kamath, co-founder of Zerodha, believes there will be an appetite for future IPOs. He says the bigger question would be how these companies fare in the longer term. “A lot of tech startups, including some of the ones that have gone public, remain overvalued. The majority of these companies are not profitable and it doesn’t look like they will be in the next four to five years, so it’s a bit difficult to justify the valuation.
Sandeep Naik, head of India and Southeast Asia at General Atlantic, said investors should separate the valuation of the company, which is determined by the public market, and its fundamentals. Naik pointed out that over the past two years, early stage and growth stage investors have made a lot of money in India. This was in part due to the exits, which allowed them to inject additional capital into the Indian tech ecosystem and help startups grow.
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“In the last 18-24 months you’ve seen the number of IPOs happening, the companies going IPO, how the companies traded and they exited, which gives you excellent validation of what the global capital markets are looking for. in our region as one of the most attractive regions to invest in growth, ”said Naik.
Amit Anand, founding partner of Jungle Ventures, believes the pace of fundraising and growth is expected to slow in 2022. have been postponed due to the COVID-19 pandemic. Anand explained that while all of the fundraisers that took place this year spanned 2022 and 2021, the picture is different.
But it still shows that India is a growing market.