Investment platform Groww, messaging bots startup Gupshup, digital pharmacy API Holdings Pvt., app developer Mohalla Tech and social commerce startup Meesho Inc are latest entrants, reports Asian Lite News.
It was an historic week for India’s technology industry as in the space of four days, the country minted at least six new startups with a valuation of $1 billion or more.
The investment platform Groww raised money at a valuation of more than $1 billion, messaging bots startup Gupshup hit $1.4 billion, digital pharmacy API Holdings Pvt. was valued at close to $1.5 billion, app developer Mohalla Tech surpassed $2.1 billion, social commerce startup Meesho Inc. also reached $2.1 billion and financial-technology provider Cred rounded out the blessing of unicorns at $2.2 billion.
Global investors such as Japan’s SoftBank Group Corp. and South Africa’s Naspers Ltd. see growing opportunity in the country’s startup scene.
India has long trailed well behind the U.S. and China in the amount of venture capital money invested in startups. The total value of deals in 2020 was $11.8 billion, compared with $143 billion in the US and $83 billion in China, according to researcher Preqin.
But several startups have emerged recently to signal the potential. Digital payments giant Paytm reached a valuation of $16 billion, making it the most valuable in the country, according to CB Insights. Online-education startup Byju’s is rasing money at a $15 billion valuation, Bloomberg News reported last week.
Flipkart, the e-commerce giant acquired by Walmart Inc. in 2018, is targeting an initial public offering in the fourth quarter that could value the company at more than $35 billion.
The report noted that the venture investments are helping to diversify India’s industry, long best known for tech services companies such as Tata Consultancy Services Ltd. and Infosys Ltd.
The Covid-19 pandemic has accelerated the adoption of online technologies in India, perhaps even more than in other countries. During the coronavirus pandemic and the stringent lockdowns of last year, more than 1,600 new startups were founded, taking the total in the country to over 12,500, according to a January report by Nasscom, the country’s technology industry trade body.
More than 55 of these are potential unicorns, the report said, what the venture industry refers to as “soonicorns.”
“The surge of funding and the breeding of unicorns is not a surprise because India has the third-largest startup ecosystem in the world and the third-largest market for such startups,” managing partner at 3one4 Capital Advisors LLP Pranav Pai was quoted as saying.
Pai said he knows of at least six new unicorns that will be minted in the next few months. While $20 million rounds were notable five years ago, startups are scaling very quickly and raising $100 million to $200 million rounds nowadays, he said.
Startups begin to shun Chinese investment
Paying heed to Prime Minister Narendra Modi’s call to build a self-reliant India amid the new normal, Indian tech startups have begun to shun Chinese investment as Indian corporates and wealthy individuals, along with investors from other countries, are funding desi companies more than ever.
In 2019, Chinese investors poured $3.9 billion into India, up from $2 billion in 2018. This investment scenario took a turnaround from May last year amid face-offs and skirmishes between Indian and Chinese troops at locations along the Line of Actual Control (LAC) in eastern Ladakh.
India rolled out a new policy last year to block “opportunistic takeovers”, requiring all foreign direct investment (FDI) from neighbouring countries to be directly approved by the government.
As a result, the investment from China in Indian companies fell down to $263 million across 15 deals in the first half of 2020.
The Indian tech startup base has witnessed a steady growth at a scale of 8-10 per cent (year-on-year) with over 1,600 tech startups and a record number of 12 additional unicorns added in 2020 — the highest ever in a single calendar year, according to the latest Nasscom-Zinnov report.
Sensing the atmosphere, homegrown tech startups have started to look around for investments within the country, and their calls have been answered.
In mid-March, the existing investors, along with a few prominent Indians, bought out Chinese venture capital firm Shunwei Capital’s minority stake in Twitter’s homegrown rival Koo’s parent company Bombinate Technologies.