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India’s Startup Scene Is Just Getting Started with Growth Potential in the US

January 7, 2022

India’s tech companies are growing fast. Very fast, resembling a similar trajectory shown by companies such as Infosys, India’s first large tech company that began in Bangalore in 1981 and famously expanded into the US to become a global company and employ thousands of people around the world. 

India now has the third largest startup ecosystem in the world, after the US and China. India currently has 81 unicorns, or privately held tech companies worth at least $1 billion, a record number, according to TechCrunch. In addition, Indian tech companies raised a record $39 billion in 2021, up four times from 2020. Many Indian startups are seeing their valuations rise quickly.

There was a record number of IPOs in India in 2021. The Gurgaon-based food delivery firm Zomato went public in July. Paytm, a mobile payments and commerce platform; Nykaa, a beauty startup; and Policybazaar, an insurance marketplace; all went public in November.

There are more IPOs in India on the horizon. The online retailer Flipkart, which is owned by Walmart, is considering an IPO in 2022 or 2023. The hotel chain Oyo filed for an IPO in September. The logistics startup Delhivery, the online pharmacy PharmEasy, and the car marketplace Droom filed for IPOs in November. And the ride-hailing company Ola plans to go public in the first half of 2022.

In India in 2021, there were 396 seed-stage deals totaling $706 million and 166 Series A deals totaling $1.67 billion, according to Preqin data cited by the Economic Times. In addition, there were M&A deals worth $90 billion in the first 9 months of 2021, up 35% from the same period in 2020, according to Nikkei. With plenty of IPOs and M&A activity, previous concerns about the amount of liquidity in the Indian market are abating, according to Nikkei.

Investors minted six new Indian unicorns in the span of four days in April of last year, compared to 7 new unicorns in all of 2020, according to Bloomberg. India’s unicorns have a combined market value of $240 billion, and they’re in sectors ranging from e-commerce, fintech, and education to logistics and delivery, according to a Credit Suisse report cited by Bloomberg.

By 2025, India is expected to have 62,000 startups, including 100 unicorns, according to a report by TiE-Delhi and Zinnov cited by Mint. And the combined valuation of India’s startups is expected to reach $1 trillion in 2025, according to 3one4 Capital, cited by Mint.

Large investors such as Tiger Global, SoftBank, Sequoia Capital, and Accel are pumping money into India’s startup ecosystem. Many investors also are investing in India for the first time. About 211 funds made debut investments in India in 2021, about 64 more than in 2020, according to Tracxn, a startup data tracker, cited by Nikkei. These new investors include Andreessen Horowitz and GSV Ventures. Investments by hedge funds in Indian startups also have tripled in 2021, according to Nikkei.

The digital economy is growing in India. There are more than 700 million internet users in India, and about 500 million Indians have yet to come online, according to CNN. The fast adoption of online services in the wake of COVID-19 has been a boon to India’s startups, according to Nikkei.

India’s unicorns include ShareChat, a social media platform; Groww, a fintech startup helping millennials invest in a number of different asset classes; Gupshup, a business messaging platform; and Slice, a credit card company.

Given the sizable growth of India’s tech companies in recent years with experts predicting further traction, this is a great time for India’s startups to replicate the success of past companies like Infosys and expand into the US. As the US is the biggest economy in the world, with an annual GDP of $21 trillion, Indian companies with their high-tech solutions will find a strong customer base and the potential to become global companies. 

At Alariss, we have worked with multiple high-growth Indian startups and have helped them successfully set up their US Sales team. If you’re built in India and made for the world, we would love to chat! Please fill out this form today.

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