The country has more than 19,000 technology-enabled startups, led by consumer Internet and financial services startups, the report said. “Indian startups raised $3.5 billion in funding in the first half of 2015, and the number of active investors in India increased from 220 in 2014 to 490 in 2015. As of December 2015, eight Indian startups belonged to the ‘Unicorn’ club (ventures that are valued at $1 billion and upwards).”
Total funding for Indian venture capital-backed companies topped $12 billion (Rs 82,500 crore) across more than 1,220 deals in the past two years, with $7.3 billion invested in over 880 deals in 2015 alone, according to startup data aggregator Tracxn.
However, exits for investors, especially through the initial public offering route, continue to remain sparse, driven down by a combination of choppiness in markets globally, difficult listing rules and, in the case of consumer internet startups, the lack of profitability.
“It is important that startups, too, see ‘exit’, which would take the form of these companies being listed, allowing the original private investors to cash in on the initial investment, and plough it back into other similar ventures,” the government survey stated.
“Right now, it’s very hard for investors and startups to list in India, which is why we see so many of them relocate outside the country’s borders. Exits through IPOs in India will take at least another 5-7 years,” said Avinash Raghava, co-founder of iSpirt, a leading software product think tank.
According to the survey, ecommerce growth in 2015-16 is expected at 21.4%, to reach $17 billion.
It, however, also stated that exit valuations are expected to increase. “Exit valuations in India are still low, but are expected to increase as the impact of new SEBI policies on listings comes into effect, and as equity markets in general revive from current low valuations caused by a sense of gloom in the global economy,” the survey stated.
“It’s good that the policy makers have started listening to us, and are making changes,” said Raghava.
The country’s equity bourses have been under pressure, due to sustained foreign fund outflows and selling by retail investors, amid the ongoing turmoil in stock markets and concerns over the global economy.
In its bid to further simulate the country’s startup ecosystem, the government has rolled out a number of ambitious projects – Startup India, Make in India, Digital India and Skill India – as it looks to drive sustainable economic growth and generate large-scale employment in Asia’s third-largest economy.
Source: The Economic Times