WHAT MR. INDIA HAS TO SAY ABOUT STARTUPS?
In the long-lost lanes of India, there is a boulevard paving way to new destinations. Nowadays people fight the battle of corporate arena and raising the armour yet high end up setting up a Start-up. A decade back it might have been a struggle to set up a start-up or fund a start-up but these days, we have a lot of options available.
The Indian start-up scenario is a game growing stronger with the rise of over 40,000 start-ups which have created more than $130 Bn of value from January 2014 to September 2018, with 31 unicorns (startups with a billion-dollar-plus valuation), India is said to be the third-largest startup ecosystem in the world. The funding landscape too has substantially matured with most global VC firms including those from the East (like China, Japan and Korea) setting up shop in India. The startups in India saw a 108 percent growth in 2018 amounting to USD 4.2 billion as compared to 2 Billion in 2017.
As one gazes towards the time slipping in the hourglass the deal count has seen an increase ticking to more than 4237 deals over the years and has unfolded to more than 846 deals in 2018 itself. The top cities gaining traction in the start-up space are Bengaluru, Delhi & NCR, Mumbai, Chennai, Hyderabad along with emerging hubs such as Jaipur, Kerala and Kolkata. Technology is going to add a petal of 1 trillion to the rose of the 5 trillion economy dream. Consumer spending on technology is also catching pace and guess who are the contributors to this meticulous growth path? Well it’s the start-up chaps running this show to an extent and the top sectors receiving funding as at 2019 include Enterprise applications, Consumer, Retail, Ed Tech, Health Tech, FinTech, Technology,Food, AI, Media & Entertainment, Life sciences, Energy, IOT, Enterprise Infrastructure and Agriculture.
Amid the slowdowns in the economy the number of deals in the start-up space has observed trends which might provide insights to one for to gauge upon (Refer figure1). Now tilting ones focus towards the global scenario, one might raise an eyebrow seeing the success of the Global start-up platforms and how India is now diving towards this Global Scenario. This bomb crater is yet to explode in India. To glance through this global phenomenon, there are sweeping facts stated through including the number of companies on these exchanges since inception has seen an upward trend where take for example the Chinext platform which was established in 2009 has seen more than 770 companies listed, the Japan mothers platform has seen more than 294 companies since its inception in 1999, TSX Venture exchange has seen more than 1659 companies listed since 1999 and the China Star Market launched recently in 2018 has seen more than 29 companies listed.
The newly launched stock exchange in USA that is the LTSE is yet to have its debutant company. While the major global sectors of a few start-ups stock exchange remain to be Manufacturing, IT, Pharmaceuticals, Mining, Finance, Life science, Retail. Over the years India has also witnessed Government Initiatives rolling the start-up ballgame amid these measures is a disruptive change gaining eminence i.e. the Start-up Listing which has witnessed two firms getting listed on the BSE Start-up platform in 2019 one among the other platforms available for start-up listing, other such platforms include SEBI IGP platform and NSE Platform for technology start-up. While this opens up a new avenue for the investors it levels India with the global playing field where such disruptive platforms have been successful as stated above.
One of the most noticeable trajectories seen in the global start-up listing is that a loss-making company is also given the wings to fly to the IPO space and this is also now a tectonic shift in the Indian gameplay with this platform but how does this synchronize with the Indian Investing funds is still an unprecedented outcome. The haloed investors pushing forward such leapfrogging technological innovation include Angel Investors, PEs, VCs and Investment funds to name a few are the already existing investors who can now explore this new start-up IPO avenue also for innovative investing.
Number of benefits come rolling around with this new avenue where one can explore the possibility of an IPO between various stages (Refer figure 2) of the fund-raising scenario which include Brand Visibility, Transparency to Investors, Tax exemption to investors and start-ups amongst others. While the eligibility criteria for listing of such companies are the key factors that distinguish this platform from the already existing SME or mainboard platform. This start-up listing propaganda is fairly a new concept in India and the Reich we live in is a tech savvy rabble and this progressive era obstinately refuses to turn around. Coping with turbulent waters include facing the waves of challenges the start-ups face including raising funds which seems to be the biggest challenge, followed by brand visibility, government and regulatory issues and Buy back agreements which might be partly resolved by this new avenue.
While start-ups are the lullaby which India is singing as a part of its growth trajectory, one can keenly wait for this space to depict more growth stories which might set up the new canvas for a successful India.