What next after Zomato’s stock debut?
Flush with start-ups, the country’s tech moment arrives
Last week marked a watershed for technology start-ups in India, as a record bout of fund-raising shifted attention to the world’s second-most populous market.
Food-delivery app Zomato Ltd became the nation’s first unicorn to make its stockmarket debut, raising $1.3 billion with backing from Morgan Stanley, Tiger Global and Fidelity Investments.
The parent of digital payments start-up Paytm filed a draft prospectus for what could be India’s biggest IPO at $2.2 billion, while Flipkart Online Services Pvt raised $3.6 billion at a $38 billion valuation, a record funding round for an Indian start-up.
“Indian entrepreneurs have been quietly building start-ups for a decade now, the country’s internet infrastructure has vastly improved in that time and there’s a very good appetite for tech stocks globally,” said Hans Tung, the Silicon Valley-based
managing partner of GGV Capital, which manages $9.2 billion in assets. “Investors are beginning to see the huge upside and they expect India to be a China.”
Many of India’s 625 million internet users are just dipping their toes into the world of video streaming, social networking and ecommerce.
Online opportunities
Opportunities in online shopping are particularly attractive, as e-commerce accounts for less than 3 per cent of retail transactions. Tech start-ups in India are still paying to build supply chain and delivery networks.
India’s population is expected to overtake China’s this decade and the mood now among investors could not be more different in the neighbouring nations.
Indian tech companies “can attract global investors who’ve burnt their hands in Chinese tech companies,” said Nilesh Shah, group president and managing director at Kotak Mahindra Asset Management Co in Mumbai. The successful listing of a few loss-making start-ups could lead to re-rating of many existing companies and send the market higher, he said.
Record funding
India had a record $6.3 billion of funding and deals for technology start-ups in the second quarter, according to data from research firm CB Insights.
Flipkart, one of India’s two dominant e-commerce players along with Amazon. com Inc, is among a slew of start-ups planning to tap public markets in the next 24 months, with a line-up that includes insurance marketplace Policybazaar’s parent ETechAces Marketing & Consulting Pvt., logistics provider Delhivery Pvt. and ANI Technologies Pvt’s Ola ride-hailing service.