2021, the year of unicorns for India’s emerging tech sector

2021 was a great year for Sumit Gupta – she turned 30, got married, and watched her start-up become one of the tech industry’s new unicorns in India.

Affected by the pandemic and after busy months trying to expand and secure funding for its CoinDCX cryptocurrency platform, the Gupta team finally took a few days off on the beach in Goa to celebrate the successful year.

“It was really nice for everyone,” Gupta said. “It has been a very, very exciting trip. I have learned a lot. The future of India is very bright, “he added.

This year, 44 new unicorns emerged in India, emerging private firms valued at more than $ 1 billion, demonstrating the growing investment interest in a country often forgotten despite its significant potential.

Foreign funds placed more than $ 35 billion in Indian startups in 2021, tripling the amount in 2020, according to data compiled by the Tracxn cabinet. These investments spanned all kinds of sectors: from tech finance to healthcare to gaming.

Traditionally, foreign investors in Asia favored China, also with a population of more than 1 billion people and an economy six times the size.

But Beijing’s drive to closely monitor its powerful digital sector and curb big business has alienated investors. This year, investments in emerging Chinese firms fell from $ 73 billion in 2020 to $ 54.5 billion, according to GlobalData analysis.

Instead, India has become much more attractive, with a long staff of well-trained entrepreneurs using a rapidly developing digital infrastructure.

“India is really the final frontier where business can attract a sixth of the world’s population,” said Siddharth Mehta, founder of investment firm Bay Capital Partners.

“I think India is 13-14 years behind China in terms of market size and scale. Currently, India’s digital market is below US $ 100 billion, but this figure can easily reach US $ 1 trillion or US $ 2 trillion in 10 to 15 years, “he said.

“India will be great”

Among those who fell before the charms of the Indian entrepreneurial universe are the Japanese Softbank, the Chinese Alibaba or Tencent or the American Sequoia Capital and Tiger Global.

“I believe in the future of India. I believe in the passion of young entrepreneurs in India. India will be great, ”said Softbank founder Masayoshi Son this month.

The Indian tech sector also saw a record number of public offerings for sale this year.

Companies such as the delivery application Zomato or the beauty products platform Nykaa went public with notable prices that made their founders billionaires.

At their peak in October, stocks in India had risen more than 125% from their lowest point in April 2020, making it one of the best performing exchanges in the world.

Overvalued companies

But some experts warn that some of these firms may be overvalued.

For example, technology finance company Paytm, which made the biggest IPO of the year, has yet to make a profit and its stocks are 40% below their initial valuation price.

And the frenzy of new unicorns does not hide the serious problems of an economy struggling to absorb the 10 million young people who enter its job market each year.

Desperate to find employment, many end up taking low-paying jobs in the “gig” or sharing economy to earn just $ 4 a day without any job security.

But for professionals in the startup sector, the demand for skilled workers has outstripped supply this year.

Overrun with money, companies compete to recruit and retain talent, offering high salaries, stocks, and even motorcycles or tickets to cricket matches as incentives.

“Recruitment companies contact us all the time,” explained an employee of the sector on condition of anonymity. “Salaries have been inflated this year and it seems like everyone is hiring. People change jobs constantly, ”he added.

Fresh from his beach vacation, Gupta is optimistic. “If you persist, it is very possible to create a unicorn, especially if you live in a country like India, which is full of opportunities.”