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2021 tech boom: India’s year of the unicorn

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Workers at a poultry shop with a QR code for Indian digital payment platform Paytm on display. AFP

2021 tech boom: India’s year of the unicorn

SUMIT Gupta has had a big year – turning 30, getting married and seeing his start-up become one of India’s newest tech unicorns.

Hampered by the coronavirus pandemic and too busy expanding and getting funding for his cryptocurrency platform CoinDCX, his team finally grabbed a few days on the beach in Goa state to celebrate recently.

“That was very delightful to everyone,” Gupta told AFP. “It’s been a very, very exciting journey. I’ve learned a lot … The future of India is very bright.”

In 2021, 44 Indian unicorns – privately held start-ups valued at more than $1 billion – were minted as investors piled money into a country long overlooked despite its vast potential.

Overseas funds put more than $35 billion into Indian start-ups in 2021 – a tripling from 2020, according to data compiled by Tracxn – buying into everything from fintech and health to gaming.

Foreign investors have long preferred China, another Asian country that records more than a billion people.

But Beijing’s clampdown on runaway growth in China’s powerful internet sector, and reining in of big businesses, have spooked investors and wiped billions off giants such as Baidu, Alibaba and Tencent.

In the start-up space, investors in 2021 sank $54.5 billion into Chinese firms, down from $73 billion in 2020, analysis by GlobalData showed.

India by contrast became more attractive, with its large pool of well-educated entrepreneurs upending how many businesses work using a fast-developing digital infrastructure.

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

“I think India is about 13-14 years behind China in terms of size and scale of the market. India’s overall digital marketplace is about sub-$100 billion today but that number can easily be a trillion or $2 trillion over the next 10 to 15 years.”

Among those attracted are Japan’s Softbank, which invested $3 billion in India in 2021, as well as China’s Jack Ma and Tencent, and US-based 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,” Softbank’s founder Masayoshi Son said in December.

Indian tech also saw a record number of initial public offerings (IPO) in 2021.

Companies going public included food delivery app Zomato and beauty products platform Nykaa, listing at huge premiums to their IPO prices and making billionaires of their founders.

At their October high, Indian stocks had rallied more than 125 per cent from their April 2020 low, becoming one of the world’s best-performing equities markets.

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

For instance, local fintech giant Paytm, the biggest IPO of 2021, is yet to make a profit and its share price is some 40 per cent down from its IPO valuation.

India’s bumper year for start-ups also masks serious problems for an economy struggling to provide jobs for the 10 million young people entering the workforce every year.

Desperate for employment, many take low-wage “gig economy” jobs, earning as little as 300 rupees ($4) a day with little to no job security.

But for white-collar workers in the start-up sector, demand for qualified workers has outstripped supply in 2021.

Flush with cash, companies are competing to recruit and retain top talent, offering cash, stock and even motorcycles and tickets to cricket matches as incentives.

“Recruiters reach out to us all the time,” one tech employee told AFP on condition of anonymity.

“Salaries have inflated in the last year and it feels like everybody is hiring. People are changing their jobs constantly.”

CoinDCX’s Gupta, fresh from his beach holiday, was bullish.

“If you remain persistent, it’s very possible to create a unicorn, especially if you’re living in a country like India, which is full of opportunities,” he said.


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