Rise of India's Tech Start-ups

Technology is the enabler that makes economies of scale easy. Seven of the 10 largest companies in the world by market capitalisation are technology companies. Every transition — from a hunter-gatherer economy to an agrarian one, from manufacturing to service dominance, and the present technology canvassing of the ecosystem — confirms that change is good. The largest company, Apple, is worth more than ₹177.7 lakh crore. In 2020, when Apple's market cap amounted to ₹157.7 lakh crore, it was two-thirds of India's annual GDP of ₹222 lakh crore. In terms of size, the top 10 organisations together are equal to 4.5 Indias, GDP-wise.

Technologically India

With the buzz around technology that can catapult an entire industry to a new level, India's focus is clear. From 48% digital-buyer penetration in 2016 to 70% in 2020, our acceptance has given a boost to the start-up space. Flipkart, Ola and Zomato are household names today.

Bangalore-headquartered, Singapore-registered e-commerce giant Flipkart grew 15 times by 2019 from a revenue of ₹2,800 crore in 2014. Walmart acquired Flipkart in 2018 in a ₹1.2 lakh crore deal, and news has it that Flipkart led Q4 FY20-21 net sales internationally for Walmart. Walmart has not set a date for Flipkart's IPO — however, it is open to the idea.

Ride-hailing platform Ola was hit hard by the pandemic as travel came to a standstill. One of its investors, Vanguard Group, discounted its value by 50% in June — from ₹44,430 crore to ₹22,215 crore. Ola successfully closed ₹3,702 crore in July 2021 at a 25–30% discount to the previous year's valuation. Ola's IPO is in the offing.

Zomato's IPO

Zomato's CEO, Deepinder Goyal, mailed his employees in September 2020 about his desire to list the company on the Indian stock exchange by mid-2021. At the time, it was considered an ambitious announcement. At an issue size of ₹9,635 crore, Zomato's IPO was oversubscribed 38 times, and July 2021 witnessed a listing at a 50% premium over its issue price. From there, the stock touched a high of double the issue price of ₹76.

The IPO proceeds will fund both organic and inorganic growth initiatives.

It even surprised market pundits when a company with no history of profitability — and with losses amounting to an estimated ₹8,164 crore in the year ended March 2021 — listed on the bourses. Zomato was present in 23 countries and 526 cities, and boasted 3.5+ lakh active restaurant listings as of December 2020. It marked the start of a phase in the market when future prospects alone decide investor appetite for a stock. It also gave a huge boost to the confidence of the tech start-up community as a whole.

Looking ahead

The pandemic has made technology a necessity; it is no longer a luxury. It has catapulted organisations that are capable of working from anywhere — or from the cloud, as they say.

Young investors, who have experienced the services or products of industry disruptors, are riding the wave. Zomato's IPO has paved the way for the likes of PolicyBazaar, Delhivery, Nykaa, Paytm and Ola. And a Chennai-based start-up — Freshworks — filed a billion-dollar IPO in the US stock market.

Make hay while the sun shines, and keep a lookout for the next big opportunity. India's burgeoning ed-tech space has yet another unicorn: Bangalore-based Vedantu is now the country's fifth ed-tech unicorn.

Each transition — from a hunter-gatherer economy to an agrarian one, and from manufacturing to the current fourth industrial revolution — shines the spotlight on change. Every few decades, the old order makes way for the new. Change truly is the only constant.