Saturday, 27 February 2016

Extracts from Indian Economic Survey 2016

Startups and Dynamism

One part of the economy that is witnessing unusual dynamism is the start-up sector, focused on e-commerce and financial services. As of January 2016, there were 19,400 technology-enabled startups in India, of which 5,000 had been started in 2015 alone.1 No less than 2000 of the startups have been backed by venture capital/angel investors since 2010, of which 1005 were created in 2015 alone. Indian start-ups raised $3.5 billion in funding in the first half of 2015, and the number of active investors in India increased from 220 in 2014 to 490 in 2015.2 As of December 2015, eight Indian startups belonged to the ‘Unicorn’ club (valuations greater than $1 billion).
It is important that start-ups, too, see “exit” (the theme of Chapter 2), which would take the form of these companies being listed, allowing the original private investors to cash in on the initial investment, and plough it back into other similar ventures. Exit valuations in India are still low but are expected to increase as the impact of new SEBI policies on listings comes into effect, and as equity markets in general revive from current low valuations caused by a sense of gloom in the global economy.
1 Based on the research done by Your Story and iSPIRT.
2 NASSCOM report titled “Startup India-Momentous Rise of the Indian Startup Ecosystem”.

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