Why Investors Remain Bullish on India's Start-Up Outlook for 2022

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India’s technology start-ups will continue to attract capital from both private and public markets next year as they grow and mature, investors told CNBC.

Indian tech start-ups also raised a record amount of capital from private equity and venture capital firms. Those investors pumped in $28.2 billion worth of tech investments this year across 779 deals, according to information provided by Asia private equity and venture capital intelligence provider, AVCJ. That marked a 200% jump in capital compared with the $9.4 billion invested last year.

"It has validated the fact that large companies can be built from this region — and create significant shareholder value. And with several promising IPOs lined up for next year, we expect this trend to continue," Anandan said.The reception of some of India's top tech IPOs has varied among investors. While Zomato shares made a stellar debut and are up around 5.44% from their first day of trading on July 23, Paytm is down more than 13% from its Nov. 18 debut.

"Majority of these [companies] are not profitable and they don't look like they will be in the next four or five years, so, it's a bit hard to justify the valuation," he said. "The last 18 to 24 months, you have seen the number of IPOs that are happening, the companies in the IPO pipeline, the way companies have traded and they have come out, which gives you a great validation that the global capital markets are looking at our region as one of the most attractive regions to invest in growth," Naik said.While start-ups are expected to continue attracting capital in 2022, the pace of fundraising and growth may slow down comparatively.

The picture still shows India as a growing market, but points to steady, longer-term year-on-year growth instead of a one-off spike, Anand explained. For international investors like Singapore-based Jungle Ventures, he said India is a strategic market and bets are generally made for the long run.

 

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