Indian startups getting ready for IPO window, says Sequoia Capital's Rajan Anandan
The Indian startup ecosystem continues to remain in a vibrant environment despite the pandemic of COVID-19 and the year 2022 is likely to see a rush of IPOs from these companies, according to an influential voice from this sector.
Participating in a interaction at the Bengaluru Tech Summit (BTS) 2020 on the topic “Startup Reboot”, Rajan Anandan, Managing Director, Sequoia Capital India, said, “Over the next two years there is going to be quite a number of IPOs from startups in India. 2022 will be a big year.”
He was responding to the question from Naganand Doraswamy, Managing Partner, Ideaspring Capital, who highlighted the fact over the last ten years, the Indian startup ecosystem has not really witnessed any large exits in terms of IPOs or M&As, with the sole exception of Flipkart being bought for around $16 billion by Walmart in 2018.
According to Rajan, the best form of exit for the promoters and investors in startups is through the IPO route as the stock market will test the strength of these companies.
However, he added that it should be goal of the startup to create an enduring company which is also very valuable and interesting.
The M&A momentum in the Indian startup ecosystem has been far and few between, and there are hopes that this would pick up pace in the near future.
Rajan quipped, “The great thing about India is that everything happens. Once it happens, it happens on scale.”
On the current mood in the startup ecosystem, Rajan highlighted that fact that India attracted $1 billion in venture investments in 2010 which went up to $14.5 billion in 2014. “There is enough capital if you building high quality business,” he remarked.
Naganand asked Rajan on what measures are needed in the present juncture to increase the flow of capital in the ecosystem which will aid in the pace of growth of startups.
Rajan felt that there will be opportunities for Indian startups to list within the country and overseas with each of them having their own characteristics. Though, he felt that the most important growth element for the startups will be on how the GDP of the country performs.
Naganand was interested to know from Rajan on what the interesting business opportunities in the near future could be. According to Rajan, SaaS, online education, digital health, direct to consumer business, agritech are some of the strong bets.
Rajan highlighted on the kind of role that SaaS startups are playing in the country’s ecosystem. Two years, there was not even a single unicorn from this segment but today the country has five and belief is that this segment will set to grow even more faster.
Naganand also bought home the point that the technology innovation from the startups in the country has not really been on par with the global standards. Though Rajan completely flipped the argument that Indian startups need to play to strength.
“We (Indian startups) are very good at taking existing technology and building it for scale and there are extraordinary opportunities available,” he remarked citing the examples of companies like TCS and Reliance Jio.
At the same time, there was also some light banter between the two as Naganand was very curious to know how Rajan was spending his time during COVID-19, especially when travel is restricted. Prior to COVID-19, Rajan was always on flights every week of the year.
“I have now started eating right and working out. It has made me much more energised and hope this is the new normal,” Rajan quipped.
Rajan has also started to discover the value of Netflix and believes it is a killer product.
As a parting advice, Rajan said, “I am of the deep belief that you should things of what you love. Give it all you have got and it should make an impact.”