According to the founder of the Indian online payments pioneer that raised funds in the country’s largest initial public offering ever, the wave of surging valuations for India’s technology startups is here to stay because the country offers a great opportunity for growth.
Indian startups are not overpriced, and “many are understating what India’s opportunity will be,” according to Vijay Shekhar Sharma, the founder, and CEO of Paytm, which raised $2.5 billion in its IPO this week. “If we look at what has happened in the United States, China, or other parts of the world, including Indonesia, India is an opportunity that will dwarf many other countries’ startup or technology ecosystems,” he said Thursday at the Bloomberg India Economic Forum.
According to Tracxn, investors have poured $7.6 billion into Indian fintech companies, nearly four times the amount invested in their Chinese counterparts. Other digital startups, such as FSN E-Commerce Ventures Ltd., which works the Indian beauty startup Nykaa, and food delivery app Zomato Ltd., have seen overwhelming demand for shares.
An open network is attracting hundreds of companies into India’s fintech space, which include Alphabet Inc.’s Google, Walmart’s Phonepe, and Amazon.com Inc., resulting in a world-beating digital payments surge. Digital payments have more than fivefold increased in the last five years and are expected to reach $2.2 trillion by March 2023, while digital lending is expected to triple to $350 billion. The Indian fintech industry’s rapid expansion risks regulatory reprimand.
Providing clarity on regulations, facilitating an easy exit for funds from start-ups, establishing a local pool of capital from investors, and avoiding retrospective taxation will further open the floodgates of money, according to Vani Kola, founder of early-stage venture capital firm Kalaari Capital, at the event.