Unicorns are feeling at home in India… And India’s making sure it stays that way
Cowboy Ventures is one of the very few Venture Capital Funds to be headed (and founded) by a woman: the redoubtable Aileen Lee, best known for coining the term ‘Unicorn’ to describe privately held tech startups worth in excess of $1 Billion. As the name suggests, these are rare beasts: just 494 exist worldwide according to this year’s Hurun Global Unicorn List, but India is home to more of the elusive creatures than any other country on earth except China and the United States: twenty-one to be precise, which is eight more than the United Kingdom and only marginally fewer than the rest of Europe put together.
The subcontinent’s star class of Unicorns is headed by One97 Communications with a market valuation of $10 Billion, followed by Ola Cabs and OYO Rooms at $6 Billion and $5 Billion respectively. With those kind of figures stacked together it’s barely credible that the ubiquitous PAYTM platform (owned by One97) and Ola Cabs’ now pervasive transport network didn’t even exist a mere nine years ago, but the two companies combined are now worth more than four times the market capitalisation of Marks and Spencer (founded one hundred and thirty five years ago).
But it’s not just about teenagers with smartphones and overextended credit cards: the stellar performance of India’s tech companies is also underpinning a rapid evolution of the subcontinent as global honeypot for Foreign Direct Investment (FDI), which has become a notable success story at the heart of India’s economic miracle. FDI is now a critical source of non-debt finance, essential to the continued turbo charging of the fastest growing large economy on the planet and that certainly hasn’t happened by accident…
Over recent years the Indian Government has taken a series of steps to foster a deliberate growth in FDI, including relaxing previously over rigorous restrictions on investments that had threatened virtual stasis on a variety of sectors as diverse as Defence, Energy and Telecoms (not to mention the venerable old Bombay Stock Exchange which was compelled by government dictat to give overseas investors the cold shoulder). It is a mark of the striking success of these governmental reforms that FDI equity investment into the subcontinent rose to $ 44.37 Billion in 2019, with $7.8 Billion being invested in June alone and India is now the biggest single recipient of Greenfield FDI from the Commonwealth.
This year’s Union Budget also included fresh initiatives to open up FDI in aviation, media and insurance in addition to which the Modi Government has released its Draft National e-Commerce Policy that aims to encourage innovation and entrenchment in an already buoyant technology sector. In October 2018, for example, Vmware, the leading US based software innovator announced its plans to invest $2 Billion on the subcontinent by 2023 and in June 2018, the Department of Telecommunication approved an application for 100% FDI funding to facilitate the merger of Idea and Vodafone that has made Vodafone Idea the single largest telecoms operator in India.
The World Bank reports that it expects private investment in India to grow by 8.8% by the end of 2019 and to overtake private consumption growth over the same period.
No wonder those Unicorns are feeling so much at home…
Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in the potential of this, the fastest-growing large economy on the planet.
It’s hard to disagree with those market analysts who place so much emphasis on the vibrancy and potential of tech companies as a key pointer for future economic growth, and by that marker India couldn’t be better placed to build on the success it has achieved over recent years.
And it's a particular badge of its success in this respect that it can now boast no less than 21 home grown Unicorn tech companies: second only to China and the United States. No wonder then that FDI is currently running at an all time high on the subcontinent.
These are exciting times and they are opening up unrivalled investment opportunities.