Encouraged by successful IPOs in India, the majority of start-up founders (58 per cent) consider IPO listing in India as the most preferred exit option, according to InnoVen Capital’s India Startup Outlook Report 2022.
This is a significant increase, as compared to the 30 per cent start-up founders preferring India listing in 2020. Further, 71 per cent of founders believe that IPO is the likely mode of exit for their investors. InnoVen Capital’s report is based on the insights gathered from 100 start-up founders across stages and sectors such as FinTech, SaaS, D2C, logistics, education, B2B, and others.
InnoVen Capital is a debt firm that offers multiple debt capital solutions, including term debt, acquisition finance, growth loans and working capital.
Exit options
Further, the report finds that mergers and acquisitions continue to be the second most likely exit option, which is largely consistent with 2020 survey while 71 per cent of founders have a preference for IPO exits, a significant increase over past years. Out of all the sectors, AgriTech and Logistics start-ups are most keen to do an IPO in India over other exit options.
It also shows that 84 per cent of founders had a favorable experience in raising capital in 2021 and 75 per cent of founders believe that the fundraising environment will be even stronger in 2022.
Ashish Sharma, Managing Partner, InnoVen Capital India, said, “2021 will be remembered as the year when the Indian venture eco-system hit an inflexion point. A record $38 billion of capital was invested into start-ups. 44 new unicorns were born, including 15 from our portfolio. Perhaps the most promising aspect was the IPO story, with Zomato and Nykaa leading the way.”
The study found that the majority of the founders chose growth over profitability, with 83 per cent of them choosing growth as their focus area. And as more startups come in, employment is expected to be higher in 2022 with FinTech, D2C, AgriTech and HealthTech hiring the most.
Trends
The shift from the conventional office culture remained constant with 54 per cent of start-ups operating in either work-from-home (WFH) or hybrid models. This trend is expected to continue in 2022. However, there is no consensus on whether Covid has been a positive influence on the culture or not. Half the founders see a positive impact on productivity and innovation, while the other half believe that WFH has led to a lack of teamwork/collaboration and a challenging work-life balance.
Further, in the over-hyped category, Quick Commerce topped the list while HealthTech was chosen as the most under-hyped sector. While the report found an improvement in the Indian startup ecosystem, improving gender diversity continues to be a challenge. Only 30 per cent of start-ups surveyed had more than 20 per cent of women in leadership roles, which is a slight reduction from 33 per cent the year before.