Whipped up by the successful listings on the bourses this year, the majority of startup founders, accounting for 58 per cent of the total, think IPO listing in India provides them with a better exit option, according to InnoVen Capital’s India Startup Outlook Report 2022.
This is a significant jump compared to the 30 per cent of start-up founders picking IPO listing in India in 2020. Further, the findings showed 71 per cent of founders think that IPO is the preferable mode of exit for their investors.
InnoVen Capital gathers insights from 100 start-up founders across stages and sectors such as FinTech, SaaS, D2C, logistics, education, B2B, amongst others, and analyzes them.
If Not IPO, Then Mergers & Acquisitions!
According to the report, mergers and acquisitions continue to be the second most preferred exit option amongst founders, which mostly aligns with the 2020 survey. Though, with this, the survey registered a fall of 3% in this preference; only 25% of the founders believe that M&A provides a smooth exit versus 28% in the year-ago period.
For the 2022 outlook, the report says 71 per cent of founders feel the IPO provides a smooth exit, as against 47% in 2021.
Out of all the sectors, AgriTech and Logistics start-ups are willing to do an initial-share sale in India over other exit options.
How Is the Fundraising Environment In India?
The survey reveals 84 per cent of founders had a favourable experience in raising capital in 2021 as against 54% in 2020, while 6% of the founders faced a discouraging environment.
On the question of, “Will the funding environment be more favourable in 2022?
75 per cent of founders had an optimistic view on this, especially the founders of Saas, fintech and D2C.
Ashish Sharma, Managing Partner, InnoVen Capital India, said, “2021 will be remembered as the year when the Indian venture ecosystem 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.”
Within What Time Founders Think They Should Exit?
The report reveals that approximately 60% of respondents expressed that they find a timeline of 3-5 years preferable for an exit.
A total of 18% of growth/ late-stage founders believe that they can drive exits for investors in the next two years, while it accounts for only 4% in the case of early-stage startups.
What Will Be The Status-quo Of Hirings In 2022?
According to the survey, 75% of the founders said they expect higher hiring in 2022 as against 2021, driven by high growth aspirations and large fundings, while 19% of the respondents do not see much change and 5% of the participants said hirings may even plummet in 2022.
Overall, hiring is expected to increase in 2022, and sectors like AgriTech, Fintech, HealthTech, D2C like to be buoyant on hirings this year.
Some Extra Scoop!
Question 1: Which Startup Emerged As The Most Admired Startup In India?
Answer: Zerodha, followed by Swiggy, Zomato, Razorpay and Nykaa.
Question 2: Which India Founder Admired The Most?
Answer 2: Deepinder Goyal, followed by Nithin Kamath, Falguni Nayar, Sridhar Vembu and Girish Mathrubootham.
Question 3: Which Global Founder Emerged As The Most Admired Founder?
Answer 3: Elon Musk, followed by Jeff Bezos, Brian Chesky, Jack Dorsey and Mark Zuckerberg.