HNIs To Invest Up To $ 30B In Tech Startups By 2025: Report
According to a report published by Praxis Global Alliance India and 256 Network, India is on its way to produce 150 unicorns by the end of 2025 which will be thrice as many we have currently. This of course has its roots in the growing growth of investment opportunities for homegrown tech ventures.
This report claims that by 2025, investments in Indian tech startups to rise to $30 billion.
Between 2014 and 2020, around 55,000 new Indian startups have raised over $70 billion in funding, reported by “Turning Ideas to Gold”.
Moreover, this report pointed out that “VC/PE funds raised during periods of economic crisis tend to have better returns when compared to those raised in non-crisis periods,” the report pointed out.
So far as percentages go – public tech companies account for 12.6% of India’s GDP while Private techs account for 10.2% of the GDP already. – reportedly.
With the potential to go public, more than 250 private Indian tech companies have valuations above $100 million.
According to the report, India is expected to have about 10,000 UHNIs (ultra-high-net-worth individuals) including business leaders, celebrities, NRIs, and digital entrepreneurs with a cumulative wealth of $700 billion by 2024
“Family offices are being set up as full-service private wealth management services to cater to one or a small clutch of these ultra-high-net-worth individuals,” the report said.
Since 2015, more than 140 family offices catering to Indian UHNIs and heavily investing in the Indian startup space are found pro-actively involved in over 50 such deals every year.
Around 190 Soonicorns are expected to become Unicorns by 2025, according to this report.
Experts say that investments in Technology have emerged as a lucrative alternative asset class to traditional investments like equity, debt, commodities, and real estate
“However, it is difficult to get exposure to high growth portfolios which use technology to solve real challenges and build large companies in a relatively short period. Backing such companies requires deep expertise, strong networks, patience, and sufficient capital,” said Kris Gopalakrishnan, co-founder of Infosys and promoter of Pratithi Family Office.
India is becoming a deep-tech hub with the establishment of more Digital-first solutions providers.
The report pointed out that India currently has more than 480 IoT startups, 80+ AR/VR startups, 30 plus Robotics startups and a whopping 950+ AI startups.
“While the exact size of underinvestment of rupee capital varies, our conversations with Indian Family Offices within the 256 Network highlighted that over two-thirds of this peer group still wait and watch when it comes to investing in VCs,” said Dhruv Sehra, founder of 256 Network.
Conventional asset classes like stocks, real estate, and gold still enjoy investments from UHNIs. And, healthy returns generated by VC investments do not benefit most family offices.
“This is because the risk-reward payoff for such investments is not well structured for potential investors,” Sehra added.
The new entrepreneurial class emerging out of The pandemic is much savvier.
While serial entrepreneurs are targeting bolder issues, several others are launching India-specific solutions.
“Many are unlocking value through private markets, and I am heartened to see multi-generational entrepreneurs viewing this space as a vehicle to create wealth,” said Sunil Kant Munjal, chairman of Hero Enterprises.
Madhur Singhal, Managing Partner and CEO, Praxis Global Alliance, said, “Private wealth in India is burgeoning and UHNIs are increasingly turning to venture capital and private equity ecosystem as an asset class. Incumbents, digital entrepreneurs, celebrities, NRIs are setting up family offices and investing in the Indian startup ecosystem which has generated 14 new unicorns in 2021 so far. These family offices are providing businesses with patient capital and we are closely following the role that these family offices play in the Indian startup ecosystem.”
While comparing private market investments and public markets, it’s found that private market investments have generated 500 basis points higher returns globally.
“Top Quartile Cat 1 AIF (Rupee Funds) have an internal rate of return or IRR of 18.19% against BSE IT returns of 13.7% and BSE Tech returns of 10.10%,” the report said.
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