#023 India's Upcoming Exit Boom!

India is set to witness an unprecedented ‘Exit Boom’:

• With ~90 unicorns today (~50% of these achieved unicorn status in 2021); this number is expected to double in the next 12 months; that’s about 150-200 unicorns by the end of 2022!

• These unicorns have raised capital that is good enough for their growth aspirations for the next 3 years at least, and they have also been valued at least 3 to 5 years ahead of when their businesses would hit the scale required to justify these valuations

• Global capital is aplenty and has been chasing these opportunities to capitalize on the potential of the India opportunity, while also laying its faith in the depth of the Indian retail investor appetite – slowly but surely planning on listing via the IPO route to exit these companies!

• Of course, the stock markets have been keeping up, demonstrating maturity with listings of large (mostly over-valued) hyper growth digital companies (Zomato, Nykka, Paytm, etc.) –India is gearing up for an array of IPOs in the technology space

• Such an unprecedented pool of highly valued companies that are seeking opportunities to cash out on the India markets will unleash a ‘big-bang’ of acquisitions by these cash-rich unicorns – acquiring small to mid-sized startups for revenues, augmented capabilities, value-chain expansion, product / platform differentiation, and of course for talent to scale themselves!

• This situation plays right to our advantage, where we are backing and building businesses which are ripe for mergers and acquisition by these unicorns – giving them the right metrics to truly defend their over-stated valuations and adding core capabilities to their platforms to help them differentiate in highly competitive markets

• In fact, our exit from Wigzo to Shiprocket (a recent unicorn), was exactly driven by Shiprocket’s intent of taking Wigzo’s ‘Marketing Cloud’ as an offering to it’s 25,000 D2C customers and 150,000 SMEs, while also pooling in a very healthy ARR from Wigzo’s topline!

• Several such transactions have already started taking shape in India, a few examples include:

  • Delhivery’s acquisition of Falcon Autotech

  • Good Glam Group merged 4 influence platforms to create Good Creator Co.

  • Mensa Brands formed to consolidate several successful brands into one D2C powerhouse

• We estimate that these Indian unicorns will make over 500+ acquisitions over the next 3-4 years - such a massive ‘Exit Boom’ in the works - what an incredible time to be investing in Indian startups!

~Abhishek