Are today’s start-ups in India really the next gen fortune 500?
Indian start-up ecosystem is the hottest investment destination at the moment. With every other graduate that dreams of becoming entrepreneur and making it big in the start-up world. Million dollar deals are cracked every moment and even the day is not far when these start-ups will become behemoths of the industry. However, this is what I am going to explore in this article. I am going to talk about the scenario where the start-ups participate in the long run race with the already established giants of the industries to win against them, whether they really succeed or get scrambled?What is Fortune 500?
Fortune 500 is the tag earned by the organizations by Fortune Magazine annually by considering some of the major factors such as revenues earned, assets, sales made, capitalisation and so on. This list ranks only public companies, or those which have issued securities through an offering and which are traded on the stock market. So even if you are making some remarkable revenue and ROI out of any privately owned or any close ended group of companies, the title to be one of “Fortune 500” is not for you!Start-Up Recognition & making it Public?
First of all, what is recognised as a start-up in India? The answer to this is 10 years from the date of its inception, Quiet long!! Yet many fail to survive this journey.Ready, Set, IPO …
There is quiet an increase in the number of Indian start-ups which are looking to list themselves on the exchanges as the ecosystem matures, companies turn profitable and investors look for an entry. According to a survey conducted by RBI between April and November 2019, 57.7 percent start-ups plan to go public over five years. This news gives tons of optimistic vibes for the existing start-ups doing really well and on the other hand backing to the upcoming start-ups.Perks of being a Start-Up, to the race of “Fortune 500”
Start-ups are ideas put up by young minds (Biological age isn’t considered here) copious of creativity and sightedness of a better and comfortable living. They are vibrant into entering the markets with well-established IT system and common platforms of social media. Their acceptance to the behavior of the targeted consumers or markets as a whole is more than that of the legend old created business. This in turn helps them to create a better space into everyday life of the person in to their daily routine. Start-up ecosystems have proven to drive productivity. This is because start-ups not only are a good engine for jobs, but they also drive innovations. Technology start-ups offer a higher job & are multiplier due to their high wage rates, they usually attract FDI.
you must have heard names such as PayTM, Zomato, and Ola Cabs? …there is a huge list though! I bet you did and even used them once.Money Talks, FUNDING!!
Earlier, Investors typically want to see that a venture capitalist or angel investor has already put down a reasonable sum of money before they ever give any funding to Indian start-ups and their founders. So to get the right amount of money for a new start-up in India you must already have the right amount of backing.
Whereas, formerly, Start-up funding in India has consistently attracted big investors from across the globe. In recent years, large Indian companies including the Tata conglomerate and the founders of Flipkart had ventured into investing in small businesses. Many companies known by their brand names benefitted from funding and saw substantial growth in the last decade, becoming household names. Some of these include ride-hailing company Ola, hotel-chain OYO, digital payment service Paytm, and online food app SwiggyFacts, Figures & Data
India is home to 21 unicorns and 4th largest unicorn creator in the globe, valued at $73.2 billion. Fintech Company Paytm is India’s highest valued unicorn, at $16 billion. Top 10 Indian unicorns make up 78 percent of the total value of unicorns, while Paytm alone claims nearly 22 percent of the total valuation share of these unicorns, with a valuation of $16 billion. India has added three new unicorns to the list this year. Along with being the highest valued Indian unicorn, fintech company Paytm is also the highest gainer in the Indian unicorn category. Over a year’s period, the company has managed to increase its valuation by a whopping $6 billion. The next highest gainer is OYO Rooms, who marked up its valuation by $3 billion.Acceptance of new normal in this times of crisis
The only drawback in India’s explosive start-up economy seems to be its struggling economy. This was dented even more with the coronavirus (COVID-19) outbreak and effects of the lockdown between March and May 2020. Despite collaborative public and private support, many start-ups declared loss in revenues and permanent or temporary closure.
Although, according to a recent research by Start-up Genome, over half of Fortune 500 companies were created during a recession or bear market, and over 50 tech unicorns, collectively valued at $145.2 billion, were founded during the 2007-2009 recession years. The global crisis will also provide a level playing field for the unicorns and the modest ones. Start-ups that understand the new definition of ‘normal’ will try to bring out the best in themselves by grabbing new opportunities and identifying new customers. While the opportunities arising from this crisis will obviously be different from the ones during previous crises, they will still exist.
No doubt, with such above average growth rate of start-ups in India, competing their direct rivals having achieved bench mark into the industry, their exists tremendous odds that “Indian Start-ups” shall win this race for “Fortune 500” in the coming years. The top Indian start-ups are a result of persistence. Despite naysayers around the globe, they stood firm and competitive, somewhat dominating the sectors nationally and globally too.
