A ‘perfect storm’ is preparing in India’s investment scene, says VC investor

Investors are wagering on Indian start-ups and facing more challenges, thanks to some extent to progress in India’s foundation, as per an investor.

Dealmaking in South Asia’s biggest economy rose in the initial seven months of 2021 as numerous foreign investors with abundant resources flushed Indian new companies with new funds.

“There is a lot of capital flowing into India at this moment,” Vaibhav Agrawal, partner at Lightspeed Venture Partners, told CNBC’s “Street Signs Asia” on Friday.

Upwards of 828 venture capital funded deals in India were reported between January and July, with a complete uncovered worth of $16.9 billion, analytics firm GlobalData said last month. That denoted a 40.8% jump in deal value contrasted and all of 2020.

Agrawal said three things were driving capital inflows into the country.

Initial, a recognizable improvement in India’s infrastructure has enabled start-ups to make more worth and scale up their organizations speedier.

He refered to India’s United Payments Interface (UPI) for example — it is system made by India’s top payments processor, the National Payments Corporation of India, that is utilized to facilitate digital payment transactions in the country.

Because of the Covid pandemic, which moved a great deal of everyday consumption online, from food deliveries to shopping, Agrawal said that many organizations are additionally profiting from a worked on cost of production per unit of products.

“We are just seeing higher order values, for example, in e-commerce, higher frequency of ordering, for example, in food commerce companies,” he said. “That is just giving a lot of confidence to investors worldwide.”

India is likewise at a phase where a huge number of new companies have reported designs to list in the securities exchange.

Food delivery firm Zomato became the first of a record of unmistakable names to be publicly listed. Others in the pipeline incorporate payments giant Paytm, ride-hailing start up Ola and e-commerce giant Flipkart.

“The big criticism of India’s capital markets has been around exits and liquidity — specially for late-stage investors,” Agrawal told CNBC.

He clarified that Zomato’s effective posting in July helped facilitate a portion of the apprehensions financial backers have about the new companies and their capacity to open up to the world.

“Zomato is getting followed by about 20-odd companies that will go [public], so, hopefully, they will do well,” Agrawal said.

“All of this is creating just the ‘perfect storm’ that’s allowing everyone to take more risks, from early stage investors to late stage,” he added.