India has recently seen an explosion in startups, becoming the third largest country in terms of startup companies. These can be attributed to the rapid economic growth and the large amount of available capital in the country. Also, with all of the rapid growth the country has been undergoing, mergers and acquisitions activity has increased as well. The country added around 650 startups last year and more than 800 this year to reach 3,100 startups in total. India’s government has undergone many changes as of late, and once these changes are fully implemented and supportive of business owners, the startup scene is projected to grow even more.
The total number of private equity deals has not increased dramatically in India. However, the dollar amount invested has increased by more than double in the last year. This week, Softbank, a large Japanese wireless company, invested over $620 million in Snapdeal, an Indian online retailer. Softbank also invested over $200 million in Ola, a taxi service similar to Uber. These are prime examples of an investor stepping in and taking advantage of growth potential in startups, hoping they will be able to outpace businesses already in these industry sectors. Indian startups are focusing on breaching the technology boom as people begin to rely on smartphones for everyday tasks, and this is where the growth in companies has come from. In 2020, it is expected that there will be over 11,000 startups in India employing over 250,000 people.
Venture Capital and Private Equity on a global scale has been in some cases controversial and risky, yet very successful, as was explained by Manesha Sampath in a globalEDGE blog post titled The Changing Global Landscape of Global Private Equity. European and Asian markets have provided many opportunities for foreign investors with restructuring, while African markets have looked to foreign investors for expertise and expansion initiatives. With startup growth taking place on a global scale, it will be interesting to see how private equity firms and venture capitalists react.