India’s wealthiest people could invest as much as $30 billion in technology startups by 2025, a key source of capital and a sign of the maturing investment scene, according to a new report.
Ultra high networth individuals- mostly billionaire founders, CEOs and corporate honchos, would be investing this money as startup investing is generally riskier but can also give far higher returns than most other asset classes. HNIs investing more also mirrors a similar trend in the US - where billionaires, including asset managers, politicians, businessmen and others dabble in startup investing regularly.
India could add 95 tech unicorns in addition to the 56 it already has, said the report from Praxis Global Alliance, a consultancy firm, and 256 network, a networking platform for private market investors. Unicorn is an industry term which demarcates private companies having a valuation of $1 billion or more.
“Investments in innovative startups have emerged as a lucrative alternate asset class when compared to traditional investments like equity, debt, commodities, and real estate. It is difficult to get exposure to high-growth portfolios that use innovations to solve real challenges and build large companies in a relatively short time. Funds run by professionals provide that opportunity to Indian Family Offices and UHNIs,” said Kris Gopalakrishnan, co-founder of Infosys and promoter of Pratithi Family Office.
The report says that India will have 10,000 UHNIs with a collective wealth of $700 billion by 2024. Currently, India has about 140 family offices which dabble in startup investing, the report says.
“Private wealth in India is burgeoning and UHNIs are increasingly turning to venture capital and the private equity ecosystem as an asset class. Incumbents, digital entrepreneurs, celebrities, and NRIs are setting up family offices and investing in the Indian startup ecosystem which has generated 14 new unicorns in 2021 so far,” said Madhur Singhal, Managing Partner and CEO, Praxis Global Alliance.Investors are bullish on internet startups led by the COVID-19 pandemic, which has boosted tech usage across sectors. Edtech, online gaming, e-groceries and health-tech companies have been the pandemic’s biggest beneficiaries, the report said.