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Indian Tech Start-ups:  The Wealth Creators
Indian Tech Start-ups: The Wealth Creators

February 22, 2022

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Indian Tech Start-ups: The Wealth Creators

2021 for Tech Start-ups: A Blog Series (3/8)

From the country’s perspective what is important is the wealth that a particular sector is creating. Sectors like IT, manufacturing, automobiles, etc have been creating wealth for India over the years. But one sector which everyone was closely watching is the start-up sector. This is one of the most talked-about sectors and people want to know its impact on the economy but now we have the answer for the same.

The most important impact that a sector can have on the economy is the creation of jobs and start-ups have cracked that perfectly:

  • Over 6.5 Lakh direct jobs created by tech start-ups till 2021 with a CAGR of ~30% since 2011
  • BFSI, EdTech, Retail and Retail Tech, FoodTech, SCM & Logistics witnessed the largest net new jobs being created, HealthTech is another major job creator for non-tech roles.
  • Indirect jobs have also rebounded on the back of online commerce, freelancers, and services segments

The valuation of tech start-ups has also risen significantly in past few years. The cumulative valuation of the ecosystem is a staggering $300Bn+ which is 2X increase from 2020. This valuation was at $10-20 Bn in 2014. Some insights around valuations:

  • 22% estimated share of start-ups at Series C+ funding stage (excluding Unicorns)
  • 13% estimated share of start-ups at Series A and/or Series B funding stage
  • 3% estimated share of angel or seed funding stage start-ups

 

wealth creator

ESOP buybacks by start-ups have started creating a lot of value for its employees. ESOPs are being actively simplified and gains transferred to employees as start-ups seek long-term commitments and attract high-quality talent. Apart from buy-backs, IPOs also prove to be major ESOP liquidation events. Some insights around ESOP buyback:

  • $400 mn value of ESOP buy-back programs
  • 6-7X higher buybacks than in 2020
  • 10000 number of employees benefiting from buy-backs in 2021
  • $900 mn expansion in ESOP pool vide revised policies
  • Browserstack, Swiggy, Upgrad, Zerodha, Udaan, Sharechat are few start-ups that executed >15 mn of ESOP buyback

So, all in all, tech start-ups in India are supporting the growth of India and empowering its employees.

 

 

 


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