Technology is the way forward: A look at Sequoia’s $1.35bn investment in India
Sequoia Capital India raised $1.35 billion across two rounds of funding for India and SEA, $525m for venture funds, and $825m for growth funds. In the past, they’ve made more than 200 investments in both India and SEA. With the Indian market and entrepreneurs proving themselves, Sequoia Capital India has been able to raise these funds for India and SEA, hoping that their returns are mutually beneficial. As per CB Insights, Sequoia Capital India invested in 80 startups in 2019 alone, in various funding stages including seeding and the other funding levels.
Another change that we’re seeing is that people are more willing to invest in startups after seeing the success of startups in India, the major cities being Bengaluru, NCR Gurgaon, and Mumbai. The most successful startups in India include Flipkart which was bought by Walmart for a value of $16b, and other notable startups from India are Ola, Swiggy, Zomato, Paytm, BYJU’s, and OYO, which are considered to be unicorns.
According to an article from Wharton, Entrepreneurship is embedded in India’s culture and economics. It might not have been technology-related but it only took the first wave for it to focus on technology. And that the last decade has seen a significant rise on many fronts such as startups, investment rounds, global investors, and internationalization.
But, now there are other factors to be considered due to the pandemic. These are times when the business models are going to be tested. They want assurance that their investments will reap rewards. Investors and CEO’s are forced to introspect and calculate the unit economics in such a volatile market where cashflow is less and businesses are slow. When startups grow, it is difficult to measure their business at a large scale and the essence of business growth is unit economics. Simply put, it is the cost price and the returns from the acquisition. Given the situation of the pandemic where the businesses are losing out on revenues, it has become non-negotiable especially for startups to measure the ROI and spend/invest money smartly to ensure maximum customer retention and revenue.
But, the major reasons for this decision could be COVID which is going to expand tech business in the Asian market as companies are forced to digitize, also because Chinese apps and products are slowly being removed from the market and to match the manufacturing processes and to meet consumer demands and requirements, technology needs to be improved. Another reason could be visa restrictions which might cause the repatriation, and as per ET, with the lockdown, and the recruitment of IIM and IIT graduates being a little hazy, they would rather start a company of their own than risk being repatriated. Risks are high in both, but at least startups have more hope than with the way things are going in the other end of the world.
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