Indian tech startup exits triple; IPO route gains traction in 2017

Key Highlights:

• Number of first exits of Indian tech companies has more than tripled from 52 in 2012 to 184 last year.
• Indian startups have filed 10 IPOs so far in 2017, the most in a single year since 2012.
• A total of 101 startups exited in 2017 YTD (August 1, 2017).

Higher number of Indian technology startups decided to exit with the number of initial public offerings (IPOs) filed by startups rising in 2017 to reach the ‘most in a single year since 2012.’

“The number of first exits of Indian tech companies has more than tripled from 52 in 2012 to 184 last year. Between 2015 and 2016, exit activity has remained the same, but IPOs have increased 400% – from 1 to 4,” a report by US based research firm – CB Insights said on August 1.

In the fast growing tech ecosystem in the country, the deal activity and active investors have been on the rise. Nevertheless many tech startups are choosing not to ‘milk the cow’ from the capital provided by VCs, private equity firms and other investment institutions.

“Exits provide capital to startup investors, which can then return the money to their limited partners or to the investors themselves,” a blog published by Startup Explore said.

Startups can exit either through mergers and acquisitions (M&A) or IPOs. In 2016 the report showed 180 startups exited through M&A while four exited through IPO.

A total of 101 startups exited in 2017 YTD (August 1, 2017), the CB Insights report showed, with 10 IPOs, six of which happened in June and July.

“Companies that have gone public this year include IT services provider Infobeans, electrical product manufacturer Shri Ram Switchgears, and stock brokerage platform Steel City Securities,” the report added.

“Among the 6 industries that saw the most exits since 2012, the advertising, sales, & marketing industry brought in the highest number, with 37 exits in that time period. The IT solutions & software development industry came in second at 23 exits,” the report added.

The report showed that exits among marketplace startups grew, from 1 in 2012 to 18 in 2016.

“The industry (marketplace) leads the way in 2017 with 9 exits,” the report added.

“Food and grocery exits have also seen an uptick in recent years, increasing from 1 in 2012 to 12 in 2015 and 10 in 2016. InnerChef accounted for two of those acquisitions, with its purchase of breakfast delivery startup EatOnGo and food truck company Flavour Labs,” the report said.

The top ten most well-funded India tech companies raised a lot of money in ‘pre-exit’ funding. One such company spoken of in the report was Videocon d2h.

“Among companies that have had a first exit since 2012, Videocon d2h raised the most money before it merged with Dish TV Videocon in 2016, at $300 million,” the report said.

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