The unprecedented crackdown of the edu-tech sector in November 2020 was indeed “The Great Fall of China.” Be it data security, marketing practices, or floating an IPO, the Chinese government imposed stern constraints on its home-grown tech companies. Listed companies can no longer raise funds by way of stock markets to invest in Edu-tech businesses. This sweeping clampdown has unleashed shockwaves across global markets.
China has two sets of investors – domestic and global. While the domestic investors have suffered huge losses due to this sudden repression, the global ones have shifted their focus towards India. Indian unicorns and tech-enabled companies are expected to benefit from this tech clampdown that has diverted more money towards India.
China gets more venture capital than India. However, the country’s repression of tech companies from raising capital, going public, or making profits has had grave repercussions. From now on, the funds from the Chinese markets can’t be used in their own country to generate profits. But, all this money has to go somewhere, right? India has an active emerging and significantly available market. The Chinese crackdown has fetched multi-faceted benefits to the Indian companies.
How can Indian tech firms benefit from this repressive move?
After the United States and China, India is the world’s third-largest market for start-ups. From January to August 2021, as much as $20.75 billion has been raised in India from 25 fresh unicorns. According to news reports, increased fundraising and high valuations of private equity (PE) firms and venture capitalists (VC) have been driven by a huge liquidity surge.
With the second half of 2021 progressing, India is witnessing considerable growth in the ed-tech sector. Following the pandemic, online education is likely to favor this tremendous progress. In addition to this, the IPO boom is anticipated to propel greater finances to PE and VC-funded start-ups.
As of August 2021, the Indian stock market has seen 40 IPO listings, out of which 23 have already filed their initial documents with SEBI! India’s start-up ecosystem includes names like:
- Flipkart (e-tailer)
- Zomato (food aggregator)
- Paytm (payments’ company)
- Delhivery (logistics’ company)
- Policy Bazaar (online insurance marketplace)
- Nykaa (online cosmetics and beauty products platform), and many more
In light of the current Chinese crackdown, the budding economy sector of India is emerging as all the more investible, accessible, and appealing.
Indian tech firms are inclining towards strengthening their presence in the overseas market. The recent acquisition of Epic (which is a US-based kids’ learning platform) by Byju is a notable testimony in this regard.
Having said all this, the real deal will be in the Foreign Direct Investment. The World Investment Report, 2021 by the UN Conference on Trade and Development reported India to be the fifth-largest recipient of FDI in 2020. As the global capital is shifting from China, Indian start-ups are gaining more fuel. The changing dynamics of global politics will work in India’s favor, hence proving as one of the greatest opportunities for India to make it big!
With such a current scenario, India is emerging as the new hope for tech investors wanting to raise funds. If you’re planning to invest or diversify your portfolio, the tech industry is an aspect you just can’t miss upon! With cloud computing and data analytics offering new windows of opportunities for Indian companies, consider investing in the top tech stocks of India for fairly high returns.