Indus Manager Steadview Capital at the Forefront of the Tech Boom in India

India is on the cusp of a wave of tech IPOs that will dramatically expand the universe of listed Indian tech companies.  There are expected to be 15 tech IPOs in India over the next 18 months.  India’s public tech market is forecast to grow by up to 30x to $500-600 billion by 2025.

Tech companies in India currently account for less than 1% of the $3 trillion total market cap in India, versus 29% of total market cap in the US, and 32% of total market cap in China, so there is huge room for growth.

The Indus Fund has a front row seat to this tech bonanza through its investment in Steadview (and to a lesser extent, Malabar, which has a smaller but highly lucrative private tech portfolio).  The Indus Fund was the first institutional investor in Steadview back in 2012 when it had less than $30 million in assets.  In the following year, three college endowments invested, and Steadview closed the fund to outside investors. 

Over the years, Steadview has established itself as a leading, if not the leading, investor in private tech companies. 

Steadview has focused on an underserved part of the funding market – companies with market caps of between $100 million to $1 billion.  Most venture capital firms invest in companies below $100 million in market cap, and private equity funds tend to invest at a much later stage, typically greater than $1 billion in market cap.  Steadview looks to invest after the business concept has been proven, which greatly reduces risk.

Steadview’s investments in Unacademy, India’s fastest growing education tech firm, is a case in point.  It made its first investment in Unacademy at a $225 million Series D valuation in June 2019, after Unacademy had proven its business model and was growing rapidly.  Global investors, including Facebook, Softbank, Temasek (Singaporean sovereign wealth fund), and General Atlantic, then followed at substantially higher valuations.

Unacademy Funding History ($MM)

Of the eight Indian IPOs expected by the end of this year, six will be Steadview-backed companies.  The first will be Zomato, the leading food delivery company in India, which will list on July 26th.  Zomato’s IPO has generated the most investor demand in India in the past 11 years, drew the second highest ever number of applicants, and was oversubscribed by 40x.  Aptus, Freshworks, Nykaa, Policybazaar, and Delhivery are then expected to list over the following six months.

Tech companies, once they go public in India, tend to have very large share price gains following their IPOs because of demand by retail investors.  There were four tech IPOs in India from 2017-19, and the average annual gain for this group has been 170% since their listings. 

We are focused on maximizing the Indus Fund’s exposure to this opportunity.  Steadview is the Indus Fund’s largest allocation, accounting for almost 40% of the portfolio.  We are eager to build larger exposure.  This is not an opportunity to waste.