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Investments And Number Of Startups Increase But Exit Valuations Still Remain Low, Says Government Survey

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India may pose as one of the most attractive destinations for investors at present, but we still have a considerable distance to go when it comes to enabling investors to exit and re-invest. And while this fact has been pretty evident from the general scenario, an official economic survey by the Government has further stamped it (via ET). 

According to Economic Survey 2015-16, which was tabled by Finance Minister Arun Jaitley in Parliament recently, India witnessed 5000 new startups in 2015, taking the total number of tech startups to 19400 and making it the third-highest base of technology startups in Asia.

The number of startups grew by 40% in 2015, creating 80000-85000 jobs in the year.The startups raised $3.5 million in funding in the first half of 2015 with the number of investors increasing from 220 in 2014 to 490 in 2015.

However, while 2000 startups were funded by VC/Angel investors since 2010, the survey said that the exit valuations were still low and investors needed to exit as well.

It is important that startups too see ‘exit’, which could take the form of these companies being listed, allowing the original private investors to cash in on the initial investment and plough it back into other similar ventures. Exit valuations in India are still low,

the survey said.

However, the survey remained positive on the overall future prospects due to the upcoming changes proposed by the government bodies and under the Startup India and Make In India initiatives.

Exit valuations in India are still low but are expected to increase as the impact of new SEBI policies on listings comes into effect, and as equity markets in general, revive from current low valuations caused by a sense of gloom in the global economy,

said the survey.

It further added,

Startup India will turn Indian youths from job seekers into job creators. It will encourage entrepreneurship, innovation and creation of revolutionary new products in India, that will be used by people around the world.

Another important point mentioned in the survey was about the “unnatural dynamism” being witnessed in the startups focussed on financial and e-commerce services. As per the survey, e-commerce in India is expected to grow by 21.7 % in 2015-16 reaching $17 billion.


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