Next few months will see turmoil globally, but India is poised to grow: ETSA panelists

Acknowledging the challenges before the tech sector, the panel members — Nithin Kamath, founder and CEO of Zerodha; Kalyan Krishnamurthy, Group CEO, Flipkart; Harsh Jain, cofounder and CEO, Dream Sports; Sumer Juneja, managing partner, India & EMEA, SoftBank Investment Advisers; and Smita Deorah, cofounder and co-CEO of edtech unicorn Lead — said it was necessary to work on the fundamentals to endure the tech winter.

“In the next 12-18 months we’ll see lots of turmoil. Companies need to focus on staying afloat,” said Krishnamurthy.

SoftBank’s Juneja concurred, saying: “2023 is going to be tough. Valuations need to be reset. Those not focused on unit economics or taking tough decisions will have a very tough time.”
Last year, India saw an IPO boom as companies flocked to the public markets for more liquidity and bloated valuations. However, this also brought on board retail investors, who bore the brunt when the stock markets corrected this year in the wake of soaring inflation, high interest rates and unfavourable macroeconomic conditions.

“A few IPOs did not do well. In the public markets, memories last much longer than in the private markets,” said Kamath. Unless a few companies make money, it’s hard to see how a lot of new startups can come and raise money from the public markets. “I don’t think it will be as easy to (launch an) IPO as last year,” said Kamath.

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Commenting on how retail investors view tech IPOs, he said, “The retail subscription wasn’t too much in most tech IPOs, just 15-20%. Most of it was institutional investors. But retail investors lose more money when a company lists at a high price and then slips into a downward journey.”

Lead’s Deorah said online education saw a spurt, especially in the K-12 category, when Covid set in. However, the correction in the edtech space after the pandemic began easing was expected and is playing out now, she said. “Money was towards K-12, edtech and B2Cs, so it would come down. As K-12 was colouring the edtech market, we need to correct that,” said Deorah.

However, there was a sense of optimism among the panelists, who felt India is actually is poised for growth, while many major economies look set to slip into a recession..

“I may be an optimist but I believe that relative to the world, this is the first time that India has an opportunity to grow because of a number of factors, including the advent of 5G,” said Dream11’s Jain.