Indian UHNIs to invest up to $30 billion in country’s tech startups by 2025: Report
The report titled, ‘Turning Ideas to Gold’, also noted that India could add 95 new tech unicorns to its 56-strong unicorn pool by the same time period.
“India is expected to have approximately 10,000 UHNIs, which will include business leaders, celebrities, NRIs, and digital entrepreneurs with a cumulative wealth of $700 billion by 2024.
“Family offices are being set up as full-service private wealth management services to cater to one, or a small clutch of these ultra-high-net-worth individuals,” the report said.
The report defines UHNIs as those having net worth of more than $30 million.
Currently, India has about 140-plus family offices catering to Indian UHNIs and heavily investing in the Indian startup space, it added. They have been pro-actively involved in over 50 such deals every year since 2015.
Speaking about the opportunity for Indian family offices investing in technology companies, Kris Gopalakrishnan, the co-founder of Infosys and promoter of Pratithi Family Office, said: “Investments in innovative startups have emerged as a lucrative alternate asset class when compared to traditional investments like equity, debt, commodities, and real estate.”
However, it is difficult to get exposure to high-growth portfolios that use innovations to solve real challenges and build large companies in a relatively short period of time, he added.
“Backing such companies requires deep expertise, strong networks, patience, and sufficient capital. Funds run by professionals provide that opportunity to Indian Family Offices and UHNIs,” he said.
Dhruv Sehra, founder of 256 Network, said many family offices prefer to keep their portfolios wedded to conventional asset classes like stocks, real estate, and gold, and do not benefit from the healthy returns generated by VC investments.
“This is because the risk-reward payoff for such investments is not well structured for potential investors. 256 Network aims to bridge this gap through this report,” he added.
256 Network is a peer-built network of decision-makers investing in the global alternatives market.
Sunil Kant Munjal, chairman of Hero Enterprises, said the pandemic has seen the rise of a new entrepreneurial class that is savvier.
“Several startups are launching India-specific solutions while repeat founders are targeting bolder issues. Many are unlocking value through private markets and I am heartened to see multi-generational entrepreneurs viewing this space as a vehicle to create wealth,” he added.
Madhur Singhal, managing partner and CEO of Praxis Global Alliance, said private wealth in India is burgeoning and UHNIs are increasingly turning to venture capital and the private equity ecosystem as an asset class.
“Incumbents, digital entrepreneurs, celebrities, and NRIs are setting up family offices and investing in the Indian startup ecosystem which has generated 14 new unicorns in 2021 so far.
“These family offices are providing businesses with patient capital and we are closely following the role that these family offices play in the Indian startup ecosystem,” he added.
The report said about 190 ‘Soonicorns’ are expected to become unicorns by 2025. Currently, India has 56 unicorns (companies with $1 billion in valuation), of which 14 were added in 2021.
Also, ‘digital first’ solution providers are establishing India as a deep-tech hub.
India currently has over 950 AI startups, more than 480 IOT startups, more than 80 AR/VR startups and over 30 robotics startups.
The report said more than 55,000 Indian startups raised over $70 billion in funding between 2014-20.
The opportunity to leverage India’s technology sector growth remains firmly in the private market as more than 250 private Indian tech companies with valuations above $100 million have the potential to go public in the medium term, it added.