2024 has become the year of startup IPOs, with 12 companies going public and collectively raising billions. Swiggy’s historic $1.35 billion IPO led the charge, cementing the ecosystem’s global stature.
Venture capitalists have enjoyed a windfall, earning more than $4 billion in IPO returns, double the 2023 figures. Major players like SoftBank, Peak XV, Accel and Elevation have raked in the fruits of patient investment, turning long-term bets into substantial gains.
Despite global economic challenges, Indian markets have demonstrated resilience, supported by robust economic growth, regulatory reforms and sustained investor confidence. With at least 25 IPOs already expected for 2025, the momentum shows no signs of slowing.
Big funding has made headlines in 2024, with startups raising over $10 billion. Family offices have notably emerged as significant contributors, injecting more than a billion dollars into the ecosystem. While early-stage funding remained buoyant, growth-stage investments reflected a cautious but quality-focused approach amid global uncertainties and interest rate fluctuations.
Challenges persisted, however. Layoffs were significantly reduced compared to 2023, but almost 9,000 employees faced job cuts. Corporate governance issues continued to disrupt notable startups like Byju’s, while others, including Koo and Reshamandi, halted operations.
CNBC-TV18 spoke to Dr. Apoorva Ranjan Sharma, Co-Founder and Managing Director of Venture Catalysts; Mrigank Gut-Gutia, partner at Redseer; Vaibhav Anant, founder of Bambrew; and Vivek Pandey, co-founder of Ecozen who reflected on the milestones for 2024 and shared his outlook for 2025.
Below are excerpts from the discussion.
Q: Tell us what the key milestones were over the past year and what will continue to drive deal momentum and activity in 2025?
Sharma: The key milestone of 2024 is the AI transformation that is happening. The o1, which is the next level of ChatGPT, is transforming things on a global scale. Now things have moved from LLM level to o1 level where they are able to think and they can also answer and listen to queries. So basically, next-level AI transformation is happening on a global scale.
In the field of space technology, Tesla brought back the rocket engine, which is also an important step. The impact of this is also happening in India. You can see many AI transformations happening.
Q: 2024 also saw the resurgence of large funding rounds, with venture capital firms injecting over $10 billion into the ecosystem. What was expected to be a cold winter for venture capital has seen springtime for funding, with Indian startups recording significant deals in the winter of 2024-2025, setting an optimistic tone. What’s fueling this winter funding spring?
Sharma: Two things that fuel the winters, which have just ended, I would say. First, the 12 IPOs, which just happened this year. For three years, on the Indian stock market, the success of startups has been affirmed. And the return too. Remember, there was the Paytm IPO, most of which went to global investors as an exit. That’s where it all started. So global investors have realized that the Indian stock market responds very, very well to startups. And that’s why you can also see the story of Zomato and Swiggy this year. So this gives assurance to global investors that if you invest in India, the exit mechanism is already in place.
The second priority is the priority of large companies, which was not the case three years ago. The funding winter taught us a lot. Almost all big companies focus a lot on financial results as they aim for an IPO in the Indian stock market. This is why the strength of Indian startups is reflected among global investors as well. And that is why these startups are becoming more and more attractive to global investors.
Q: Fast trading has been the buzzword this year. Could you start by explaining why this segment took off the way it did and where the current average GMV spend and number of users are?
Gut-Gutia: Quick Commerce has had a fantastic year. Looking at the datasets on the total size of the sector, we see that every month the sector is breaking all records in terms of growth. So in most months of this year, the fast commerce sector in India, when we look at GMV levels, is growing at over 80% on a year-on-year (YoY) basis. And if you talk about the actual GMV that we expect, I think by the end of FY25 or let’s say over the entire period of FY25, I think we will see the industry exceed GMV by almost 6 billion dollars. So for an industry that had just under a billion dollars, maybe four or five years ago, to hit the $6 billion mark by FY25, I think it’s a fantastic achievement.
I believe one of the biggest factors driving the growth of the industry is the number of users transacting monthly. So, about a few months ago, the industry had around 9 million users transacting monthly. But because of this phenomenal growth in adoption and experience, we expect the number of monthly transacting users to exceed 15 million. It’s already there in recent months, and the average for the whole year could also be around 15 to 17 million.
Essentially what happens is the user simply spends across all categories, not just groceries, but also electronics and housewares, some fashion, beauty, etc. . So it’s really the spending across segments and the enormous convenience that fast commerce has brought to our customers that is really driving the phenomenal growth in the sector.
Watch the accompanying video for the full discussion.