58% startups aim IPO in 5 years : RBI

Getting listed on the stock exchanges within the next five years seems to be on top of future plans of more than 58% of the 1,246 startups, the Reserve Bank of India revealed.

According to a pilot survey on the sector conducted by the Apex Bank between November 2018 and April 2019, it was aimed at collecting information on major characteristics of the startup sector in the country.

The recently published Pilot Survey on the Indian Startup Sector has thrown up many interesting insights.

The RBI survey reveals that most of these startups are spread across multiple sectors and mostly dealing with health, software development, IT consulting/solution sectors and were less than three years.

About 24% of the respondents intended to seek acquisition at a later date.

These startups were mostly in the areas of product development, software development and IT consulting/solution sectors.

The survey also suggests that a huge majority of startups (63%) are in the software development, IT consulting/solution and health sectors plan to hire at least 20 new employees in the next two to three years. Another interesting insight was that 10% of the respondents planned to exit soon, mainly on account of funding requirements and market conditions.

According to the RBI study, most of the startups (57%) had at least two co-founders. Participation by women also remained high with about 45% of the participating startups having at least one female founder. However, only 5.9% of the startups had female-only startups as compared to 55% of startups run by male-only founders.

Another insight from the survey was that a third of the startups used online marketing, big data analytics, machine learning and internet of things (IoT) for their business while most of the respondents targetted business to business (B2B) and business to consumer (B2C) channels for selling their products.

The survey also says that the efforts of the private sector were the driving force behind the startup sector in India, with a whopping 86% of the participating startups being private limited companies. It also said that innovation was a big driver and about 20% of the participating startups had filed a patent.

In terms of sectors, Data analytics was the leading sector by a fair margin (14.4%) followed by health (8.7%), education (8%) and agriculture (7.7%).