Will the The Indian Artificial Intelligence (AI) Industry go public by offering IPO?

In a technology webinar, Fractal Analytics co-founder Velamakanni remarked, “Artifical intelligence has had a profound impact on global enterprises, and India has become fundamental to developing and delivering solutions around this.” To fund its expansion, the AI and analytics solutions company is considering an IPO. Qure.ai, Theremin.ai, and Eugenie.ai are among the AI businesses that the company has incubated.

The epidemic has increased demand for analytics companies such as Fractal. Crux Intelligence, the firm’s most recent venture, integrates machine learning and natural language processing to enable businesses to extract business intelligence from data and analyze it.

There are over a thousand SaaS/AI startups in India. SEBI’s strict restrictions are one of the reasons these companies have not chosen to go public. However, SEBI’s recently announced Innovators Growth Platform (IGP) had given IPO-bound companies reason to be optimistic.

Potential IPOs

Tata Elxsi, Saksoft, Mphasis, Persistent Systems, Bosch, Kellton Tech, and Zensar Technologies are among the AI-focused startups that have already gone public. The majority of these businesses have been in business for at least five years and have a significant market share.

While AI adoption in India is still in its early stages, we may see a few businesses go public shortly.

A few possible candidates are listed below.

Innovaccer: 

The startup, based in Noida and San Francisco, recently raised an undisclosed sum headed by Tiger Global Management. Innovaccer examines healthcare data to derive useful information. Innovaccer Health Cloud will be available soon, according to the business. Since its inception in 2014, the company has raised $229.1 million in six rounds of investment.

Digit Insurance: 

The Bengaluru-based insurance firm, founded in 2016, has seen a two-fold gain in worth in just two years. Digit Insurance, which has a market capitalization of $1.9 billion, has raised $444.5 million in six fundraising rounds.

Postman

Postman, a Bangalore and San Francisco-based API development and testing startup with a $2 billion valuation, was founded in 2014. Throughout four rounds of investment, Postman has raised a total of $208 million.

In an interview, Sequoia India’s managing director, Shailendra Singh, stated that India is moving toward an IPO-centric market. Appier, Salesken, Wobot, and Basis AI are among the Indian tech businesses backed by Sequoia Capital. According to Singh, there will be many IPOs with direct international listings in the next two years, allowing companies with a market capitalization of $10-$40 billion to list on NASDAQ.

Talentica

Talentica is a Pune-based software company that assists core ISVs and Web 2.0 startups in turning their ideas into products. Opera Mediaworks, Rubix, and Tala are among the firm’s clients. The yearly revenue of the corporation is expected to be over $13 million.

Algoscale Technologies

Algoscale’s platform Data Hub, situated in Noida and created in 2014, operates across the Big Data Analytics value chain, providing analysis and technical infrastructure under one roof.

IPO checkpoints

An initial public offering (IPO) is an excellent strategy to raise capital from domestic and international investors. An IPO’s timing is crucial.

  • It takes an average of eight years for an Indian firm to become a unicorn. New startups, on the other hand, are reaching the billion-dollar level considerably sooner.
  • In at least three of the previous five years, the average pre-tax operating profit was at least Rs 15 crores.
  • In each of the previous three full years, the company’s net tangible assets were at least Rs 3 crores.
  • Growth: The business should show signs of being solid and thriving. It should be taken into account and the company’s revenue growth and future growth predictability.
  • Balance sheets: The company’s balance sheet must have enough cash to fund the business to break even.
  • Profitability: The company’s financial statement should show net income and free cash flow.

Read more : Father of Artificial Intelligence (AI)

Status quo

For the Indian tech business, the pandemic has turned out to be a blessing in disguise. In under ten years (2010-2020), the country’s Unicorn club went from zero to 37 members and now stands at 52. Innovaccer and Digit Insurance, both IT startups, are the newest members of the Unicorn club. By 2025, the number is expected to reach 100.

Google and Amazon, for example, committed $10 billion and $250 million, respectively, to the Indian digital economy in 2020. Furthermore, Microsoft’s venture fund has made 90 investments to date, including a $2 billion investment in Jio Platforms.

Despite the pandemic and the ensuing lockdown, AI startups in India have received $836.3 million in funding, the highest funding outlay in the last seven years, with a 9.7% year-on-year increase. Between April and September 2020, FDI into the technology sector increased by 336 per cent.

Sequoia Capital (1,487 investments), Tiger Analytics (500 assets), Nexus Venture Partners, Venture East, and Softbank have made significant venture capital investments in the field. “Our analysis reveals that the Indian startup ecosystem has generated great value for founders, employees, investors, and the economy,” said Rehan Yar Khan, Managing Partner, Orios Venture Partners. The majority of these are backed by technology, which is the crucial difference between unicorns of the twenty-first century and those of the previous era.”