Ripe for deal-making: Why new-age businesses in India will be a game changer

The Indian market over the past 5-8 years has seen a vast spectrum of new-age businesses that are changing the rules of the game for traditional enterprises and creating an opportunity spectrum for private equity and strategic players. The key drivers of this change are internet connectivity, mobile penetration and the millennials, which have influenced this change sweeping India in tandem with the rest of the world.

With a mobile in almost every hand in India, and internet in almost half, the reach and connectivity have been at its historic peak and created highways of information and engagement trespassing infrastructure bottlenecks the country has seen. Thus the cornerstone of new-age businesses has been the mobile which is now the prime connection and communicating mechanism for business models that are addressing pain points in traditional businesses to deliver a more convenient and positive experience to customers.

Another facet of new-age businesses is the targeting of millennials and thereby new-age businesses that make doing things convenient and provide instant gratification.

Thus we had seen emergence of ecommerce 6-8 years ago in shared transport and hospitality, to food delivery disruptors like Swiggy and Zomato attracting $1.72 billion in capital over the last five years. As the market evolves, we now see some very interesting developments -- the office space through co-working and co-living, health and fitness through connected health and gyms, to a range of fintech applications that engage with consumer, data and delivery. These emerging new-age segments alone have attracted more than $1 billion over the last three years.

Our experience as an emerging new-age investment bank has been very interesting having done multiple deals in the last three years in new-age businesses like co-working (Awfis), fitness (Fitness First-Cure.fit merger) and fintech (M1 Exchange).

In the emerging environment we see strong investor traction (the current dry powder on India-focused funds into Angel-Series D is about $46 billion) much of which could be directed to new age businesses that address large markets (millennial-oriented), often fragmented, have significant digital/mobile enablement for access/conversion, have good unit economics and have impeccable quality of leadership team that can demonstrate superior product and consumer experience and ability to scale.

Some interesting sectoral trends  that we believe will attract strong capital are clearly in millennial-driven spaces especially shared economy (vehicles, offices, living, furniture, apparel etc..) fintech (consumer credit, payments, financial management) health and fitness, consumer products, media (content, platforms) and social engagement (including new age gaming).

We are in interesting times and while there is significant capital following the right ideas, it is an interesting period for consolidation and great opportunity to create sustainable value given the opportunity spectrum even as there will still be the one-offs targeting market dominance aka Swiggy, Flipkart etc.