India’s demographics are skewing toward a younger, consumer-oriented and mobile-friendly generation, and that presents huge opportunities for institutional investors, says Accel India Managing Director Subrata Mitra.
Mitra discussed India’s venture capital prospects and tech ecosystem with institutional investors at a private Trusted Insight dinner in Tokyo on Tuesday, November 29. In attendance were senior investment professionals representing some of Japan’s most renowned insurance firms, investment banks and corporations.
India’s sustained economic growth and evolving demographic is powering technological change in the country, Mitra said.
India’s GDP flourished by 7.3% in Q2 2016-2017 to over $2 trillion. Despite fears the government’s recent demonetization will slow this growth in the immediate future, a recent UN report states that the country’s GDP is still expected to increase by 7.6% in 2017. Furthermore, by 2020, India will have 900 million people of working age, and the average age of its citizens will fall to 29.
According to Mitra, this economic and demographic change is fueling the rapid adoption of smartphones.
According to Mitra, this economic and demographic change is fueling the rapid adoption of smartphones. There are currently over 200 million smartphone users in India, but in 2017, the country expects that number to grow to over 300 million smartphone users, according to Statista. This will provide businesses with a good opportunity to reach Indian consumers, stimulating growth in India’s e-commerce and logistics sectors.
One of India’s other key advantages in fostering new startups is its technical talent. Previously, this talent was often poached by Silicon Valley, however, that trend is changing. According to Mitra, India’s entrepreneurs now want to build startups locally, particularly in the country’s tech hub of Bangalore. But before India’s entrepreneurs create global tech giants in the same vein as Silicon Valley startups, Mitra argued they should first focus on the local Indian market, one of the world’s fastest growing economies.
Institutional investors in attendance voiced a desire to echo some of India’s early success by nurturing Japan’s own technology ecosystem. One attendee, for example, hosts an initiative providing office space for companies and venture capital firms moving into Japan. Overall, institutional investors in Japan are taking note of the venture capital asset class, and many that Trusted Insight spoke to are either expanding their direct investing efforts or their commitments to new and existing managers.
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