Equirus InnovateX Fund

The fund’s vision is to find substantial leaps in technology with solid new business models, great monetization strategies & proven growth teams in large addressable markets.

Key Drivers Propelling India as a Leader in Technology Adoption

Rapid Digitization

• 1 billion people use mobiles and over 50% use smartphones in India
• Over 1 billion smartphone users by 2026
• Covid has increased digital sales in both goods, services, and software
• Demand for tech solutions that foster transformations is rising across sectors

Ease Of Doing Business

• India ranked 63rd in 2022 (142 in 2014) in ease of doing business among 190 countries
• Primarily due to trade and taxation regulations, infrastructure, and technological readiness.
• Policy reforms such as Make in India, Digital India, India Stack, EV policy, Drone regulations, ISRO’s space push, etc. will support the next decade of growth in technology

Data

• India’s Personal Data Protection Bill, 2022 provides for collection, storage, processing, transfer and regulation of personal data
• GOI’s goal is to protect the data of its citizens through data localization
• India’s vast data resources, along with government initiatives and data protection laws will propel the country’s efforts in the AI race

Focus On Profitability

• Companies are focusing on profitability largely due to drop in funding, valuation premiums, and an overall market slowdown
• Managements are investing in digital transformation, and innovation to reduce costs, improve efficiency, and drive growth
• The adoption of AI in India is expected to lead to an increase in India’s GDP by 1.3% by 2030

Friend Shoring

• The international order is straining to with US & China in a tariff war and Ukraine invasion leading to sanctions on Russia
• Companies are choosing resilience over efficiency
• India possesses the scale, talent, and resolve to be the ideal offshoring destination. India is the prime candidate for the China+1 strategy

Middle India

• Tier 2 & Tier 3 towns have emerged as centers for IT and IT-enabled services
• Ahmedabad and Kochi lead the Tier 2 cluster with a large talent base and medium maturity
• Bhubaneswar and Vadodara lead the Tier 3 cluster and low market maturity for IT and BPS
• As Metros and Tier 1 cities near saturation, Tier 2 and 3 cities will be the new locus of growth

Investment Themes

Software & SaaS

• Market: Expected to reach $13.1 billion by 2025, up from $6 billion in 2019
• Growth Drivers: Increasing adoption of cloud solutions, corporate focus on profitability and efficiency, and the rising digital transformation 
  • Indian has become a global leader behind only the US in scale and maturity
  • Of the 1600 funded SaaS companies in 5 years, 12 exceed $100mn in ARR (vs. 5 in 2020)
  • Companies are leading global markets by product, pricing and mature GTM playbooks
  • Cloud-based data platforms, workflow management tools are key to business agility
  • Low Code No Code, Hyper-automation and RPA, are gaining traction business processes

Deep Tech

• Market: At 42%, 10-Year CAGR, deep-tech startups will continue to grow at 40-45% CAGR
• Growth Drivers: Increasing global competition, ease of doing business, expanding Tier 2 & 3 talent skill base, demand for emerging tech
  • Deep-tech start-ups in India are rapidly growing, forming 12% of the start-up ecosystem. 500+ “inventive” deep-tech start-ups are building new-to-world technologies in India
  • Healthcare, BFSI, Defense, Space, and Education are using deep-tech to introduce cutting-edge solutions for own operations and customers
  • AI is being deployed across application areas by Indian companies and government, and is expected to contribute 60% of the net new value add of US$500 billion by FY2026

Fintech

• Market: Expected to reach ~$150 Bn by 2025, up from $50 Bn in 2021. Expected to be $1 Tn in AUM and $200 Bn in revenue by 2023
• Growth Drivers: Rapid digitization, fast tracked payment ecosystem, rise in neo banking and Insurtech, focus on Equity investments
  • Financial services forms 20% of the global economy and 24% of India’s market cap 
  • Aadhar-led KYC, eSign, DigiLocker, Account Aggregator, OCEN have led to the creation of uniform, standardized digital rails
  • Every lending decision, customer interaction, and insurance underwriting and claim is expected to be connected to cloud and data, which will be mediated by software