New Delhi, February 13 Titan Capital and AceVector Co-Founder Kunal Bahl predicted on Friday a "shift in focus" for India's startup ecosystem, stating that new-age technology companies are likely to account for 8-10 per cent of the country's total listed market capitalization in the next decade.
Bahl noted that while tech companies represent only about 2.5 per cent of India's market cap, the trajectory is set for massive expansion as the economy formalizes and goes digital.
"If you look at the US, about 25 per cent of their listed market cap is new-age tech companies. In India, that is only 2.5 per cent. Out of our $5 trillion economy, only $150 billion is the market cap of listed new-age tech companies.
"If you just zoom out and look at the overall picture, you will see that over the next 10 years, there will be a large number of new-age companies listed in India. The potential for growth for Indian tech companies is immense. We are just getting started," Bahl said at the ET Now Global Business Summit.
He added that as India's total market cap grows to $15 trillion over the next 10 years, the share of new-age tech companies is "likely" to reach 8-10 per cent, potentially creating a value of over $1 trillion.
Bahl emphasized that India is at a turning point driven by three major factors: the formalization of consumption through UPI and demonetization, the financialization of small businesses, and the rapid digitization of infrastructure. These factors, he said, are leading to rapid adoption of tech businesses and their products in India.
"It is no surprise that we are now seeing Indian new-age companies being celebrated and becoming part of the Nifty 50. It is only a matter of time before there are more," he said.
Bahl argued that India's strength lies in developing solutions for "unexciting" industries rather than just consumer-facing apps. He cited an example of an Indian startup using AI to interpret and track complex tenders that run into thousands of pages.
"Context is important, and that's where companies from India will emerge who have contextual AI apps built for the world," Bahl said, adding that he expects Indian AI application companies to generate billions of dollars in revenue in the coming years.
Despite the optimism, Bahl pointed to a significant "lack of capital" and the "frugal mindset" of Indian business committees and underlined the stark disparity in venture funding between India ($10 billion) and the US ($300 billion).
Praising the government's initiative to launch a Rs 1 lakh crore research, development, and innovation (RDI) fund, Bahl stressed that India needs much more investment and a shift in mindset regarding risk.
"We need to be comfortable with the idea that there will be some waste along the way as we build world-class tech companies in India... and we need to accept that."
Bahl noted that the most valuable businesses over the next 15 years will likely emerge at the "intersection of consumption and AI".