Foreign investors are betting on India's burgeoning middle class and growing internet-savvy population, while their domestic counterparts cower at the lack of profitable exits from startup investments. (Nikkei montage/Source photos by Reuters, Getty Images and AP)

For India tech startups, IPO success hinges on foreign investors

While domestic managers exercise caution, overseas funds take opportunities

SAYAN CHAKRABORTY, Nikkei staff writer

October 2, 2023 06:00 JST

BENGALURU -- Foreign investors have the potential to make or break upcoming tech IPOs in India as domestic funds remain cautious about backing loss-making young ventures.

In the first half of the year, foreign portfolio investors almost tripled their holdings in three startups and now hold 33.3% of food delivery service Zomato, 22.7% of logistics company Delhivery and 16.8% of financial services provider Paytm. In addition, their share of insurance startup Policybazaar doubled to nearly 30%. For lifestyle company Nykaa, it's up one and a half times to 10%.