The “you-too-can-do-a-start-up” spirit hangs like pollen in the air the millennium Indians seem to breathe, especially those from Bengaluru, Mumbai, Gurgaon and New Delhi.
In an otherwise bleak situation when funds are scarce; only 20-odd venture capital firms are active; barely five venture debt firms around; and there are middlemen galore to deal with at every step, we still hear of a new arrival in the start-up ecosystem every other week.
Since June 2014, some 2,281 Indian start-ups had begun operations across a range of sectors, including e-commerce, health technology, robotics, logistics, business intelligence and analytics, food technology, and online recruitment.
Youths from predominantly middle-class upbringing are either quitting reasonably well-paid jobs, or those straight out of college taking the plunge to become entrepreneurs.
According to a Nasscom report, India has moved up to the third position and has emerged as the fastest growing base of start-ups worldwide. Interestingly, the trend is increasingly shifting from start-ups seen majorly as disrupters to also being enablers of change. Hence, there is greater collaboration being seen and expected between different players of the ecosystem with the start-ups.
“A nation which has traditionally been risk-averse all these years has become a country of risk-takers,” says Bhavin Turakhia, a mid-30s Mumbai youth who along with brother Divyank started a web technology business venture, Directi, in 1998 with a loan of Rs 25,000 from their accountant father. The Turakhia brothers were recently front-page fodder for the national dailies when they sold their online advertising firm, medianet.in, for a whopping $900 million.
As a serial tech entrepreneur, over the last 18 years, the Turakhias have set up and founded or co-founded 11 businesses. In 2014, the brothers sold their web hosting company to Nasdaq-listed Endurance Group for $160 million.
Stories like these continue to inspire a new generation of entrepreneurs, mostly in their mid-20s, who are willing to suffer setbacks, anxiety, unimaginable stress and endless sleepless nights to make their dreams come true, and believe, rightly and wrongly, that entrepreneurship was “in their blood” and one day they will retire rich with a private jet to their name.
What the US economy witnessed in the 90s is being played in India — bandwidth availability. No longer simply a basic tool, technology has become a more critical competitive advantage for start-ups today. Though the percentage (19%) of internet penetration is far low, in absolute values the country shows some astounding figures. India is close to replacing the US as the second largest enabled market with numbers inching towards 300-million-internet-users mark, the largest being China.
The year 2015 was a formative year for the Indian fintech (financial technology) sector, which saw the emergence of numerous fintech start-ups, incubators and investments from public and private investors. One among many fintech start-ups was Hummingbill, an Accounts Receivable Management software that gets invoices paid faster, reducing businesses’ average day’s sales outstanding. Founded by New-Yorker Adam Walker, who is presently stationed in Bengaluru, Hummingbill has 15 active users of the software, including companies like Capillary Technologies and Freecharge.
Asked why he relocated from New York to Kenya to begin a start-up in India, Adam says, “The market there was too small while India is very promising as more and more talent from Silicon Valley is moving back to India. Moreover, the “India Stack” from Unified Payment Interface, to digital signatures, to Public Switched Telephonic Network to eKYC (Know Your Customer) to the digital locker, is opening up many opportunities for start-up companies to leverage the new technologies to facilitate presenceless, cashless, and paperless services — from banking to healthcare.”
According to Fintech In India: A Global Growth Story, a paper published jointly by Nasscom 1000 Start-ups and KPMG, India is gaining ground on the growth of the fintech ecosystem including themes like next-generation payments, P2P lending, roboadvisory, Bank in a Box, security and biometrics with a fair supply of proficient and inexpensive talent, a potential to capture a large portion of the unbanked population, and a steady inflow of funds.
Interestingly, while most start-ups were busy in setting up their terrestrial business, serial entrepreneurs and researchers, namely Dr Prasad H L Bhat and Dr Neha Satak, were exploring internet delivery from space through their start-up, Astrome Technologies.
Dr Bhat started Streamoid Technologies and led the development of core IP (Internet Protocol) in visual research domain that the company is now monetising while Dr Satak, who following her PhD from Texas A&M University, worked as a Postdoctoral Research Associate with the USA’s Air Force Research Lab, and has to her credit founding two space companies, namely Scientific Preparatory Academy of Cosmic Explorers (SPACE) and Experimental Center for Applied Physical Systems (ECAPS, LLC). The duo has set up Astrome Technologies, which is engaged in exploring internet delivery from space.
Says Dr Satak, “We knew that satellite-based internet is the quickest means of reaching the remotest locations, but what is more amazing is that we found that satellite-based internet works out to be significantly less expensive to set up the infrastructure, than ground-based fibre and tower internet delivery mechanism.”
Astrome Technologies, which has received seed investments from Angels and the Indian Institute of Science, has a patent on millimetre wave technology. Elaborating on the same, she says, “A number of companies globally are aspiring to launch constellations of satellites around Earth to provide internet connectivity to all. What they lack are high bandwidth transponders as currently, only speeds of 8 Gbps are possible per transponder. For each transponder that is launched in space, anywhere between $3 million and $30 million dollars is spent on manufacturing and launching the satellite that carries it. Therefore, more the speeds you can get per transponder, cheaper is the per Gbps connectivity from space. Using our patented millimetre wave technology, we are developing space transponders that will deliver 100 Gbps capacity that is 12 times the capacity of the existing transponders in the market.”
While big names like OneWeb, Space X and Boeing have plans to launch a constellation of 1,000-plus satellites in low earth orbit for the purpose of providing internet connectivity to remote areas, Astrome plans to launch only 150 satellites to cover the developing countries belt which includes South Asia, South-east Asia, Australia, Africa, South America, parts of North America and Arab countries.
Typically, start-ups begin by building a first minimum viable product, a prototype, to validate, assess and develop the new ideas or business concepts. You’re unlikely to consider addressing issues related to agriculture among business concepts until you’ve heard of Hosachiguru, an agricultural asset management company based in Bengaluru. The trio behind Hosachiguru (meaning tender sprouts in Kannada), Ashok Jayanthi, Sriram Chitlur and Srinath Setty, all engineering graduates, address the need for “individuals, especially urbanites who not only crave to re-live those wonderful moments of childhood, but wish their children to have similar experiences of yesteryears in their home towns.”
Entirely bootstrapped to the tune of Rs 50 lakh to kickstart its operations, Hosachiguru, with a team of 40 people, is converting dry lands to arable fruit orchards at the rate of 20 acres a month. Says Srinath Shetty, “So far we have around 450 acres and a couple of hundreds more in the pipeline. We are growing at a modest rate of 100-150 acres per annum. Currently, we are focused in a cluster of areas near southern Bengaluru and in the neighbouring Anantpur district of Andhra Pradesh.”
With plans to build a strong network of project managers, agronomist and skilled work force before taking the next big plunge, Hosachiguru’s idea is to templatise farming and put appropriate checks and balance to deliver efficiency at scale. Dwelling on its strategy, Shetty says, “We have evolved over a period of time in strategising certain models like contract farming, agro forestry projects for institutions/ corporate and horti services for the urban real estate (where Resident Welfare Associations and gated communities have their own farm backyard). On the marketing front for the produce, we are looking at partnering with institutions, start-ups and co-operative societies that will help us have direct access to markets/ consumers.”
A decade back, the term e-com had yet to enter common man’s vocabulary. Those were times when you couldn’t order a Roman Veg Supreme pizza or a Gucci flats online as you can do nowadays. So when in 2006, Prakash Mundhra started his start-up, Sacred Moments, to sell puja kits, no one took him seriously. Still an MBA student at Pune’s Symbiosis Institute of Management, he began his venture with an initial investment of Rs 6 lakh, a part of it coming from the money he won in the college competitions. “Not many were sure that the model would work. But I persevered, giving myself six months to make it a success,” says Mundhra who operates from Thane, adding, “We are clocking on an average 30% growth annually over the past 10 years.”
Many have tried to imitate Mundhra but failed. What started as puja kits now includes Holi kit, Ganapati kit, Durga puja kit, grihapravesh (house-warming ceremony) kit and even a car puja kit. He has moved to corporate gifts and also exports to countries with large Indian diaspora, namely the US, the UK and Canada. The latter is growing at 200% a year and constitute a third of the company’s total sales. Marketing through Linkedin for B2B business has helped Sacred Moments reach clients across the world and it clocked a turnover of Rs 4.02 crore last financial year.
Have you ever considered designing your own flats, pumps or sandals? Delhi-based first generation entrepreneurs Anshul Sood and Neha Kumthekar’s start-up Oceedee India offers options to those women who are never fully satisfied with the pair of shoes they pick up from high-end showrooms. Be it the design, the fit or the material used. “Our USP is an online design studio that offers a simple, playful and an awe-inspiring 3D experience for designing shoes using close to 250 styles, 50 different types of leathers, 13 different heels, and preview it before ordering their unique pair. The idea is to offer them a platform to design a shoe that suits their style,” says Kumthekar.
According to Nasscom, there are around 5,000 technology start-ups in the country, funded or not by venture capital. India may be called a start-up nation thanks to so many ventures, but reality is that the country is witnessing a major shakeup. Since June 2014, around 2,281 Indian start-ups had begun operations, of which 997 have already closed down — a failure rate of close to 50%, according to data collated by research firm Xeler8. These were enterprises across a range of sectors, including e-commerce, health technology, robotics, logistics, business intelligence and analytics, food technology and online recruitment.
It’s a known fact that 90% of the ventures are likely to fail and the same is not specific just to India but a universal phenomenon as first generation entrepreneurs try to disrupt traditional markets. According to Bhavin Turakhia, most start-ups fail because they chase valuation rather than create value. “Like media elsewhere, Indian media too is obsessed with numbers and go about town talking about those which attract investments in millions and billions while rarely dwelling about their products,” says Turakhia who, having sold two big businesses, is concentrating on their communication business products, namely Flock, Zeta and Radix.
Some have attributed the failures to lack of innovation and over-crowding. It’s a question of too many addressing too few. Consider online shopping channels which are overcrowded with players like Snapdeal, Infibeam, Amazon, Ebay, Myntra, Jabong and Flipkart. Or Deal-a-Day channels numbering around 20 with names like mydala, koovs, bagitttoday, timesdeal, dealsnow, rediff-deal ho jaye and others.
Marketer and angel funder Mahesh Murthy, zeroing on the number 1 reason why start-ups fail, wrote in a Quora post: “They run out of money. I can’t emphasise enough how important it is to have enough cash to pay your people till your customers start paying you.” Despite issues of weak capitalisation, difficult environments and fierce competitors, one can still triumph. That’s what the history of 20th century’s corporate world tells us, that companies prosper not due to their great technology or brilliant founders, but great leadership.