Bigger, Bolder Beginners

Tribune Team

In sheer empirical sense, these guys are almost invisible, yet when you talk about them, they tend to bring to life an India you have never seen before: each of them stretching oneself to generating wealth, jobs, and most ambitiously, outdoing even themselves at domestic and global levels. They are the beginners, but so what! Theirs is a story waiting to be written, though it's well begun. According to National Association of Software and Services Companies (NASSCOM), India is home to over 3,000 vibrant tech/ digital startups and is the fourth largest base across the world. This is despite almost negligible government push. Call it the lack of job opportunities for the educated youth, often termed unemployable, or a last-ditch attempt to survive and thrive, a mini startup revolution has begun. Last year alone, 876 investors funded $8.5-plus billion to 925 startups. These were primarily food, e-commerce, travel & hospitality and e-wallet and payment services entrepreneurs. 

There's more: over 72 percent of startups are founded by those younger than 35 (no surprise considering the median age of the population in India is 27 years). In that sense, India has now become one of the largest bases for startups after US, UK, and China. These two factors are driving a new online entrepreneurial and mobile culture.

Yet there's a downside. A Reuters report said most of India's tech startups make losses. They follow a discount-driven business model aimed at generating revenue from customers that buy and sell goods and services, touting growth in "gross merchandise value" on their platforms to attract funding. The news agency cites two of the country's best known e-commerce retailers -- Flipkart and Snapdeal - as having attracted big-name backers like Accel Partners, Singapore state investor Temasek Holdings and Japan's SoftBank Group Corp, enthused by growth potential in a country where only 252 million of a population of 1.3 billion have internet access. It quotes banking and industry sources saying the two have notched up huge losses as they compete for increasing sales through deep discounts.

In early warning signs for the country's startup industry, firms from food delivery companies TinyOwl and Foodpanda to SoftBank-backed property firm Housing.com have either cut jobs or shrunk their services. At TinyOwl, last November around 20 employees even held their boss hostage for two days after it announced job cuts. "We are in the middle of this funding winter. Global issues such as a slowdown in China could likely have a bigger impact this year," Reuters quoted Vijay Shekhar Sharma, founder of mobile wallet Paytm, backed by Alibaba Group Holding Ltd.

There's excitement though, closer home. Mentors like Sumeer Walia says innovative ideas are less as compared to services-based ideas. Most startups have ideas of mainly online, retail e-commerce, IT and product development, app development, hyperlocal services, social entrepreneurship, environment protection and suchlike. He says handholding, mentoring and idea validating remain major needs of the youth in most northern states. "They need structured guidance. The second need is easy space for running the business and ease of doing business, followed by guidance on channels of funding, either bootstrapping, easy startup loans, or seed funding," says Walia. "The way forward could be encouraging entrepreneur interaction/development hubs both at academic and professional levels," he says, adding that more and more women are coming forward with business ideas.

Take a look at what's happening in Punjab, Haryana and, of course, Bangalore:

Punjab

There's a buzz post Flipkart and Zomato exit by Punjabi youth who moved to Bangalore or Delhi: If you got an idea, make it viable and visible and then either sell it after making the moolah or wait for seed funding and venture capitalists (VCs) to help you grow big. Punjabi entrepreneurs have so far not managed to attract VC funds. 

Ask Chandigarh-based KS Bhatia, the owner of Pumpkart! His online company sells water pumps and was on the verge of being sold as Bhatia was unable to fund investors for his project. But a mention of his company by Google CEO Sundar Pichai thousands of miles away in San Jose, when Prime Minister Narendra Modi was interacting with top IT CEOs there, changed everything. "Investors had almost taken me to the end of the road as we didn't offer after-sales service. After Pichai's commendation, I have seed money coming in," he says. Pumpkart is using services of village level entrepreneurs to run another online repair and sales service, Repair In India. 

Bhatia could be an exception. Amit Narang, whose startup, a mobile wallet, FX Mart, was acquired by Flipkart for Rs 25 crore last year, says the ecosystem for startups is not in place in North India. FX Mart was approved by RBI in 2014 as an Immediate Payment Service Provider, and within a year it had created over 20,000 mobile wallets. One of the reasons why he decided to sell it off to Flipkart was it was becoming difficult to find investors. "I made my money. I am using it in my new business venture, where I am creating an online market place for sports goods and toys. I don't have to look for investors and seek their approvals all the time," he says.

Serial entrepreneur Komal Sharma agrees with Narang. Sharma's latest startup, XLPAT, is making waves in the intellectual property rights and patents space. She says the ecosystem is not as vibrant as in South India. "If you have to get VCs to invest in your startup, you have to continuously travel to meet fund managers in Bangalore and Hyderabad. Being a woman has its own disadvantages, as investors are not that comfortable investing in a woman's enterprise," she says. XLPAT Is a technology platform that uses artificial intelligence to mine upwards of 100mn technical documents and provide intelligence to an industry that is of $230bn in size.

Luckily, startups have a shoulder to cry on. The Indus Entrepreneurs (TiE) and more recently the StartUp Accelerator Chamber of Commerce (SACC) are getting active, getting them in touch with VCs and mentoring them in initial years. Sumeer Walia, SACC advisor and executive director says he can has several success stories. "Bouyed by the entrepreneurship spirit of youth in Punjab and Haryana, especially those studying in professional colleges, we began mentoring, handholding and helping arrange seed money for startups two years ago. We have analysed 80 business proposals, of which 17-20 are now parked with us for initial mentoring. We are providing them guidance and space to run their venture from for an initial period."

Gurgaon

While the analysts are still busy studying factors like a top B-school, a young skilled workforce, venture capital firms and entrepreneurial spirit, Gurgaonwallas have gone a step ahead getting their clothes groceries, taxis bike drop-offs and even 'çhai' through apps. It began with 'ápp se mangwalo.' It marked the success of hyper local startups. The exemplary performance is of Gofers.

Founded in Nov 2013 in its original form, Gofers is a local e-commerce mobile platform transforming the shopping experience by connecting consumers to local stores. Founder Saurabh Kumar is an IIT-B graduate and an MS from University of Texas. "I always believed that most successful business ideas are always based on the simplest of things, catering to the most basic human needs. The idea which inspired Grofers was: how about someone bringing at your doorstep the daily needs like veggies and groceries from the shop of your choice? In places like Delhi and Gurgaon where people are always on their feet from home to office and back, being able to save some time on chores like these is certainly an attraction," says Saurabh. Gofers secured a funding of $36 million from Sequoia Capital, Tiger Global and Yuri Milner last year.

The official figures claim that over $1 billion was invested in Gurgaon startups across sectors in 2015, including food, grocery, logistics and e-commerce among others.

Bangalore

Sashank Rishyashringa and Gaurav Hinduja, both MBAs from Stanford University, had set up Capital Float in 2013 to provide working capital for small businesses and startups in India. They offer flexible, short-term loans that can be used to purchase inventory, service new orders or optimize cash cycles. Borrowers can apply online, select desired repayment terms and receive funds in their bank accounts in seven days flat. The company has raised $17 million to date, all within a year and has loaned more than $6 million to small businesses in 12 Indian cities

"The most significant aspect of the government's Action Plan on Startups is the recognition of the need to give as much freedom as possible to startups in early days -- freedom to incorporate, innovate, operate and even exit, and also freedom from inspections and procedures," the co-founders said. 

Sony Joy, founder and CEO of Chillr, a mobile app for peer-to-peer and peer-to-merchant payment to anyone in the phone book, says while the government initiative is good, the decision not to levy taxes on the profits made by startups was something that would only be relevant in case of breakevens. "We are still in a wait-n-watch mode to see how the government plans to take this forward," he said.

Joy says instead of exempting tax on profits, the government should provide income tax/VAT rebates to encourage digital transactions in retail payments. 

STARTUPS

Better ideas & funds

The need is structured guidance, easy space for running business and ease of doing business. The next is channels of funding

Getting right staff

Founders find it hard to get staff as enthusiastic and as innovative as them 

Lacking nurturing

The clout as powerful as that of Microsoft, Google and Intel is absent. Indian strartups are still waiting for a Tata or Reliance to do so.

Venture investing

It's in infancy. When guys of the calibre of Sequoia are investing in eye hospitals and retail chains, you have to realize how weak the venture system here is.

Active assistance

Handholding, mentoring and idea validating are the major need of the youth.

(Ruchika M. Khanna & Prashant Saxena in Chandigarh, Sumedha Sharma in Gurgaon and Shubhadeep Choudhury in Bangalore)