India @70: How big thinkers and entrepreneurs are redefining India by upending convention
A substantial ecosystem has been created but it’s still some distance away in evolutionary terms from that in the United States or even Israel.
The Indian startup ecosystem, the third largest in the world, is now in its fourth generation. Numbers from various reports establish its vibrancy. According to Nasscom, until 2016, India added upwards of 1,400 new startups, taking the total to more than 4,750. That year saw more than 80 M&As among them and more than 650 startups raised funding to the tune of $3.8-4 billion. Nasscom predicts the entrepreneurship ecosystem will more than double to reach more than 10,500 startups by 2020.
The biggest pointers to this maturing of the ecosystem are the new areas of opportunity that startups are exploring. Entrepreneurship 4.0 is looking deeper into India-specific problems and finding India- specific solutions for the masses. So for them the next big opportunities are in pockets untouched so far by technology.
These involve the use of machine learning and artificial intelligence to solve inefficiencies in logistics, healthcare, education and financial services. Then there’s the massive space of financial inclusion -- providaing credit services to under-served small businesses and consumers.
“While entrepreneurs of the generation of Narayana Murthy (Infosys) and Azim Premji (Wipro) operated under unbelievable conditions and put us on the map, those of the Deep Kalra (Makemytrip) generation were the first to take things like ticketing and finding jobs on the internet,” said Bala Parthasarathy, CEO of fintech startup Money Tap.
“The third generation comprising ecommerce leaders, cab booking and wallet companies necessarily took an innovation from the US or China and adapted it to India. That was in fact arduous and was possible only with innovations such as cash on delivery.” Parthasarthy’s startup aims to solve the problem of credit for Indians and believes he can take it to overseas markets as well. That kind of ambition is a key element of this startup cycle.
“Entrepreneurs of this generation need to focus on the big issues where there can be a real differentiator,” said Saurabh Srivastava, cofounder of India’s largest angel network, Indian Angel Network, which screened about 12,000 business plans last financial year.
For the current crop that has achieved sizeable scale and have survived through the initial challenges of infrastructure and capital availability, the next era will be that of handling a highly competitive landscape. “Only a few established players will emerge who will emerge with highly differentiated offerings,” Dhruv Shringi, CEO of Yatra.com.
A substantial ecosystem has been created but it’s still some distance away in evolutionary terms from that in the US or even Israel. What that means is that both entrepreneurs and investors are learning from experience and are self-correcting. The old-school principles of building a business that is valuable for shareholders and investors should be taken to heart.
“We never splurged, none of us drew big salaries. But today we see that while companies are in trouble, founders have all the money,” said Srivastava. “You can confuse raising money with success. At the end of the day, a successful business is one that can make a reasonable profit.”