The year ahead: 2016’s most anticipated shakeups in India’s startup scene

Entrepreneurs come in all shapes and sizes. Photo credit: Rachael Voorhees

For anyone who hasn’t been paying close attention, it can seem like India’s startup ecosystem has appeared out of left field. Throwing a stone in Bangalore will hit a hyperlocal grocery delivery company and, as Indian YouTube show “The Viral Fever” explains it, being an entrepreneur carries the same allure that playing the guitar once did.

With over US$6.4 billion invested into Indian startups in the first three quarters of the year, it’s time to separate the men from the boys, so to speak. What’s real, what’s not, and what’s next for India?

See: What are the hottest sectors for venture capital in India this year?

But first, a history lesson

Image credit: Wikipedia
Women purchasing copper utensils from a merchant in a bazaar in 19th century India.

Before Alok Goel, former CEO of Freecharge and Redbus, ex-Googler, and managing partner at investment company Saif Partners, placed his bets for 2016, he explained that it was important to first take a few steps back in order to get a panoramic view of India’s current startup ecosystem and identify its patterns. Saif’s portfolio spans everything from mobile wallet and ecommerce site Paytm to hospital appointment scheduler (recently acquired by rival Practo) Qikwell. It has had five IPOs in India.

“Let’s start with 2003,” he explains. “Until this point, India was an outsourcing hub. People were sending their work out here for cheap costs. Things were changing, however. Global companies like Microsoft, Google, Yahoo, and Cisco had opened up centers in India and were realizing that there was so much more that could be done with them. It’s like they all sat down together and thought, ‘why can’t we use our presence in India to our strategic advantage? Why can’t the real work happen out of this country?’”

Next, came 2006, and with it the wave of copycat innovations. I’m talking the ‘Amazon of India’, the ‘Expedia of India’, the x’s and y’s of India. The large businesses of today – think Zomato and Flipkart – are all a result of this system. They’re important but copycat models in some ways.

“2015 was really the landmark year for copycat startups. Valuations were imbalanced and the number of startups trying to solve the same problem went through the roof,” Alok says.

So, with everyone talking about the end of this holy era, will the purported “bubble” burst?

“Not at all,” says Alok. “In fact, we’re at a great point in the ecosystem. Today, the amount of time it takes to launch a startup in India is shorter than it’s ever been before. The information gap has been bridged globally.”

This, Alok explains, will spur a series of India-focused startups. “When we used to raise funds for Freecharge, we would go to the fundraising meeting with our investors and get asked who we were like,” he says. “This was necessary for them to understand our business model and envision it in the Indian ecosystem. I would always say that we weren’t like anyone.”

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