Start-ups come of age as e-tail booms

A host of tech firms are starting to emerge from the shadows

Start-ups seem to be finally coming of age with booming e-retail companies and software solution providers who analyse business needs of large global corporations. However, when compared to Silicon Valley, the Indian start-up industry is hampered by lack of technology infrastructure, access to quality mentors and good talent, industry watchers say.

With the likes of Flipkart and Snapdeal raising billions of dollars in capital, and the buzz about e-commerce and what it can do to India’s retail economy, a whole host of technology companies are starting to emerge from the shadows. Case in point: Brain4ce Education Solutions, which offers tech courses online under the name of Edureka, has grown its revenues by a whopping 2,768 per cent in the last three years.

Yahoo’s acquisition of Bangalore-based Bookpad for $15 million is another example. Bookpad converts Microsoft Office or PDF documents for use on a web browser. This came on the heels of Facebook acquiring Little Eye Labs for a similar amount.

Zomato, the online food review portal, raised ₹370 crore in fresh funding earlier this month, raising its value to ₹4,000 crore. Lack of good public transportation in the country has given birth to start-ups like Ola, TaxiForSure and others, raising millions in funding.

Industry watchers believe these developments have put Indian entrepreneurs on the global map.

“If you look at these deals, it is an affirmation that Indian companies are starting to make a mark,” said Rajat Tandon, Senior Director, Nasscom 10K start-ups initiative.

Industry body Nasscom has also done its bit to help start-ups. In April, as a part of its InnoTrek initiative, Nasscom took around two dozen start-ups to Silicon Valley and showcased their wares to tech giants like Yahoo. Similarly, iSPIRT and Microsoft Ventures have helped Bookpad with their business accelerator programmes.

Global ventures

In the last couple of years, India has seen 4,000 start-ups, 400 venture capitalists and 150 start-up incubators. “The next set of big companies have the potential to come up from any part of India. That is a heartening sign,” says Sharad Sharma, co-founder and a member of iSPIRT.

Entrepreneurs themselves are a confident lot. Deepinder Goyal, founder of Zomato, believes the company’s success in India can be taken to other emerging markets like Latin America, which is not something a lot of tech companies have done in the past. “Building a company that can be synonymous with India and which achieves scale is what drives me,” he says. Goyal is up against Silicon Valley companies like Yelp and Facebook, all of whom compete for advertising eyeballs.

There are other start-ups like Zoho which want to take on the likes of Salesforce.com in the enterprises software segment.

“Our logic is simple: there are millions of small businesses and they can’t use software that costs millions of dollars. With our cloud computing platform, we can do that at much less cost and more effectively,” says Sridhar Vembu, CEO and founder of Zoho.

Different shades

There is also a trend of different kinds of start-ups emerging from different regions. Rajesh Sawhney, the founder of GSF, a company that invested in Little Eye Labs, says the NCR region has e-commerce start-ups, Mumbai has start-ups focused on media and financial technology-related products and Bengaluru start-ups focused on technology.

For example, Mumbai has seen the emergence of Powai Lake Ventures, which is close to the IIT Mumbai campus. One of the ventures that was founded here is Housing.com, a map-based real estate and property search portal. TinyOwl, a location-based food ordering app, also from here, is aspiring to go global from the financial capital of India.

Similarly, Bengaluru and Gurgaon have buildings that are designated for start-ups. This kind of infrastructure provides them with space that helps them to bounce ideas off their peers, and other amenities.

E-healthcare start-ups are also starting to see traction. Shashank ND, co founder of Practo Technologies, says healthcare will see convergence of information systems, picture archiving and communications systems (PACS), electronic medical/health records (EMR/EHR) and point of care systems to generate clinical data, including images.

Not all hunky dory

Despite the growth and the interest in Indian start-ups, there are a lot of basic problems that need to be addressed. From collaboration between industry and academia to technology infrastructure and ease of setting up business (or winding them down) there are areas of concern, industry watchers say. Most Indian companies have lacked meaningful exits, says Sharma. The number of exits in software products start-ups in the country is 1.1 times the amount of investments, while Israel’s ratio stands at seven times, according to a Signal Hill-iSpirt study.