A compilation of important news from the startup world:
Will Raghuram Rajan’s exit affect the startup ecosystem of India?
Prime Minister Narendra Modi recently called Raghuram Rajan a “patriot” in an interview with Times Now setting to rest a few speculations as well as raising a few questions, primarily on his silence over the long drawn clash between his party hardliners and the RBI chief.Raghuram Rajan announced his decision to step down as Reserve Bank of India Governor in September this year and will not seek an extension after completing his three year stint. This decision would make Rajan the only RBI governor since the 90s to serve for only 3 years. The decision seems to come in the wake of mounting differences between the RBI chief and BJP’s conservative right wingers who have increasingly criticized Rajan’s financial decisions.Differences between Rajan’s economic decisions and BJP hardliners was palpable two years ago when the RBI chief rooted for higher interest rates when the BJP was trying hard to sell itself as a party promising economic growth and employment at a time when the annual GDP growth was below 5 per cent around the 2013-2014 financial years. It was also marketing itself on the ground of relaxing restrictions to facilitate more foreign investments. Rajan’s vocal resistance to the interference of the government in economic and monetary policies have led to some personal attacks from BJP party members. With his exit, repercussions on the startup economy will be very likely decided solely by government policies. While the government is open and encouraging about the startup ecosystem whether or not they can focus on the key challenges remains to be seen.
Forbes India Startup Square: Glamour of valuations hides real problems
Much of India’s startup success stories are skewed towards solving the problems of the urban middle-class. Be it an Ola, Flipkart or Paytm, they solve consumer pain points by offering a seamless and unobtrusive mobile app and internet purchase experience. And given their investor line-up, which includes some of the world’s biggest startup financiers, they are able to offer deep discounts. The frenzy surrounding these tech-enabled ideas is understandable, but are there entrepreneurial dreams that go beyond India’s urban middle-class? After all, only 200 million in a country of over a billion people can speak English and nearly 70 percent of India continues to live in villages.As part of Forbes India’s first Startup Square event in Bengaluru in May, held in association with accelerator and early-stage investor Axilor Ventures, an eight-member panel had an intense two-hour discussion on ‘Why we should look beyond the urban middle-class.’ The audience got to hear interesting insights on the country’s startup ecosystem in a discussion moderated by Forbes India Editor Sourav Majumdar. The panelists included Ganapathy Venugopal, co-founder and CEO, Axilor Ventures; Rajesh Babu, director, Lok Capital, an impact investment venture capitalist; Nagaraja Prakasam, partner at US-based impact investment firm Acumen and an angel investor who focuses on the social sector;
Axis Bank initiates accelerator programme for start ups
Axis Bank, India’s third largest private sector lender by assets, said it started an innovation lab facility in Bengaluru to accelerate development of new technology solutions for the banking sector.The lab, a first by a bank in India, has an in-house innovation team and an accelerator program to work closely with various start-up companies in the financial technology space, the bank said on Tuesday.”We are working with six to seven start-ups at this stage in Mumbai and the maximum we can accommodate is 10. The accelerator which will incubate start-ups for three months and the first batch is already operating in Mumbai. The second accelerator programme, expected to start in July, will be based out of Bengaluru where the bank has rented a 10,000 sq ft space.
Cisco LaunchPad to accelerate Modi’s Startup India initiative
In a fillip to Prime Minister Narendra Modi’s ‘Start-up India’ campaign, US-based global technology company Cisco on Wednesday unveiled ‘LaunchPad’, an open innovation initiative to accelerate startups and support growth among India’s young developer community. ‘LaunchPad’ will help startups, their authorised channel partners and developers scale their solutions, address new markets and build digital businesses in the world’s youngest startup nation and second biggest developer community. “We have an unprecedented opportunity to digitise the next three billion people in one-third the time it took to connect the first three billion. Through ‘LaunchPad’, we want to unleash the next generation of disruptive ideas and help turn the entrepreneurs of today into the business leaders of tomorrow,” Amit Phadnis, President, Engineering and India Site Leader, told reporters at Cisco campus here. “We would wish to take this initiative to state governments as before we digitise the next three billion, connecting the few millions in our country with our strong go to market capabilities is the first challenge,” Phadnis told IANS. As pat of the project, Cisco teams will mentor startups and developers on how to help create digital solutions to enable enterprise customers, service providers and other enablers in the public and private sphere. The move will help connect the people and 50 billion devices through digitisation, matching appealing ideas with business expertise and connecting engineering talent with investors and customers. For this, Cisco will provide a space at its Bangalore campus with access to a suite of Cisco technologies and free grants to startups chosen to work at its campus.
Will Pune outpace Bengaluru to become India’s next startup hub?
Maharashtra CM Devendra Fadnavis recently expressed the state government’s intention to develop Pune as the startup hub for Maharashtra. He went on to say that Pune could be the startup hub of the country.A seemingly tech savvy minister and a proponent of the government’s Digital India, Make in India and Make in Maharashtra initiatives, Fadnavis has already seen his state bring in investment from Silicon valley giants. Microsoft has already started providing key technology and infrastructure for ideas like ‘smart villages’ and other citizen services.In addition, the Redmond giant set up data centres in Mumbai and Pune, thus launching its public cloud locally. At the recent AWS Summit, Fadnavis also welcomed Amazon’s announcement of the availability of Mumbai as a new AWS Region. The company said that the new Mumbai Region is currently available for multiple services, including Amazon Amazon EC2, Amazon S3 and Amazon RDS, and is the sixth AWS Region in Asia, thirteenth worldwide.Coming back to the Pune leaving behind Bengaluru as the startup hub of India, we dig in a little deeper to see if there is really some merit in the claim. Shobhit Srivastava, Research Associate – Mobile Devices and Ecosystems at Counterpoint Research tells Tech2 that there are a number of factors to be considered for a city to be a startup hub. These include talent pool, available investment and a healthy audience or market for the product the startup is offering.
Rakesh Mathur, the original online whiz kid, on Indian startups, bubble and bootstrapping
Thanks to the unprecedented success of companies such as Flipkart, Ola, Mu Sigma and Paytm entrepreneurship and startup culture have become mainstream in India in the past five years. These success stories have impacted the mindset of young Indians and encouraged them to tread the path of entrepreneurship. While the world started acknowledging young Indian startups and their founders only in the recent years, Rakesh Mathur took the startup world by storm when his price comparison portal Junglee was acquired by Amazon way back in 1998. A veteran Silicon Valley entrepreneur, Rakesh is an alumnus of IIT Bombay and The University of Texas. He has founded and led over a dozen startups including Junglee, Webaroo (now known as GupShup), and Snapstick.In the last three years itself, two startups backed by him – Just Chalo and Droptalk – were acquired by OpenTable and Dropbox respectively. Currently, he is leading a new venture – FlyWheel, an e-hailing app that everyday taxi drivers can use to pick up smartphone users in a handful of cities across the US. According to Rakesh, Uber has an upper-hand over Ola, as its technology is primarily meant to minimise human intervention. He adds:On the contrary, if you look at Ola, it probably has 15X more employees than what Uber has globally. Uber has impressed me with its capability as a technology provider.At the same time, like others Rakesh doesn’t believe that Indian e-commerce is a winner take all game.
Berlin-headquartered DCMN acquires India-US based startup 1SDK
Berlin headquartered growth solutions provider DCMN has acquired Kochi, India and US-based startup 1SDK, which offers a SAAS-based platform for advanced mobile attribution analytics capabilities to mobile app developers. Financial details of the deal were not disclosed. Cofounded by Anil Kutty, 1SDK was incorporated in the United States in 2013 with its team primarily based in Kochi. Kutty will join DCMN as director of mobile products as will his team of developers. The 1SDK tool works by measuring conversions from mobile advertising campaigns using metrics including retention, engagement and churn (or app uninstalls). This deal will allow DCMN, which has so far focused on developing its TV attribution technology, to develop a proprietary mobile capability as well as launch new features leveraging the two platforms.
Grofers lays off staff, revokes campus offers
Tiger Global-backed grocery delivery firm Grofers has let go some employees and revoked campus job offers as part of a restructuring of operations, indicating the growing pains Indian startups are facing as the funding crunch deepens.“In the past couple of months, we have been making some necessary strategic changes within the company. The changes we have made will, in our opinion, benefit our customers in the long term. However, these changes have made the new roles redundant and therefore, we are no longer able to continue with the offers we made a few months back,” Grofers India Pvt Ltd said in a blog post.The move comes weeks after online marketplace Flipkart deferred the joining dates of some hires from the Indian Institute of Management, Ahmedabad. Earlier this month, the All-IITs Placement Committee, the body that represents the placement cell heads across IITs, had decided to blacklist seven startups that withdrew job offers to students this year. The development highlights that Grofers has yet to fully recover after shutting operations in nine cities earlier this year.Grofers is one of the most funded grocery startups. It had raised $120 million in November last year, taking the total to nearly $200 million. Its investors include Tiger Global, Sequoia Capital and Japanese Internet and telecom conglomerate SoftBank.In the blog post, Grofers founders Saurabh Kumar and Albinder Dhindsa also said that the company has let some existing employees go and that it is offering severance benefits and outplacement services. The company didn’t specify how many employees it has sacked or how many campus offers it revoked.
Brand Capital invests $25 mn in Meru Cabs
Mumbai-based radio taxi firm Meru Cab Company Pvt. Ltd has raised $25 million (Rs 150 crore) from Brand Capital, the ad-for-equity investment arm of Bennett Coleman and Co (BCCL).The company will use the capital to strengthen its foothold in the Indian market, reports PTI. “With the ongoing transformation in the taxi industry, this move is in line with the company’s efforts to showcase its services to a larger customer segment via a bouquet of media channels,” Siddhartha Pahwa, CEO, Meru Cabs was quoted as saying in the report. This would mean that Meru will receive free advertisements and promotions on BCCL’s various media properties including the country’s largest English daily by readership The Times of India, The Economic Times and news channels Times Now and ET Now. Email queries sent to both Brand Capital and Meru Cabs did not elicit any response till the time of filing this report. Meru Cabs is one of India’s oldest radio taxi firms running operations in 24 cities across the country. Meru Cabs had raised Rs 300 crore ($50 million) from its existing investor India Value Fund Advisors (IVFA) in March 2015. Vishal Nevatia, chief executive officer and managing partner at IVFA, had then told VCCircle that the taxi firm is also open to acquisitions and that other investors are likely to infuse $100 million in the company within a month or two. IVFA earlier infused $75 million into Meru Cabs since 2006.
Amazon Web Services Platform Expands to Mumbai in India
Amazon.com, Inc. ‘s AMZNworld leading cloud platform Amazon Web Services (AWS) is gradually expanding its presence in India. Recently, it announced the launch of the Asia Pacific (Mumbai) Region, which happens to be the company’s sixth in the Asia Pacific.With the recent launch, AWS now offers its services across 35 Availability Zones (AZs) through 13 technology infrastructure regions worldwide.As per information provided by the company in its press release, some of its other AWS Regions are being used by more than 75,000 India-based customers as a measure to save costs, accelerate innovation, expedite the time to market as well as expand their geographic presence within minutes.The recent launch is in response toincreasing customer demand for AWS’ presence in India so that they can migrate their applications, which require low latency and data sovereignty.Moreover, the company has announced the implementation of the pay-as-you-go pricing feature that would enable faster sign up on part of the customers. Furthermore, the AWS Activate program would enable India-based startups to avail the resources they require to quickly scale up their businesses. The Mumbai region would comprise two AZs. These AZs are actually datacenters located at distinct places within a single region but equipped to operate independently of other AZs. Though these remain interconnected over a low latency network, their power sources, cooling and physical security are totally independent of one another. These factors contribute to lower down time and therefore increase efficincy for companies using cloud resources.
Five Star Business Credits raises Rs 114 crore from Morgan Stanley Private Equity Asia
Five Star Business Credits, which provides loans to micro entrepreneurs, has raised fresh funding of Rs 114 crore from investment firm Morgan Stanley Private Equity Asia, which has now acquired a minority stake in the Chennai-based company. The Matrix Partners-backed venture, registered as a non-banking finance company, plans to increase its loan portfolio by five-fold over the next three years to Rs 1,000 crore. The deal comes at a time when investors are seeing rising potential in the small business lending market, which they expect will grow as large as the microfinance industry. Five Star’s typical clients include tea shop owners, vegetable vendors, small machine owners, provision stores, waste paper recycling units, tailors, and power looms. These customers typically don’t have a credit profile and cannot raise debt from banks. Founded in 1984, Five Star started expanding its business by focusing on the small business space only in 2010 after the current managing director D Lakshmipathy took charge of the business. At that time, the company had a loan book of Rs 18 crore which has now expanded to Rs 200 crore primarily focused on Tamil Nadu. Five Star had earlier raised Rs 33 crore from Matrix Partners India in two rounds of funding in 2014 and 2015.
Bengaluru now has startups that help foreigners settle here
Sarah Miller, 24, from the United States, lived in Bengaluru for a year. This student of international relations and business-turned hospitality technology professional believes her stint helped her explore the business culture here. “It has improved my global outlook and cultural appreciation,” said she. For many international students and working professionals like Sarah, who are heading to Bengaluru for professional insights into sectors such as startups, medicine, engineering, education and NGO, adapting to the new circumstances is not easy .Adapting culturally , understanding business needs and communication methods takes a lot of hand-holding. That’s precisely why Troy Erstling founded BrainGain. The 26-year-old from New Jersey came to the city in 2013 to study social entrepreneurship and faced all the problems any foreigner would do in India. He interned with Zoomcar, before coming up with the idea of finding “real jobs for friends here.” Since BrainGain started in 2014, the company has placed 30 foreign students and professionals in companies such as Buttercups, Bhive, Exotel, Mobstac and Hotelogix. BrainGain helps imported talent to settle in Bengaluru by teaching them how to deal with autorickshaws, getting money exchanged, what a head wiggle means, breaking into a masala dosa and sipping chai, says Erstling. “Once they get past the initial chaos, people get acclimatised rather quickly ,” he says.
CarDekho.com, BatteryDekho.com, Sports Asia get funding
Gurgaon-based auto portal CarDekho.com has launched automobile battery research and discovery portal BatteryDekho.com that aims at building a comprehensive ecosystem for vehicle ownership and making the battery discovery, research and selection process conveniently for the Indian consumer. With this move, CarDekho users can search and compare specification and pricing of batteries. The site already has more than 250 batteries of brands such as Amaron, Exide, SF Sonic, Tata Green, and Base. Users will have the option to search for batteries that are compatible to 500 car and bike brands. BatteryDekho.com has partnered with more than 10,000 dealers in 200 cities to enable better search results and greater selection flexibility for its users.
HT Media Ltd has decided to pick up a 50.5% stake in Singapore-based digital content firm Sports Asia Pte. Ltd, as the newspaper publisher expands its online offerings.The company will make the investment through wholly owned step-down subsidiary HT Overseas Pte. Ltd. It didn’t disclose the value of the all-cash deal but said it will buy Sports Asia’s shares for S$1 apiece.The transaction will be completed by July 1, VCCircle reported. It added that the investment will help it diversify its digital content development.