A compilation of important news from the Indian startup world:
Sale season on start-ups in India: M&As surge to $61 mn in May
Overall, the industry saw 47 M&A deals involving start-ups in 2016 (January to May), as compared with 23 in the same period a year ago (January to May, 2015), Grant Thornton India data reveals. The pressure on start-ups to consider M&As is quite evident. After robust investments last year, fund managers are increasingly developing cold feet towards infusing large amounts of capital in the domestic market.As per Grant Thornton India, the total amount of PE and venture capital (VC) investments in the country fell by over 8% in 2016 (YTD) when compared to last year. PE and VC firms invested $5,364 million this year (YTD), while last year the invested figure stood at $5,841 million for the corresponding period. In the case of start-ups alone, a report released by global research firm Goldman Sachs on June 15 says private equity funding in India declined by 25% year-on-year from $2.5 billion in 2015 to $1.9 billion in 2016. “As the industry is maturing, there are a lot more large potential acquirers today than before, like Flipkart and Freshdesk. The more interesting part is that in India, even the large public companies are warming up to talent and product acquisitions—like CaratLane being acquired by Titan. This is a very healthy trend for the startup ecosystem,” says Neha Singh, co-founder of Tracxn, a data analytics company that tracks the start-up industry. Analysts say the M&A trend will continue. “We strongly believe that the momentum will continue to rise. This quarter has already seen around 40 deals till now and we expect an addition of five to seven deals anytime soon.
Start-ups: 571 entrepreneurs queue up for tax benefits
As many as 571 budding entrepreneurs have filed applications as on June 24 with the Department of Industrial Policy and Promotion (DIPP) for recognition as innovative startups to avail tax breaks and other benefits. Out of these, only 12 are eligible for consideration by the inter-ministerial board for tax benefits, Startup India tweeted. Startup India is an initiative of the DIPP. Seven have submitted all documents and are eligible for Startup India benefits and tax exemption and 106 have submitted all documents but are not eligible for tax exemptions, it said. “Remaining applicants will receive hand holding support from Startup India Hub,” it added. The inter-ministerial board validates the innovative nature of the business for granting tax related benefits. In January, Prime Minister Narendra Modi unveiled a slew of incentives to boost start-up businesses, offering them a tax holiday and inspector raj-free regime for three years, capital gains tax exemption and Rs.10,000 crore corpus to fund them. India has the third-largest number of start-ups globally.
How real is the Artificial Intelligence startup wave?
While running a digital marketing agency, Neerav Parekh regularly updated his clients on their campaign performance with reports and charts that were carefully put together. However, the clients were quickly snowed under the blizzard of data, and inevitably demanded that account managers personally visit them and take them through these reports. This was a laborious process and, rather than plod through it repeatedly, Parekh, a serial entrepreneur, turned to artificial intelligence (AI), the science of trying to make computers think and act like humans, for a solution. His product, Phrazor, is aimed at automating the process of interpreting data and communicating insights. Having used Phrazor for his agency, Parekh has now sought to extend the reach of his product. Using AI to pore through, comprehend and piece together numbers and notes is just one use of this rapidly emerging technology. “AI is not new, but its recent reemergence is thanks to the incredible performance of a type of machine learning called deep learning in some of the core problems like image recognition and speech recognition,” says Navneet Sharma, cofounder and CEO of Snapshopr, a visual intelligence platform. For startups in India, venture capital investments in AI in the United States provide some indication of the exploding interest in this space. According to data from CB Insights, VCs invested barely $415 million in AI ventures in 2012 and this exploded to $2.38 billion in 2015.
‘We aim to become tech expert for startups’
Established in 2005, TechJini is a Certified Google Developer Agency. The company is one among the first few selected from over 50 developer agencies across the world.“If you are a startup, we are your chief technology officer (CTO); TechJini will work and consult with you, take your product live and manage it in the long run aiding you with technical expertise needed. For larger companies, we offer proficiency in mobility, IoT and emerging technologies. We are your technology experts and consultants making sure you get the maximum (return on investments) RoI out of your technology investments,” Techjini Founder Amit Rana told Deccan Herald.With over 200 employees, TechJini works across business verticals— media, engineering, manufacturing and startups to Fortune 500 companies. The team has an extensive technical background and they want to make sure it continues to be their strong point over the years to come.It is present across India, in Tokyo and New Jersey with over 100 clients from all geographies combined. Without disclosing revenues, Rana said, “We are a rapidly expanding mid-sized company that is 100% debt-free and profitable from the day we began operations in 2005.”On challenges, Rana said, “Firstly, during our initial few years we did not have a portfolio of completed projects that would serve as a sales pitch to win new customers. Due to our strong technical bent, we created a proof-of-concept as opposed to sharing a proposal. We used a consultative approach with our clients that made them comfortable instead of making a sale.”
Vodafone focusing on intelligence and automation
The immense opportunity presented by the large number of consumers in India has led to 2100 – 2500 enterprises being started in India per day and between 750-800 getting out of business or becoming dormant, as per a survey conducted by the India SME Forum and researched by SDRC India Advisors.The survey has further revealed that challenges faced by all startups, micro, small and medium entrepreneurs, whether it is financial, sectoral, geographical or managerial are often quite common and so are the solutions that emerge from them. Most of the successful entrepreneurs either work hard at finding and applying solutions or are mentored either by a member of the family or one among their immediate friends and family circles.A common link between the high death rate of small and medium enterprises in India, are the first generation entrepreneurs, who do not have adequate mentorship, access to industry or market best practices and are working in closed set ups, without access to successful entrepreneurs. These first generation entrepreneurs have a tough time in not only navigating business downturns, but also in enabling sustainable growth of their enterprise, leading to shutting down their enterprises. Unfortunately, most successful entrepreneurs too work in closed set ups, without sharing or divulging much about their business strategies and the hurdles faced; while taking the success curve. Discussions on setbacks and ways to circumvent them are often discouraged, in turn, discouraging assimilation and amplification of best business practices in the industry.
Venture Catalysts raises $500K from Zaffiro Ventures
Venture Catalysts (VCats) was valued at Rs 40 crore during the investment process in the six months of its operations, it said in a statement today.Founded by Anil Jain, Anuj Golecha, Apoorva Sharma and Gaurav Jain, Venture Catalysts (VCats), launched itself as India’s first Seed Investment & Innovation platform aims to provide venture fund, co-working facility, angel network and post-investment support to boost startups in their early stage of growth. It ideally invests $100K to $250K in early stage startups that has the potential to create enduring value over a long period of time. Venture Catalysts plans to establish a holistic, end-to-end startup investment and support ecosystem across the country, including tier-2 and tier-3 cities. It plans to extend its reach to another five cities in two years.