From the startup world – July 5

Narendra Modi's pet project is facing lot of problems

A compilation of important news from the Indian startup world:

Startup India from announcement to on-the-ground action: a report card from the DIPP Secy
The new DIPP Secretary walks the talk when he says that he is open to supporting and encouraging startups. I called him last Thursday, and he promptly agreed to meet me the very same day. Like everybody else in the startup ecosystem, I was keen to learn what was happening on the Startup India Standup India front after the big bang launch in January this year. I wanted to know what the government has been doing so far and what more it plans to do.Ramesh Abhishek took over the reins at the DIPP from Amitabh Kant when the latter moved to become CEO of the Niti Aayog. It has been up to him  and his team to ensure that what PM Modi laid out  in the Startup India initiative in January this year is timely implemented and  is successful in what it set out to do: give new Indian entrepreneurs a robust infrastructure and support system to get them up and going. “Taxation and incentives (for startups) were the big areas. Startups registered and incorporated from 1st April 2016 are eligible for tax incentives,” he adds. The government has published the guidelines for tax exemptions that startups registered between 1 April 2016 and 31 March 2019 can avail of. Startups need a certificate of eligibility from the Inter-Ministerial Board of DIPP to avail of these benefits.

How healthcare tech start-ups will secure your future
The healthcare startup space, which is still in a nascent stage of evolution in India, is gaining traction over the last few quarters, with companies focusing on hospital management systems, doctor discovery, delivery of medicines and home healthcare services. India has a shortage of medical professionals with around 1 doctor for every 1,700 patients, as against the WHO prescribed ratio of 1: 1,000. The core challenge remains as to how to to provide better access to healthcare. Smartphone led mobile technology digitisation of healthcare practices is somewhat bridging this gap. Healthcare startups like Practo, NetMeds, Portea, Healtcart, Care24, Medikoe, 1mg, DocsApp, Healthenablr among others, have found a foothold in the business world and attracting investors. According to a report by research firm Tracxn, until April, a total of $27 million has been invested in India in 2016, through 28 deals.
A cumulative of over $338 million is invested the sector since 2009, with 2015-16 seeing 84% of the overall funding.

Revealed: Shashank ND’s ambitious roadmap for Practo
During a recent event in Bengaluru, someone from the crowd pointed to Shashank ND, the founder-CEO of Practo Technologies, and shouted across the room: “Practo, Practo.” It was a young man who, having caught Shashank’s attention, drew him aside to thank him for the work Practo was doing. His grandmother had been suffering for three years, he said, and no doctor had been able to diagnose her ailment. Tired of running pillar to post, they desperately searched online for doctors in Bengaluru. Finally, it was a doctor suggested by a Practo search result that solved her issues and continues to be her go-to physician. “It’s all because of you,” her grandson told Shashank. Some might call it happenstance but, for the 29-year-old entrepreneur, this was validation of his vision for the company: To simplify health care for the common man by building a connected health care platform that addresses consumer pain points. “If someone has stomach pain, we are helping that person go to the right doctor nearby. A common man doesn’t understand medical jargon,” says Shashank. “We are trying to increase the trust between doctors, hospitals
and patients by making the process transparent and eliminating the barrier of lack of information. We want
to help consumers make a more informed decision.”

Why co-working spaces in India have startups and entrepreneurs hooked
The monumental work that follows starting up truly begins to manifest itself when investors and other stakeholders come knocking. As meetings on precarious subjects are scheduled with the weight of deadlines hanging in the balance, pending utility bills or malfunctioning internet networks may be enough to break the momentum. Sharing office space with existing establishments could serve as a quick fix. Fortunately, eliminating administrative hassles is, but the most basic benefit such collaborations have on offer. Co-working spaces essentially work around the concept of leasing office infrastructure and resources to individuals or groups of people, often on a subscription basis. In addition to flexible working hours, these centres foster an innovation-inspiring atmosphere, bringing together groups of like-minded people under one roof. “The idea was essentially to set up a plug-and-play option for anyone looking for a serviced office space,” says Virtuous Retail (VR), Director, Rajiv Raichand. “When people start their own businesses, they need to experience the exchange of ideas while maintaining a wide network of connections. With co-working spaces, we give them the option of picking up contacts from simply working together, thereby bringing much more value to people running businesses,” he says.

Indian startups raise $2.1 billion in H1 2016, a 40 percent decline compared to H1 2015
As much as the industry would hate to admit it, the year 2016 has not been kind to startups so far. Many younger startups have shut down, big boys got devalued, job offers were pulled back, and competition was never fiercer. Save for online marketplaces and fintech startups, which are obviously interlinked, investment inflow into the country has been dull, compared to the previous year’s Q1 and Q2. According to YourStory Research, venture capital-backed companies in India have raised $2.1 billion for the first half of 2016, through 559 deals, where angels, VCs and private equity (PE) investors deployed risk capital across stages. More than $719 million was raised in Q2 alone across 260 deals. This is a 40-percent decline from the same period in 2015, when startups raised $3.5 billion across 380 deals. Last year, hedge funds, mutual funds, venture capital firms, and corporate investors were scrambling to get into every deal. This year, however, that doesn’t seem to be the case. A handful of startups —including Peppertap, Amber Wellness, Tooler—have shut down in the last six months. Many have been rumoured to be opening up their fixed deposits for survival. Understandably, this has investors worried.

Govt prepares software products policy to create 10,000 tech startups
Aimed at creating a robust software products industry in India, the National Democratic Alliance (NDA) government plans to offer fiscal incentives for start-ups in this space.The strategy is aimed at enabling the environment for creating 10,000 technology start-ups to develop globally competitive software products and generate direct and indirect employment for 3.5 million people. InfraCircle has reviewed a draft of the National policy on software products–2016.One of the prominent electoral planks of the NDA government was job creation which led to initiatives such as Make in India and Skill India aimed at creating employment opportunities.The government aims software products to account for $100 billion of India’s gross domestic product (GDP) by 2025 from the current level of around $6.1 billion. Of these, exports account for around $2 billion. The country’s information technology industry, valued at around $143 billion, is expected to grow to $350 billion by 2025, according to the draft policy being prepared by the ministry of communications and information technology. India’s GDP expanded 7.9% in the January-March quarter, accelerating from a revised 7.2% in the previous three months. The country’s GDP growth is projected between 7% and 7.75% by the Economic Survey for the current financial year.

Xiaomi’s Hugo Barra on Indian startup bets, IoT ecosystem & more
Xiaomi has been making a lot of noise about its smart phones of late in India and with a whole ecosystem of products in place on its e-commerce platform; they are eyeing to become an overarching technology company.In an exclusive interview with ETtech, Xiaomi’s Vice President-International, Hugo Barra talks at length about their world of IoT products, startup bets in India, the newly launched Mi Max and their future plans.Q: Do you think Xiaomi’s Internet of things ecosystem will offset weak smart phone sales in the future?We think of our business as a platform and the three main pillars of that are MIUI operating system, e-commerce business and hardware.We generate revenue through the products and services that we build on top of this platform. This ecosystem of varied products complements the smart phones that we sell in the market because all such products are connected to the Internet and are controlled by the respective app on the Xiaomi phones. In terms of start-ups, how are you looking at investments in India? The country is going through a pretty important transition where on-demand content is critical. Therefore, we have a two-fold agenda while we are talking to start ups in India. It’s partnership first & foremost and secondly investment and they often go hand in hand. We are currently talking to a large number of companies in the mobile Internet ecosystem. Hungama was our first investment in India and we have also partnered with MobiKwik and Zomato, but these are just partnerships right now. We look forward to make more of such partnerships.

Investment surges in start-ups in M-commerce, mobile payments: News Corp VCCircle
With mobile phones contributing 40% of all e-commerce sales in India as of 2015, start-ups across sectors are building business to reach customers using mobile phones as a channel of choice, says News Corp VCCircle’s ‘Annual India Mobile Ecosystem Report’.The report analyses the data segment wise and states that the start-ups in segments like M-commerce, video streaming, gaming and M-payments have attracted $ 8,053 million worth funding.With majority of mobile centric start-ups still being in the early funding stage, the tendency of them achieving scale and breaking is still low. Speaking on the report highlights, Nita Kapoor, Head-India, New Ventures, News Corp and CEO, News Corp VCCircle, said, “The numbers are suggestive of India being an evolving ‘data’ story.

Government has changed rules for funding of startups.
Government has changed rules for funding of startups.

Government eases funding rules for startups
A recent notification issued by the ministry of corporate affairs (MCA) makes it easier for startups to access funds via the convertible note route.This notification is part of the all-round initiatives planned by the government to strengthen the startup ecosystem in India.Funds received by a startup amounting to Rs 25 lakh or more by way of a convertible note, in a single tranche from a person, will not be treated as a `deposit’. The convertible note is to be either converted into equity or repaid within a period of five years. The Companies (Acceptance of Deposits) Rules have been accordingly amended via a notification dated June 29.Owing to this relaxation, the stringent rules relating to informing the registrar of companies (RoC) or creating a deposit repayment reserve in the books of accounts will not apply to the startup receiving funding via convertible notes. However, it should be noted that the relaxation is available only to startups that meet the government prescribed norms (as defined by the department of industrial policy and promotion, or DIPP). This notification is the second such initiative to ease funding challenges for startups. TOI had in its edition dated June 20 reported that eligible startups will be exempt from angel tax.

SAP StartUp Studio: A garage that can transform ideas into successful companies
SAP, the $23.3 billion market leader in Enterprise application software has upped its game in India, by bringing into its campus in Whitefield, Bengaluru, the first batch of startups that are working on core technologies like artificial intelligence and cloud-based software.  The new tenants at SAP Labs India campus will be housed at the “StartUp Studio” – a 75 seat incubation facility.  Every year, the studio will take around 10 startups, provide them with technical expertise and support and give them access to the large base of SAP customers where appropriate. . The end goal of the Studio is to fine-tune the business of these startups and take them to their next stage of growth. “Startup innovations are happening in India and we recognise that we have to support the Startup Policy launched by the Prime Minister this year,” says Bernd Leukert, Member of the Executive Board at SAP, Products and Innovation. He adds that the StartUp Studio will be a place where SAP executives and employees can interact with these startups and jointly share resources. SAP Labs announced at the curtain raiser event to announce the SAP Startup Studio initiative on n Thursday, 23 June, that it is even changing its HR policies to encourage its 8,000 odd employees to become entrepreneurs. Starting this year, any employee who wants to start his own company can take a two-year sabbatical from the company.

Google India head Rajan Anandan invests in 500 Startups-backed Fulfi.IO
Angel investor Rajan Anandan, who also heads Google‘s Southeast Asia and India businesses, has invested an undisclosed amount in 500 Startups-backed Fulfil.IO. “We are very excited to get Rajan’s support in our journey. He is one of the most respected names in the tech industry, understands internet retail and the need for better tools for growing e-commerce businesses,” Sharoon Thomas, co-founder and chief executive officer, Fulfil.IO, told DEALSTREETASIA. “In our process of scaling up, we are sure we will gain a lot from his experience of building and scaling world class products in the internet retail space,” he added. Thomas said the funding was at the seed level but did not disclose the amount. US-based Fulfil.IO offers modern cloud based software for retailers to manage inventory and automate fulfillment operations. Anandan, the vice-president and managing director of Google, confirmed the investment in an email response to DEALSTREETASIA, but declined to give details of the funding. Founded by Prakash Pandey, Rituparna Panda, Tarun Bhardwaj and Sharoon Thomas, Fulfil.IO was among the 15 startups chosen in investment firm 500 Startups’ accelerator programme, where it received $125,000 as initial investment.

Hyderabad Angels aims to back 3 US-based startups by next quarter
Hyderabad Angels, one of the largest angel networks in India, is mulling investing in three US-based companies by next quarter. The angel network which has invested Rs 30 crore ($4.47 million) in more than 20 startups since its inception in 2012, plans to invest in 12 startups more in India by March 2017. “We are evaluating three companies in the US. One of the deals is expected to close by mid-August and two more by next quarter. We are still evaluating,” P.S. Sreekanth, investment director, Hyderabad Angles told DEALSTREETASIA. “Outside India is going to be a big opportunity for us. We are getting lots of interest from investors as well as entrepreneurs in the Middle East, UAE, US, Singapore and Dubai,” said Sreekanth. “Given our bandwidth, currently it is difficult to monitor investment outside India.” “While we are sector agnostic, artificial intelligence, virtual reality, fin-tech, edu-tech, and health-tech are few of the sectors that will continue to attract investments from us in the current startup market scenario,” he added. Hyderabad Angels makes pre-Series A or seed level investment. As part of pre-Series A investments, it invest upto $1 million and as part of seed round, it puts upto $150,000.

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