From the startup world – June 24

The Indian government will build a corpus for startups in two Finance Commission cycles.

A compilation of important news from the startup world:

No bumpy ride for startups as Modi government okays Rs 10,000 crore corpus
The government today approved Rs 10,000 crore ‘Fund of Funds for Startups’ to support them with an aim to generate employment for 18 lakh persons.  “The fund is expected to generate employment for 18 lakh persons on full deployment…A corpus of Rs 10,000 crore could potentially be the nucleus for catalysing Rs 60,000 crore of equity investment and twice as much debt investment,” an official statement said.  The decision was taken in the Union Cabinet meeting chaired by by Prime Minister Narendra Modi.  “The Cabinet has approved the establishment of ‘Fund of Funds for Startups’ (FFS) at Small Industries Development Bank of India (SIDBI) for contribution to various Alternative Investment Funds (AIF), registered with SEBI which would extend funding support to startups,” it said.  This is in line with the ‘Startup India Action Plan’ unveiled by the government in January.  The corpus shall be built up over the 14th and 15th Finance Commission cycles, subject to progress of the scheme and availability of funds, it said.  “This would provide a stable and predictable source of funding for startup enterprises and thereby facilitate large scale job creation,” it added. An amount of Rs 500 crore has already been provided to the corpus of FFS in 2015-16 and Rs 600 crore earmarked in the 2016-17.

Indian startups have existed much longer than you realize
Technology startups in India date back almost three decades. Microsoft Accelerator in India has compiled the industry’s major landmarks, and published them in an e-book that will be launched on June 23. “As we analyzed, we came up with four distinct phases of growth and maturity that we have traversed so far: software services and global delivery model, the dotcom era, the rise of product startups and growth of startup ecosystem,” Ravi Narayan, director, Microsoft Accelerator said in a blog post. Some of the milestones include US-based Texas Instruments’ decision to start an R&D center in Bengaluru in 1985 (this center became an incubator for many of the current entrepreneurs), and the launch of home-grown accounting software Tally in 1986.

Great Indian startups some way off, will continue to support those with which I was involved: Softbank’s Nikesh Arora
Nikesh Arora, who helped back Indian startups with over $1 billion in SoftBank capital in less than a year, believes that “great businesses” are some way off and the way to get there is for founders to be focussed on execution. The outgoing president of the Japanese conglomerate told ET by email that he will continue to support the startups that he was involved in funding, observing that he has made friends with the founders.  Arora, 48, a former chief business officer at Google, announced his surprise resignation from SoftBank on Tuesday after the Japanese group’s founder Masayoshi Son said he planned to continue as the chief executive officer for years more. Arora had been tipped to succeed Son in 2017, when the Korean-origin businessman turned 60. The companies that Arora backed in India include online retailer Snapdeal, ride-hailing app Ola, on-demand grocery retailer Grofers, budget hotel aggregator Oyo and realty portal Housing.

Former Dell India MD Sameer Garde joins analytics startup IQLECT
In yet another instance of industry veterans joining startups, former Dell India president and MD Sameer Garde has joined as head of global alliance, strategy and partnership at analytics startup IQLECT founded by former Jabong CTO Sachin Sinha. IQLECT has built a software-converged platform that enables data analytics in real time for businesses. It is backed  by US investors including Cadence Design Systems CEO Lip-Bu Tan, former Flextronics CEO Michael Marks and former Flextronics CTO Nicholas Brathwaite besides Exfinity Ventures led by former Infosys CFO V Balakrishnan. Ganapathy Subramaniam, venture partner, Walden International, is another investor in the firm. IQLECT has developed a converged box besides offering its analytic platform on cloud as a SaaS product. Sachin Sinha, founder and CEO of IQLECT, said he is excited about an industry veteran joining the firm to lead its next phase of growth. He said Garde would also head sales for Asia-Pacific for IQLECT.

AICTE mulls policy to help students launch own startups
The All India Council for Technical Education (AICTE) will soon introduce a policy that will empower students pursuing technical education to launch their own startups. The policy is in the final stage of drafting and will be tabled soon, said the AICTE chairman, Anil Sahasrabuddhe, here on Wednesday.  Sahasrabuddhe was in the city to inaugurate a conference titled Bridge 2016 that was organised by ICT Academy of Tamil Nadu at Hotel Le Meridian. “We have formed a committee headed by the vice-chancellor of Gujarat Technical University to frame a policy for startups. It has met thrice so far and I was told that the policy was in the final stage of drafting,” he said.  Sahasrabuddhe also pointed out that Gujarat Technical University and Abdul Kalam Technical University, Kerala, have already introduced a policy for start-ups. “Taking a leaf out of them, we want to come up with a policy for all technical institutions,” he said.

India: SEBI may scrap listing platform for start-ups
The market regulator is reworking its plans for a capital-raising platform targeted exclusively at start-ups after the concept failed to take off a year after it was proposed. Now, the Securities and Exchange Board of India (Sebi) is considering sweeping changes to the listing framework for technology-focused start-ups that will allow them to trade publicly on regular stock exchange platforms, said two people familiar with the matter. The changes could involve amendments to as many as 10 Sebi regulations, they said on condition of anonymity. On 23 June 2015, Sebi unveiled a set of new rules that were supposed to make it easier for India’s 3,100-odd start-ups to list on an alternative listing platform. The response to the new rules was tepid; both start-ups and bankers were concerned about the ability of Indian investors to judge the value of early-stage companies, and worried about liquidity on the alternative trading platform. Taking note of the concerns, Sebi’s primary market advisory committee (PMAC), in a meeting on 30 May, recommended that the regulator give up on the idea of an alternative listing platform, said one of the two persons cited above. Under current rules, 75% of the public issue by a start-up needs to be allotted to qualified institutional buyers, while the minimum number of investors to whom shares have to be allotted has to be 200. Further, Sebi rules allowed only two categories of investors—institutional investors (with net worth of more than Rs.500 crore) and non-institutional investors other than retail individual investors to invest in start-up listings.

PayPal appoints Anupam Pahuja as India head
Global payments firm PayPal has appointed Anupam Pahuja as managing director and country manager for India. Pahuja will be responsible for all aspects of PayPal’s India business, it said in a statement.  Pahuja takes over from Vikram Narayan who headed PayPal’s India operations from April 2014 till May 2016. A PayPal veteran with over six years of experience with the firm, Pahuja was previously heading technology for APAC and was responsible for establishing PayPal’s technology centres in India. Prior to joining PayPal, Pahuja was managing director for India from 2008 to 2010 for NASDAQ-listed SumTotal Systems, a US-based firm that provides human resources management software and services to firms. In this role, he managed the company’s global product development and led sales, marketing and professional services for the APAC region.

How Indian food-tech startups are faring, in five numbers
Food start-ups aren’t the flavour of the season. They haven’t been, for quite a while now. Last year, investors pumped in millions of dollars into various food-technology start-ups betting on consumers’ changing habits to drive growth for these companies.  However, too many start-ups jostling for market share in this segment has prompted investors to be cautious and this hyper-funded sector has been among the worst hit by the slowdown in venture funding, having seen major shake-ups in the past year. TinyOwl Technology Pvt. Ltd, one of the most well-funded start-ups, for instance, merged with logistics company and logistics firm RoadRunnr (Carthero Technologies Pvt. Ltd) in May to start a new entity called Runnr to stay afloat. Internet-first kitchen Spoonjoy (Emvito Technologies Pvt. Ltd) and restaurant aggregator Dazo, which had marquee investors Amazon India chief Amit Agarwal, Google India chief Rajan Anandan and Flipkart co-founders Sachin Bansal and Binny Bansal, shut shop in October after failing to raise substantial funds. In March, ride hailing service Ola (ANI Technologies Pvt. Ltd) also shut down its food delivery business Ola Café, a year after launching it in Delhi, Mumbai, Bangalore and Hyderabad.

New Wave Of FDI Reforms Could Help Take Struggling Start-Ups To Shore
On 21 June, the Government of India took a significant step towards making India the most open economy in the world. Through this reform it has allowed 100% Foreign Direct Investment (FDI) in food retail, civil aviation and 74% in private security agency and pharmaceutical businesses. This step comes at a time when the Indian start-up network is witnessing one of the hottest summer seasons of the past few years. The inhabitants of this third-largest ecosystem in the world have been in search for new resources of liquidity to ensure their survival. If early signals hold any truth for the foreseeable future, the present funding scenario can turn out to be a drought, which can last for some time to come. In February, this year, Morgan Stanley reduced the valuation of India’s biggest unicorn, Flipkart, from $15.2 billion to $11 billion. Data from VCCEdge shows that in the first three quarters of 2016, compared to the same period in 2015, the number of venture capital deals have fallen from 138 to 88, and the total value of venture capital invested has taken a drastic fall of over 80%, from $1.8 billion to $334 million. The reason for this caution are factors such as uncertain global economy, slowdown in China, expected increase in interest rate in the US, and a private vs. public valuation disconnect with disappointing initial public offerings (IPOs). Due to the slowdown in the Chinese economy, on the flip side, Indian start-ups have attracted the attention of prominent Chinese Investors that include Fosun Group, Xiaomi’s founder Lei Jun (Shunwei Capital Partners), Cheetah Mobile, Baidu and Tencent.

Oracle bolsters India sales presence, to open a 200 people strong digital sales hub in Bengaluru
To lay more focus on cloud computing, Oracle has today announced that it is planning to setup five state-of-the-art Digital sales hubs throughout the Asia Pacific region, including one in India. Apart from the setup of digital hubs, the tech giant also plans to hire over 1,000 professionals(of which 20% will be from India) to keep pace with the growing demand for cloud computing. Through the setup of its sales unit in the Asia-Pacific regions, Oracle aims to tackle mid-size organizations and offer them enterprise-grade cloud capabilities that are flexible, affordable and scalable over time. This will also make it easier for Oracle to enter a mid-market economy like India and help companies transition to the cloud quickly and seamlessly. Apart from India, Oracle will setting up ‘digital’ selling hubs in Australia, China, Korea and Singapore. Big Data and Cloud Computing go hand in hand. And since the startup ecosystem in India is piping hot, international giants see huge potential in India’s emerging organizations. Thus, Oracle plans to represent large and mid-size firms across industries including communications, insurance, e-commerce, media, financial services, healthcare, among others.Oracle has already stepped into the Indian ecosystem by setting up a Accelerator in Bengaluru.

Has Virtual Reality finally arrived in India?
The term “virtual reality” was first used in the 1982 science fiction novel by Damien Broderick called The Judas Mandala, although it was not used to refer to the VR technology. Virtual Reality as we know it today can be described as an immersive technology that uses replication of real or fictitious surroundings to simulate reality through the senses. Besides visual and audio experiences, the uses of VR are immense. The global gaming industry is propelled towards this direction. Virtual reality is also being increasingly used by other sectors such as real estate, events and even in surgeries where remote controlled robots are being trained to perform successful surgeries with the help of virtual reality. With leaps in technology the virtual reality sector has seen a recent boom. If reports are to be believed then by 2020 the sector will touch $150 billion, a whopping growth in a very short span of time. Big names in the tech world have recognized VR and AR as the next big tech stop in the world. Google has forayed into this sector with Magic Leap, Google Glass etc and has been working on its own VR arm; Facebook too acquired Oculus Rift as a nod to this industry. Microsoft’s Holo Lens and several other big names all pooling into this industry is a big indicator of its impending, exponential growth.

PrettySecrets, NewQuest, TLabs, get funding
Mumbai-based online lingerie platform, PrettySecrets.com has raised $6 million (Rs.40 crore) in its latest round of funding led by Singapore-based venture capital fund RB Investments Pte. Ltd, as per Deal Street Asia report. Existing investor Orios Venture Partners also participated in the round. The company will use the funds on adding new products and categories to its platform as well as invest in improving its supply chain and for marketing campaigns.Launched in 2012, PrettySecrets.com was founded by Karan Behal who comes from experience in manufacturing, export, retailing and marketing of lingerie products. The company claims to sell over 1,000 products on its platform. NewQuest Capital Partners has marked the final close of its third secondaries fund ‘NewQuest Asia Fund III, LP’ at over $540 million.The funding was led by a diverse group of pension funds, sovereign funds, insurers and financial institutions based in Asia, North America, Europe and the Middle East. As per VCCircle report, the fund had an original upper limit of $520 million, which was increased due to the strong demand. Hyperlocal mobile commerce marketplace LazyLad has pulled down its shutters, laying off close to 30 people in the process. Saurabh Singla, co-founder and CEO, LazyLad confirmed the development to Techcircle.

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