A compilation of important news from the startup World:
India’s unicorns limp along without foreign funds
India’s unicorns may be a shrinking herd. As it stands, the country only has a handful of startups whose value exceeds the mythical $1 billion. As capital dries up, though, valuations are falling and signs of stress are emerging. The good news is that unprofitable habits are vanishing along with unreal expectations. Once-hot companies are feeling the strain. Flipkart, the country’s top online retailer, recently deferred the joining date for new graduates. The decision prompted India’s top colleges to consider demanding that start-ups disclose their financial position before they are allowed to recruit on campus. For India’s online retailers, the scarcity of funding may be particularly timely. A recent overhaul of foreign investment rules specifically prohibits firms that operate as marketplaces from directly or indirectly influencing the price at which goods are sold on their sites. That’s hard to reconcile with the creative techniques that firms have used to offer deep discounts and lure customers. Pulling in the reins now may enable them to live longer – even if means shedding their unicorn status.
SAP India announces Startup Accelerator-II at IIM-A’s CIIE
SAP SE, on Wednesday, announced the second edition of its Startup Accelerator Programme in collaboration with the Centre for Innovation, Incubation and Entrepreneurship (SAP-CIIE) at IIM-Ahmedabad, to mentor and build capacities of 30 start-ups by 2017. Launched in 2015, the SAP-CIIE Startup Accelerator Programme is creating a pipeline of investable startups from the Gujarat region and providing them mentorship opportunities. Besides Gujarat, the programme aims to expand to Rajasthan and Pune. CIIE increases its footprint in multiple regions, we are also developing depth in sectors such as healthcare, agriculture, cleantech, water and enterprise technology.
SBBJ, RIICO ink agreement to support startups
State-run lender SBBJ and RIICO on Wednesday entered into a strategic agreement to facilitate startup entrepreneurs in getting funding assistance and suppor the eco-system in Rajasthan. The entrepreneurs will be eligible to avail collateral free finance up to Rs 1 crore under credit guarantee trust for micro small enterprises (CGTMSE) and up to Rs 10 lakh under Pradhan Mantri MUDRA Yojana from the bank.
DigitalOcean launches Bangalore datacenter to support India’s fast-growing developer & startup ecosystem
DigitalOcean, the developer’s cloud computing platform, announced today the launch of its new datacenter in Bangalore, India. Headquartered in New York City, DigitalOcean has been growing rapidly — with over 700,000 registered customers globally — by offering simple on-demand cloud computing resources. DigitalOcean will continue to offer a single pricing plan across all of its regions worldwide, including Bangalore. This means SSD-enabled cloud servers starting at $5 USD per month, and identical pricing for all additional services like bandwidth, snapshots and beyond. Bangalore will be DigitalOcean’s 8th region globally, following New York, San Francisco, Amsterdam, Singapore, London, Frankfurt, and Toronto. Today, India is home to the fastest growing ecosystem of startups and entrepreneurs, with approximately 4,000 startups launching this past year. Considering the number of software developers throughout India will grow to over 5 million by the year 2018, the region is one of the most important technology markets in the world. DigitalOcean has hired a local team and has also partnered with NASSCOM’s 10,000 Startups initiative to grow and support the startup ecosystem in India.
StartupKafe.com & Arsh Communication Join Hands to Provide Branding Services to Startups
The major motive of ‘Startup India, Standup India’ Movement initiated by Prime Minister Narendra Modi is to boost such ventures which are seen as key to employment generation and wealth creation. To promote all the specially startups across the media Arsh Communications and StartupKafe.com have announced their partnership today. The partnership aims at offering a platform for startup companies to promote their innovation. Both the organizations will offer a bouquet of services at subsidised rate, helping a startup to promote their business and reach their target customers. The services offered will be press release distribution, presentations, startup profiling and interview, branding, Media training and social media marketing that startups can opt for at a reduced cost. Arsh Communications is a holistic communication agency which is especially formed to help startup. Arsh combines strategic thinking and effective execution. Its services are Public Relations, Media Relations, Communication Consulting, Content and Video production service – allows for a single agency interface to address the various communication needs. Arsh communication is backed by seasoned PR and journalist, and combined they have more than 25 years of experience in communications
Move to tax startups with declining valuation a form of tax terrorism, perverse
Calling it another form of tax terrorism and perverse, the startup community across the country reacted strongly to the proposed move by the Income Tax department to tax startups whose valuations have recently fallen. The rationale behind the move by the Tax officials stem from Section 56 of the Income Tax Act that confers on them the power to levy excess consideration, more than the fair value, against issue of shares. “Any consideration received by a company (start up) from a resident, against issue of shares, exceeds the fair market value of such shares, such excess consideration is taxable in the hands of the startup, as an income,” Section 56 (2) (vii) (b) of the Income Tax Act says. This law was inserted around the time when there were some incidents in states like Andhra Pradesh. This is a draconian law giving sweeping powers to the Income Tax officials. It is a part of the tax terrorism of UPA II and we have now requested the government to do away with it. Valuation is a matter between the investor and the company and not for IT officials.
With $75M in fresh funds, venture capital firm Romulus Capital enters India
On Wednesday, seed stage venture capital fund Romulus Capital announced closing its third fund of over $75 million in commitments. The firm will continue to invest in these sectors with the new fund. They are planning to invest in as many as 20 new startups while looking to fuel their investments further in India. They are looking to invest in three to four Indian startups in the next 18 months. As of now, the firm claims to have 30 startups as a part of its investment portfolio. Romulus Capital invests close to $100,000 to $150,000 at the seed stage and up to $5-6 million for series A. Being a team of five members, Krishna is helped by his other partner Neil Chhedda. After his under-graduation from Yale University, Neil is completing his masters from Harvard Business School. He is a part of the Romulus Fund since 2012. According to the fund, one-third of their portfolio companies from Romulus’ first fund will have greater than $15 million in revenue this year. Both Krishna and Neil have also been named the Forbes 30 under 30 in the Venture Capital list.
RIL to invest $16M in ex-Qualcomm India head Avneesh Agrawal’s startup
Reliance Industries is investing $16 million in NetraDyne, a vision analytics-based startup co-founded by former Qualcomm India & South Asia president Avneesh Agrawal, the company has informed in a stock exchange filing. Reliance Industries is making this investment through its subsidiary Reliance Industrial Investments and Holdings (RIIHL) in two different tranches. Reliance Industries said NetraDyne is currently in “advanced stages of product development” and is building deep learning solutions and vision analytics based products targeted at industries like fleet management, automotive, security and surveillance.