From the startup world – June 4

A compilation of important news from the startup world:

Is Uber’s new funding round a slap for Startup India?
It has been a week of irony for Prime Minister Narendra Modi’s”Startup India” scheme, you could say. Modi had kicked off the ambitious scheme last January from a podium that stylishly sported a Silicon Valley-style slogan: “We Unobstacle.” The Karnataka government in April cracked down on taxi aggregators Uber and Ola with regulations that seem to reinforce archaic licensing rules than embrace new technology. Mercifully, the Bengaluru government on Wednesday said it will stop its plan to impound cabs for supposedly not having relevant licences. Drivers affiliated to Ola and Uber, which use smartphone apps to bring customers and taxi drivers together, had filed a petition against a statement last Saturday from the government asking unlicensed drivers to stop operations. Now, Uber is indeed facing resistance in several places across the world by incumbent taxi companies that may be threatened by new technologies that increase competition It is true that “surge pricing” by Uber and Ola that led to consumer howls of protest is a politically and socially difficult thing, but governments needs to find a middle path.  While rows rage in Delhi and Karnataka, Uber has received an impressive $3.5 billion in fresh funding from the soverign wealth fund of Saudi Arabia, valuing the company at $62.5 billion. Very clearly, that is a vote for new technology and its benefits.

How the government’s 6pc equalisation levy on digital ads is going to affect Indian startups
In the Indian fiscal budget presented on February 29, Finance Minister Arun Jaitley proposed inserting a new chapter titled ‘Equalisation Levy in the Finance Bill 2016’. This will provide for an equalisation levy of six percent of the amount of consideration for specified services received by a non-resident not having a permanent establishment (PE – private equity) in India, from a resident in India who carries out business. The levy would not be applicable to non-resident service providers having a PE in India, as they will be subject to regular PE-basis taxation. Introduction of this tax is based on the Base Erosion and Profit Shifting (BEPS) report, which was earlier endorsed by G20 and OECD (Organisation for Economic Co-operation and Development). Equalisation levy has been brought in order to tax e-commerce transactions of non-residents. Google and Facebook ads are the most popular and effective platforms as of now and this levy will eventually impact the small local players more severely than the giant-sized Facebooks and Googles of the world. The equalisation levy would translate into startups ending up paying six percent over the 14.5 percent service tax.

India is wooing Silicon Valley investors to pour in money in tech startups
The head of India’s financial markets regulator visited Silicon Valley this week to promote rule changes in his country protecting minority shareholders and encourage more investment in his country’s thriving technology startups. U.K. Sinha, chairman of the Securities and Exchange Board of India (SEBI), said improved regulations make it much easier for investors in the country’s over-4,000 technology startups to eventually cash out through initial public offers in Asia’s third-largest economy. A 2013 overhaul of India’s corporate governance rules clamped down on related-party transactions benefiting majority shareholders. In March, Indian online retailer Infibeam became country’s first e-commerce company to list its shares, raising $67 million. There are hopes of potential listings from major competitors Flipkart and Snapdeal.

Investing a Startup Mentality in India’s Farmers
Today, the government of India is investing in two initiatives to boost the economy: supporting the agricultural sector—which employs half of India’s workforce—and bolstering startup technology companies. These two efforts may seem unrelated but there is real potential to transfer lessons from the startup culture to our agricultural sector. One initiative to improve agriculture in India is an approach called Farmer Producer Companies (FPCs), which the government hopes will bring individual farmers together to empower them to operate with a business mindset. FPCs are farmer collectives which bring together the farmers into one umbrella organization to do what each farmer cannot do individually. Startups have a hunger to innovate, which means they test out new approaches to increase efficiency. They have courage to think big and use tools like “lean methodology“—a rapid process of testing a tool or a way of farming as you are developing and refining it—and systems thinking that requires a big picture view of farming. They would encourage farmers to look beyond what is happening to the plant in front of them, but instead at what happens before planting, during growing and after harvesting when crops go to market.

LinkedIn Co-founder Allen Blue on failed startups, building relationships, investments and growth
In 1998, Allen had started with Socialnet.com, one of the early social networking sites, and also worked as a web designer before co-founding LinkedIn. LinkedIn had 350 employees. While the team knew what they stood for and what their culture was, Jeff Weiner, who had joined in as CEO, decided to embark on a six-month project of writing down and stating the culture and purpose of LinkedIn. When the team is being built up, and the company is on a high growth trajectory, Allen suggested that startups should make the effort to write down the culture and values of the organisation. In the past couple of weeks, LinkedIn has been facing flak for the security breaches and hacks on its website.

Quadria Capital founders launch Rs 65 cr HealthQuad to invest in healthcare startups
Sponsors of healthcare private equity firm Quadria Capital, Amit Varma and Abrar Mir launched Rs 65 crores ($10 million) healthcare focused venture capital fund HealthQuad. The fund is focused on investing in early stage healthcare companies in India, through a pre-series A or Series A round of funding. Founded in January 2016, Healthquad Advisors Private Limited has been registered with SEBI as a Category I Alternative Investment Fund. The fund’s investment strategy will be focused on investing in key healthcare subsectors namely healthcare delivery services, life sciences, devices and medical technology and healthcare technology. Currently, HealthQuad has 8-10 investors. Even a group of 16 new Chinese investors made their foray in India to fund 150 startups that are into consumer, data analytics, e-commerce and technology services. A new early- stage venture fund, Ideaspring Capital worth Rs 125 crore was recently launched in Bengaluru to back product startups.

India among top five innovation destinations: Report
Innovation centres in the country doubled to 16 in the six-month period till February this year, to leapfrog India into top 5 globally when it comes to innovation, a report by consulting major Capgemini said today. Other global companies who have checked-in into the country to house their centres of innovation include engineering company TriMas Corporation campus in Delhi for packaging solutions and food ingredient Puratos’ centre in Mumbai. Airbus’ Bizlab intends to bring together startups and its internal entrepreneurs, while Visa will house 1,000 developers who will work on next generation payment solutions.

Indian Startup Funding Report May 2016 – Delhi Dethrones Bangalore, HealthTech Beats Ecommerce
This May, the funding scenario for startup ecosystem in India posits some interesting findings. Around 87 startups got funded this May 2016, 14.5% more as compared to April 2016 and 61% more as compared to May 2015. While, ecommerce remains the major sector to receive maximum deal value, HealthTech has emerged as the top sector in terms of number of deals. Furthermore, number of acquisitions has increased by 13% as compared to April 2016 and 67% as compared to May 2015. Hyperlocal (with 5 M&As) has been the top sector for M&A in May 2016. Delhi/NCR is clearly the new hotSpot for startups for Funding. Bangalore startup ecosystem seems to have reached saturation.
In May 2016, HealthTech has secured 11% of the deals, leaving Ecommerce behind at 9%. On an average 3 startups were funded per day this month (May 2016). This could be an indication of recovery for Startup ecosystem.

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