There’s something that links Rajan Anandan, Anupam Gopal Mittal, Sanjay Mehta, Sharad Sharma, Sunil Kalra and TV Mohandas Pai. They are all angel investors and over the last decade, collectively, they’ve vested in 425 startups across verticals. There’s no doubt that India’s startup sector is on an all-time high and has been on a roller coaster ride over the last few years. This year’s Union budget despite focusing heavily on pushing the digital economy gave certain concessions to the startup community. From announcing Rs 10,000 crore as ‘fund of funds’ to creating the Ministry of Skill Development & Entrepreneurship and PM Narendra Modi’s visionary start-up initiative, even the in-power government has not failed to recognize that entrepreneurship is the only way for employment in a country of more than a billion people.
Needless to say, thus, when it comes to investments, India is the next big thing, the hen laying the golden eggs at the moment. According to InnoVen Capital, a venture debt firm, angel investment in Indian start-ups hit a five-year high in FY16 that stood at Rs.113.6 crore across 69 deals, a rise of about 62% in deal value and 47% in deal volume from FY15 that had witnessed Rs 70 crore in investments across 47 deals. Orverall, Indian startups raised $1.42 billion across 307 deals in Q1 2016 in which e-commerce bagged the maximum numbe of deals as well as maximum value of deals as against 147 deals valued at $1.7 billion in Q1 2015.
An industry-wise analysis has revealed that irrespective of funding stage, consumer internet and e-commerce are the most popular segments. India’s economy grew by 7.9% in the first quarter of 2016 and this growth is thereby directly proportional to the increasing purchasing power of Indians which translates to more demand for consumer goods. As of 2016, with more than 500 million internet users, Indian e-commerce industry has been a land of opportunities for investors. We’ve got Tiger Global, Sequoia and Naspers. In 2016, Indian e-commerce also drew attention from DST Global, Soft Bank, BlackRock and Sofina to name a few.
Generally, a lot more individuals and HNIs are coming to appreciate angel investment as an asset. In the past, people have not looked at it as an investment opportunity. Today more and more people are looking at it as a viable alternative. This has also increased the valuation in angel rounds. Besides, there is an increase in the number of angel investors coming into the market.
We have always developed and produced some great products, but they have been lacking in terms of exposure at a global level. I’d like to talk about two startups here, one that I’ve invested in myself and Flipkart, thanks to whom e-commerce has become one of the fastest growing sectors in India. Let me begin with the story of the startup I’ve invested in – Bookpad that has been acquired by Yahoo at a value of $8.3 MN. Bookpad is the maker of Docspad, a HTML 5 document embedding, editing and annotations API provider for web and mobile apps. Founded by 3 IIT-Guwahati grads, why I invested in this company was because I found Docspad a highly focused product useful for web and mobile applications dealing with documents. Yahoo’s acquisition was strategic as they could then integrate the technology into all of their products. I agree that Google Docs is a rival, but here’s why Docspad is different. Like Google Docs, instead of being aimed at consumers looking to simply create or edit documents, spreadsheets or slideshows off the web, then share files and collaborate with others, Docspad is brings a Google Docs-like ease-of-use to any other application a business may need, including things like applicant-tracking systems, conferencing solutions, learning management solutions etc.
Now, getting down to Flipkart. As of Feb 2016, their valuation stands at $15 billion. Flipkart raised US$1 million in 2009 from venture capital funds Accel India, US$10 million in 2010 and US$20 million in 2011 from Tiger Global. They took everyone by surprise when they announced that it raised $1 billion from already existing investors Tiger Global Management LLC, Accel Partners and Morgan Stanley and a new investor Singapore sovereign-wealth fund GIC. By starting cash on delivery at a time when people were skeptical about online payment options, Flipkart started a trend that all e-commerce businesses follow today. Secondly, they addressed supply chain management, delivering goods on time, by launching their own supply chain management system that determines the success of any e-commerce company for that matter. A robust back-end is a vital pre-requisite for an online business, so from a consignment model, Flipkart shifted to a warehouse model, maintaining its own inventory. They’re now targeting to reach a gross merchandise value of $8 billion, add 100,000 sellers on its platform, sell 25 million products per month and 1 billion goods by end of 2017.
I’d like to say when the going really gets tough, for startups, the tough gets innovating!!
The article has been pen down by Dr. Som Dutta Singh. She is an Indian entrepreneur, angel investor and founder of Unspun Consulting Group.