India: Technology Start-Ups in Emerging Markets

 India: Technology Start-ups in Emerging Markets

MAN 4633: Foreign Direct Investment

Professor Jerry Haar

Table of Contents

Introduction        3

Opportunity        3

Angel Investors        5

Challenges        6

India as a Tech Hub        7

Entrepreneurial Ecosystem        8

Role of Governments in Sustaining the Entrepreneurial Ecosystem        9

Role of nonprofits in India        11

India’s entrepreneurial agenda and the success of techs startups        16

INDIA’S SUCCESSFUL TECH-STARTUPS        17

1) FLIPKART        17

2) ZOMATO        19

3) PRACTO        19

4) CUEMATH        20

5) FAIRCENT        21

6) ZOOMCAR        22

Introduction

Technology is the future not only is it going to make our lives easier but it’s also going to lead to more sustainable methods of doing things. Our groups challenge was to investigate the opportunities and setbacks for tech startups in the emerging markets. Our country of choice: India. In this paper we analyzed the macro environment that these startups would be competing in as well the effects of culture, government policies and possibly barriers to entry on their success. We also take into account existing company and and NPOs and their effects of the destiny of India’s startups.

Opportunity

Opportunity in India's start up community is abundant. With only 25 percent of the population of 1.2 billion is presently online, and fast-growing sales of smart phones fueling internet access at a furious pace the demand of products and services is sharply increasing. As more and more people gain access to the internet and will now have the ability to connect to not only the community around them but the world as a whole entrepreneurs who are able to fnd a niche market and exploit opportunity stand to make a killing. A report by the industry body National Association of Software and Services Companies (NASSCOM) found that India is now the fourth largest startup hub in the world, with more than 3000 new companies. Over the next five years, that number is expected to grow to 11,500. It is being termed a gold rush. Several international firms are injecting large amounts of capital into India's startup community including notable American companies.

After testing its startup mentor program in Israel, search giant Google is now turning its focus on Indian startups. The company has picked India to kick-start its startup mentorship program Launchpad this year, signaling its growing interest in Indian startups.

It launched the first of four such week-long programs, during which a set of mentors from Google and other companies will coach startups looking to grow. "This is one of our large scale new program offering," said Sunil Rao, who heads the startup initiative for Google India. While Google has an interest in growing India's digital economy, the startup program could also turn into a pipeline for Google's investment arm.

The company's venture capital arm had recently picked up a stake in real estate portal Commonfloor and Freshdesk, a Chennai-based customer support tool. In India, Google plans to mentor close to 100 companies through Launchpad, which was started on a small scale nearly three years ago in Israel. Last year, it was conducted in 20 different cities. Google benefits from the growing digital economy, as companies spend on Google to acquire customers.

India is one of the largest Google developer ecosystems, with a large number of Android developers. Increasingly, India has become core to Google's vision of getting 7 billion people or the world's population to use the Internet.

Google isn't the only American conglomerate investing in the region, in 2015, at Think Next Microsoft announced three new partnerships for its #CoInnovate program. The program seeks to connect mature startups with corporations to facilitate greater market access for entrepreneurs. And now the program is expanding in India with three new partners, including Citi India, part of the multinational commercial and investment bank Citigroup; Kyron, a launchpad for enterprise startups; and Patni Healthcare, a firm set on transforming specialty healthcare in India through technology.

The partnerships will span all of #CoInnovates programs to help spur on late stage startups. Citi India will be working to find new technologies and solutions for client’s banking, e-commerce and transaction needs. Microsoft Ventures, the arm of Microsoft that runs #CoInnovate, will also work with select startups that participate in Citi’s own startup acceleration program, the Citi Mobile Challenge 2015.

Angel Investors

 Angel investment in Indian start-ups hit a five-year high in the year ended March 2016, as venture capital firms and existing angel investors pumped in cash to back the next wave of start-up stars, according to a report by InnoVen Capital, a venture debt firm.

Venture capital firms turned increasingly cautious about their bets in 2016, forcing a number of start-ups to shut shop and the rest to focus on cash conservation and unit economics instead of chasing growth.

However, angel investors remained upbeat amid the funding slowdown. Generally, a lot more high net-worth individuals are coming to appreciate angel investment as an asset class. Angel investors put money mainly into consumer Internet and mobile, e-commerce and food tech start-ups.

The National Association of Software and Services Companies (NASSCOM) has launched 10,000 start-ups program. The program aims to incubate, fund and support 10,000 technology start-ups in India by 2023. Indian Angel Network is the partner for the program, supported by Google India, Microsoft and Verisign.