Present scenario of start-ups in India: With an investment of over $9 billion and over 4,200 startups by the end of year 2015, India is the biggest growing start-up nation in the world. With an increase of 1000+ more start- ups from 2014 to 2015, India has moved from 4 th to the 3 rd largest start-up ecosystem in the world with an expectancy of about 11,500 startups by 2020. The positioning of India as a startup country is also thought of in the light of other famous startup arenas such as the US, Israel, Singapore and Canada. Between 2010 and 2014, the infusion of VC and PE has increased from $13 million to $1,818 million. Angel investment too has multiplied by almost 8 times from $4.2 million to $32.2 million. Foreign investment in India has picked up a hike, as major investors like Tiger Global Management (TGM), Softbank, Sequioa Capital has invested huge pools of money, which is due to the consumer growth backed by mobile and internet revolution with over 97 crore mobile users and over 350 million internet users all over India. India has added some real value by contributing technologically by some great Tech ventures. This is visible as many of them has been M&A by major giants across globe like: 1. In early 2015, Twitter acquired ZipDial–a mobile marketing and analytics firm based out of Bangalore. 2. In January 2014, Facebook had acquired Bangalore-based Little Eye Labs–a startup that made a software tool for analyzing the performance of Android apps. 3. Yahoo bought Bookpad last year, a Bangalore based startup that has built an end to end document handling technology for the cloud.
Transcript
Present scenario of start-ups in India:
With an investment of over $9 billion and over 4,200 startups by the end of year 2015, India
is the biggest growing start-up nation in the world. With an increase of 1000+ more start-
ups from 2014 to 2015, India has moved from 4th to the 3rd largest start-up ecosystem in the
world with an expectancy of about 11,500 startups by 2020. The positioning of India as a
startup country is also thought of in the light of other famous startup arenas such as the US,
Israel, Singapore and Canada. Between 2010 and 2014, the infusion of VC and PE has
increased from $13 million to $1,818 million. Angel investment too has multiplied by almost
8 times from $4.2 million to $32.2 million.
Foreign investment in India has picked up a hike, as major investors like Tiger Global
Management (TGM), Softbank, Sequioa Capital has invested huge pools of money, which is
due to the consumer growth backed by mobile and internet revolution with over 97 crore
mobile users and over 350 million internet users all over India. India has added some real
value by contributing technologically by some great Tech ventures. This is visible as many of
them has been M&A by major giants across globe like:
1. In early 2015, Twitter acquired ZipDial–a mobile marketing and analytics firm based
out of Bangalore.
2. In January 2014, Facebook had acquired Bangalore-based Little Eye Labs–a startup
that made a software tool for analyzing the performance of Android apps.
3. Yahoo bought Bookpad last year, a Bangalore based startup that has built an end to
end document handling technology for the cloud.
Market size:
1. The net amount invested in the start-ups from year 2010-2015 were $27 billion out of
which 50% of the amount invested between 2010-2014 ( $9 billion ) was invested in
2015.
2. With an intensive growth in the start-up arena from the past 7 years, it has given birth
to 8 unicorns whose valuations is more than $1 Billion.
Start-up name
Sector Round 2015 funding ($)
Quarter Over all funding valuation
Flipkart Ecommerce Late stage 700,000,000 Q3 3,200,000,000 $15 B
Inmobi
Mobile Advertising Late stage 100,000,000 Q3
220,600,000 $2B
Ola On-demand cabs Series F 500,000,000 Q4 1,180,000,000 $5B
Ola On-demand cabs Series E 400,000,000 Q2 1,180,000,000 $ 5B
Paytm Ecommerce Late stage 500,000,000 Q3 585,000,000 $2B
Quickr Online Classifieds
Series G 150,000,000 Q2 346,000,000 $1.04B
Snapdeal Ecommerce Late Stage 500,000,000 Q3 1,600,000,000 $4.8B
Zomato Food Series G 25,000,000 Q2 164,000,000 $1.05B
Zomato Food Series F 60,000,000 Q3 164,000,000 $1.05B
3. Majority of the 1200 new startups are B2C, primarily present in 3 segments namely
eCommerce, consumer services and aggregators followed by hyperlocal, health-tech,
edu-tech and analytics.
And if we break it down by sectors, e-commerce unsurprisingly took the biggest piece of
the pie with $3.23 billion, followed by the closely related sectors of consumer Internet
and mobile apps.
4. The number of active investors in the ecosystem has grown from 220 in 2014 to 490 in
2015, depicting a 2.3X growth. The number of accelerators has grown by 40% from ~80
in 2014 to ~110 in 2015.
5. Making big bets on Indian innovation has become a global point of interest. 8 out of
every 10 top VC/PE Firms in India are foreign, and global investment in the Indian
ecosystem is leading to an increased FDI . TGM turns out to be the biggest investor with
an investment of about $269 million on 10 projects.
6. Analyzing funding trends geographically in India, it has been seen that Bangalore led the
charts with $2.43 billion, followed by New Delhi at $1.43 billion, and Mumbai stood in
the third position with $610 million.
7. The global fin-tech industry is a $45 billion opportunity by 2020 growing at a
compounded annual growth rate of 7.1 per cent. Importantly, the Indian fin-tech
industry too is expected to grow by 1.7x by 2020. At present the total Indian fin-tech
market is about $8 billion with fin-tech software market at $1.2 billion constituting
about 20% of the total funding in fin-tech startups across globe.
International Market Scenario:
With an investment of $326b in the past 5 years across the globe in
start-ups from 2011-2015,2015 marked a rise in funding to VC-backed
companies as it reached a multi-year high, topping 2014‟s total by 44%. Mega
rounds proved to dominate the startup world in 2015 as, despite the highs in
funding, deals actually fell 3% versus 2014.
Tech companies have taken 76%+ of all deal activity to VC-backed
firms in each of the past 5 quarters. Healthcare failed to garner more than
13% in any quarter over the same period.
Internet and mobile continue to represent the bulk of deals to VC-
backed companies, as the two major sectors accounted for 66% of all deals
in Q4‟15. All other sectors remained fairly range-bound with healthcare
accounting for 13%, software 6%, and consumer products & services 4%.
Both North America and Asia saw significant drop-offs in total funding to
VC-backed companies in Q4‟15. North America saw just $14.1B of
investment in Q4‟15, the lowest quarterly total since Q3‟14, while Asia
funding fell to $9.7B. Despite the similarity in deal activity in Asia and
Europe, Asia captured over 3x the funding in Q4‟15
The venture capital ecosystem deployed $58.8 billion across the United
States in 2015, marking the second highest full year total in the last 20 years.
First-time financing (companies receiving venture capital for the first time)
dollars decreased 12 percent to $2.2 billion in the fourth quarter, as the
number of deals declined by 20 percent to 322 compared to the previous
quarter. First-time financings accounted for 19 percent of all dollars and 33
percent of all deals in the fourth quarter.
The UK‟s technology business raised a record-breaking $3.6bn in
venture capital and records a 70% increase from 2014.
The international ranking of the 20 best start-up arenas in world are:
Silicon Valley has earned its reputation as the global tech mecca with
14,000 to 19,000 startups and 1.7 to 2.2 million high-tech workers. It is the
home to success stories such as Apple, Google, Facebook, and countless
others. It has the highest absolute growth rate among VC investments and
exit value. Silicon Valley‟s main challenges are access to talent, affordable
housing, and adequate public transportation.
New York has evolved into the second strongest startup ecosystem in the world over the past three years, with approximately 7,100 to 9,600 active tech start-ups. With a local GDP of approximately $1.5 trillion, the New York ecosystem is a large playground to test and market all kinds of products. The biggest challenge to remain at #2 overall is the cost and availability of engineering talent. Startups in NYC compete with numerous Fortune 500 companies, and as a result it takes 40% longer to hire a software engineer than in Silicon Valley.
Tel Aviv is a prominent start-up ecosystem in the global landscape, ranked #5 overall. The city has an exceptionally strong start-up ecosystem with a well-balanced set of quality resources. The inflow of international venture capital is strong, the integration of international talent remains weak (Israel has a 40% lower share of foreign employees than Silicon Valley). A more diverse work force may increase the performance of Tel Aviv‟s start-ups.
With an estimated Startup Output of 3,200 to 5,400 active tech startups and an Ecosystem Value of $44 billion, it is the fourth largest ecosystem in the world, and the largest in Europe. The ecosystem‟s downsides are in its culture and labor market. Many experts have noted that its culture lacks a fully authentic entrepreneurial spirit, with an aesthetic feeling similar to London‟s more established sectors.
After a decade of slow growth, Berlin‟s tech scene has grown
very fast since 2010 and was the fastest growing hub in 2014. Berlin is home to between 1,800 to 3,000 active tech startups. By 2020, Berlin‟s startups could potentially create as many as 40,000 new jobs. Berlin‟s weak spots have traditionally been the vibrancy of its funding landscape and lack of exits.
Singapore is known for being one of the world‟s top financial centers, Its business friendly environment is a fertile ground for startups, with 2,400-3,600 active tech start-ups. Singapore enjoys a significant inflow of talent, yet it is still difficult for startups to find experienced software engineers because of the competition of larger companies and a culture that does not value risk-taking.
Challenges/consulting areas for start-ups:
Hiring can be terrible. While it is a cliche, start-ups require the right kind of
employees with a great balance of ability and attitude to work and perform. India
is still nascent in terms of the start-up culture and there aren't enough high-
quality employees that all the growing start-ups need. 54% of top-tier founders
are more likely to hire an accountant but if you are an extremely well-funded
unicorn in the making, there are no issues in finding the right talent. But for the
other 99%, hiring great employees is a supremely difficult task. It takes an
enormous amount of time to sift through people who don't meet the bar and is
very expensive.
92% of start-ups fail in 1st 3 years of their existence out of which 74% of start-
ups fail due to premature scaling of the business that is due to adding horizontals
or adding new dimensions much rapidly on the verticals of business. Start-ups
that have helpful mentors, track performance metrics effectively, and learn from
start-up thought leaders raise 7x more money and have 3.5x better user growth.
Hence, mentoring and providing operations related consultancy turns to be one
of the biggest avenues of providing consultancy.
The latest World Bank Ease of Doing Business (out of 189 economies) ranks
India at an abysmal 142 where starting a business rank for the country is even
lower at 158. It is uncannily difficult to start a business in India and myriad laws
and regulations means it takes about 30 days to comply compared to just 9 days
in OECD countries. It is hard to do things correctly in India without having to fill
out a host of forms (bank paperwork, labour department, shops & establishment
rules). Rules are often not transparent and getting these items done often
requires a lot of manual intervention. Time is your most valuable resource at a
start-up, which can’t be wasted. Hence, there is a need to be well versed with the
Indian Judiciary System to help find solutions to the contradictory laws:
1. Rules related to FDI have been eased substantially over the years but there is
still a lot of paperwork and bureaucracy in dealing with foreign investment. The
RBI has delegated a large part of their exchange control roles to banks who serve
as authorized dealers. This ought to be good, as it reduces the number of times
you have to approach the RBI for approval. However, most banks have internal
rules and controls that are more stringent than what RBI specifies. That means
you often end up with a situation where the bank’s compliance department will
not process your payment even though you are compliant with RBI rules.
2. A law enacted last year that states that the Tax Assessing Officer (in the Tax
Department) will decide if your valuation in even a seed-stage capital raise is
justified or not, and if he decides it isn’t, he can tax your capital raise as income!
So, you raise money after a lot of work and the government may come back and
tax you on the full capital raise as though it is income. The government
apparently enacted this to try and shut down black money funding of dummy
companies, but it has become an obstacle for all genuine companies as well and
certainly impedes the easy flow of capital to start-ups.
Capital and access to capital has been a perennial problem for startups. While, of late angel investors, venture capital and private equity have brought succor to some extent, a large number of startups still grapple to raise funds from institutional setup. Funding challenge is not merely limited to seed rounds, but also for vital Series A and B rounds. For a startup looking to scale, it is still very hard to raise rounds to scale as the number of investors that write larger cheques in India are very limited in number.
Major drivers in consultancy market
1. McKinsey:
McKinsey & Company is a worldwide management consulting firm. It conducts qualitative
and quantitative analysis in order to evaluate management decisions across the public and
private sectors. It ranks 1st in the consultancy arena and is widely considered the most
prestigious management consultancy across globe. McKinsey's clientele includes 80% of the
world's largest corporations, and an extensive list of governments and non-profit
organizations. More current and former Fortune 500 C.E.O.s are alumni of McKinsey than of
any other company, a list including Google C.E.O. Sundar Pichai, Facebook C.O.O. Sheryl
Sandberg, Morgan Stanley C.E.O. James P. Gorman, and many more.
2. The Boston consulting group:
The Boston Consulting Group (BCG) is an American worldwide management consulting firm
with 85 offices in 48 countries. The firm advises clients in the private, public, and not-for-
profit sectors around the world, including more than two-thirds of the Fortune 500
Considered one of the most prestigious management consulting firms in a branche-internal
survey BCG was ranked second in Fortune's "100 Best Companies to Work For" in 2015.
3. Bain and company:
Bain and company management consulting services focus on our clients' most critical issues
and opportunities: strategy, marketing, organization, operations, technology,
transformation, digital, advanced analytics, mergers & acquisitions and sustainability across
all industries and geographies. We bring deep, functional expertise, but are known for our
holistic perspective: we capture value across boundaries and between the silos of any
organization. We have proven a multiplier effect from optimizing the sum of the parts, not
just the individual pieces.
Differences in the 3 Giant Consulting companies:
McKinsey is more academic in nature. Their engagements tend to be on similar lines, and they are fantastic in repeating results. They work on a best practice approach, i.e., they know what the best way to do something is, they assess the client's situation and identify where the client is going wrong, and then they deliver the best practice solution that they've proven to work over and over again. The firm's academic nature also comes out in the fact that they generate more thought leadership content than any other consulting firm.
BCG is very client tailored. What I mean by this is BCG works "with" the client to
find the best solution to the problem the client is facing at that time. It need not be the
solution they delivered to a very similar problem to another client 30 days prior. Their
intention is just as much to draw the answer out with clients as it is to find the
solution. Bain is a little bit in the middle, leaning towards BCG's way of delivery.
1. Geographical reach is weak in emerging economies.
2. Alleged controversies
1. Geographical reach: Geographic expansion can help you gain access to new markets and talent pools, reduce costs, and perhaps most importantly, provide a robust pipeline to fuel your company‟s future growth. Although geographic expansion provides a compelling path to accelerated growth by opening up access to new markets and customers, many companies fail to take full advantage of global opportunities:
63 percent of respondents in a recent survey said they view customers in emerging markets as a future source of profits.
Capital invested $75 million in the medical-waste disposal firm Stericycle, a target for anti-abortion groups for disposing aborted fetuses. The company had a record of safety violations, including a fine for “knowingly exposing workers to life-threatening diseases.”
Firms offshoring jobs to low-wage countries
Loading a company with massive debt and causing it to cut 367 jobs: After purchasing Dade in the early 1990s, Bain “pushed Dade to borrow hundreds of millions of dollars” in April 1999. Dade bought half of Bain‟s shares in the company, which led to layoffs that year and bankruptcy in 2002.
Solutions to the problems faced by company: Opening our first Turkish office is a testament to the increasing demand from our clients who are investing heavily in this area of the world.Since Bain started working in Turkey, we have been advising a widening portfolio of clients in the region, accumulating extensive local knowledge and delivering an excellent record of results. Opening an office in Istanbul further demonstrates our long-term commitment to this country. Bain‟s Washington, D.C. office is being opened to meet growing client demand in the mid-Atlantic region.
1. Less penetration through some international markets.
Emerging players:
Advantage business consulting:
With deep experience in startups, our professionals provide a range of process structuring, business valuation, due diligence and pre-funding support and services for startups looking for a leap to the next orbit.
Designing and implementing processes aligned with business objectives,
Pre-funding / due diligence support,
Preparation of project / feasibility reports / business plans,
It is a New Delhi based consulting practice specializing in business
planning. We provide strategic services to companies and institutions
looking at setting up their new venture in the Indian sub-continent in
wide variety of industry sectors.
We offer services to international companies with interest in India;
overseas companies wishing to pursue their interests in India: assist
foreign companies planning setting up and doing business in India.
Businesses looking to foray into India or for that matter any new global
location need the expert assistance of business planning consultants in
broad range of areas spanning tax and regulatory areas, key manpower
and material resources.
Guidance on approvals and clearances required from Government of India, liaison and follow ups.
Company Formation in India: Incorporation of Company with Registrar of Companies in India.
Professional Services: Lawyer, Chartered Accountant, Company Secretary.
Establishment of Branch/Liaison/Project office in India Registration, licensing from DIC for SSI/SIA for large and medium
industries. Land, premises related issues for Industrial or Commercial complexes:
Purchase/ lease. Registration under States Sales Tax Act, Central and State Excise Act
from Sales Tax Department and Central and State Excise Depts. Manpower resources: Recruitment and outsourced services and
recruitment of key individuals. Lease agreements. Travel services, vehicle hire/purchase.
Business Development: Sales & Marketing plan. Recurring Services
TechnoPak:
It strives to deliver strategic solutions that are unique and structured to suit your business requirements. Our services are designed using an out-of-the-box approach rather than a cookie cutter. The premise of theor establishment being „Concept to Commissioning‟. They are a group of strategic advisors who walk with you from the ideation phase of your business until your start-up vision becomes a reality. Technopak has been a trusted advisor for over two decades and the segments served encompass a broad range of business organizations which belong to such diverse sectors as Retail, Consumer Products & E-tailing, Fashion - Textile & Apparel, Food Services & Agriculture, and Education. This rich experience in varied fields has rewarded Technopak, with 70% of our projects involving former clientele.
New Entrants:
VyapaarHub Ventures:
Vyapar Hub is a startup in corporate solutions and business consulting domain. It provides consulting in management, marketing process outsourcing, education, health, wellness and psychology. While business consulting in India exists, it is mostly dominated by a few big names and there was an opportunity to provide consulting and business solutions to startups and SMEs. It has four business verticals:
The classification of all the sectors into different websites makes it quite user
efficient. So, framing a dedicated website for a partviluar vertical is their USP.
SDLC Services Pvt. Ltd:
It is a provider of unique & niche business analysis and user experience services to clients which do software development. We are provider of services in which software needs are define & solution is recommended before actual software development.
Cost competitiveness – Starting in a small town helped them minimize resource cost, infrastructure cost and operational cost, and this benefit is transferred to their clients
Domain knowledge – Their domain expertise is in Business Analysis, UI and UX 24*7 availability and Infrastructure – Though they are in a small town, they
have good infrastructure in terms of office place, high-speed internet connectivity, conference rooms and 24*7 availability. This allows them to work in different time zones
Quality of deliverable – They have a very high standard on-time and within budget deliverables to their clients
Niche Services that supports software development – They provide all the services that compliments software development
Client can see demo prototype before actually developing software. 24*7 availability along with cheap and affordable priced due to their location sets up the service at a very cheap cost to the customer. Also, the easy grant to customer to see the progress of work is given. This turns to be the USP of SDLC Services Pvt. Limited. 5n Business consultants: The process originated in 2011 with start-ups and having worked across industry segments, we initiated Business plans for existing companies which were seeking either funding for existing business or diversifying their business portfolios. Hence, by being a boutique consulting firm specialized in writing Business plans, Investor presentation, Executive Summary and Teaser documents, we cater both to start-ups and existing companies. Video teasers and teaser documents are the one things that is not often provided with the consulting companies. Hence, it acts as a perfect one time spot for startups/SMEs or existing companies.
