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The Indian Startup

Scenario

Trends over the past years


Funding

9000
5130
700

982

2012

2013

2014

2015

The funding of Indian startups has increased by almost 80%.


Ecommerce continued to have the largest share of funding followed by other consumer internet startups.
As Ecommerce market focuses on their core businesses, logistics startups will have an opportunity for
growth.
Fintech and Hyperlocal startups had a great year in terms of funding.

2015 in review

2015 in review

Challenges to Funding
The investors are now more careful than
ever. Following are some major
challenges for the private equity
industry:
Mismatch in valuation expectations
Volatile macro-economic factors
Difficulty fund-raising
Inability to exit

VC Trends-Global

Global funding fell a further 8% vs. the previous quarter

VC Trends-Global

Deal share to seed-stage investments abruptly dropped in Q116, down


from 32% of the total in Q415 to just 28%. Series A deals continued to
take a strong proportion of deals with the 26% in Q116 representing a
5-quarter high for A rounds.

VC Trends-Global

Internet and mobile once again took the majority of deals going to VCbacked companies. These two major sectors accounted for 67% of all
deals in Q116. All other sectors remained fairly range-bound, with
healthcare taking 13% and non-internet/mobile software hitting a 5quarter low at 4%.

VC Trends-Global

Asia saw another significant drop-off in funding to VC-backed companies


in Q116, with the $6.5B in total funding representing less than half of
the frothy Q315 peak

VC Trends-Global

Digital Health offering real opportunities for investors

Eyes on the Unicorns

The potential offered by digital health solutions is creating a lot of buzz in


the VC market. Total VC investment in digital health was up significantly in Q1
compared to Q415 despite decreases in other sectors.

With high profile companies failing to live up to their private valuations,


existing and potential Unicorns are coming under more scrutiny than ever
before.

Investors focusing on performance over possibility

VC investors are becoming more critical of potential investments, looking for


companies that can demonstrate revenue creation, positive margins,
profitability and an ability to control expenses

VC Trends- India
The rise in total funding(Tech Sector)

VC Trends- India
Surge in series A and series B funding

VC Trends- India
Funding in different sectors($ mn)

Sectors to look out for in 2016

Internet of Things- According to Nasscom, in five years, the global


opportunity is likely to touch $ 300 billion and the Indian IoT market itself
could be about $ 15 billion. Startups like Smartron have already started
releasing products to the public

SaaS- Indian SaaS companies areexpected to reachthe$10 billion revenue


mark in 2025. Practo, Freshdesk, RateGain are some of the biggest Indian
SaaS startups.

Healthcare- India's healthcare sector is expected to be $280 billion in size by


2020. Startups like Practo, Portea and Lybrate have already made their mark
last year and more are expected to come up this year.

Education- India's online education market size is expected to touch US$ 40


billion by 2017. Startups like Byju, Genius are ready to disrupt this space.
Other startups also have a great opportunity in this market.

E-Commerce
Big Players New
Flipkart
Players

Snapdeal
Amazon
Alibaba
Jabong
Infibeam

Lenskart
Tradus
FabFurnish
FirstCry
CaratLane

Market Size

Expected to reach
$38 billion by
2016

Current Scenario

This is a highy competitive segment.


Acquisitions have increased multi fold.
The growth in this segment is certain.
The uncertainity lies in profitability.

Investment
Investing into developed areas is risky. The current players already have a huge customer
base.
Without a really strong business model, it will be hard to expand in these developed areas.
Some areas like online drugstores, hardware, still havent found traaction. These will be the
areas of rapid growth in the future.
Before entering this market, a good analysis of market is required. Last year saw the rise of
Lenskart and the fall of Jewelskart, Bagskart, Watchkart.

Ecommerce- Business Models

Almost all the big players have a similar model. They act as a platform to facilitate purchase
between retailers and customers.

Startups like Lenskart have a different business model where it itself acts as a retailer.

These big players have yet to turn profitable.

Most of the startups in this segment have focused on growth rather than profits. They have
been burning their fundings to increase market share. Unviable discounts to get customers
on board have resulted in huge losses.

New players are emerging with a focus on differentiation. And not surprisingly, they focus on
vertical or niche categories.

Startups to look at

Teesort- Teesort claims to have delivered more than 2 million orders so far. It
isgrowing at a rate of 300% YoY, expecting to achieve a revenue of Rs. 100 crores in
this fiscal year. It is profitable and claims to have a gross margin of 40%.

Mirraw- It will be touching INR100 Cr this year. It is growing at a rate of 10-12%


MoM. It plans to go deep into categories to build a wider inventory. One major thrust
will be on home furnishing as it is witnessing a demand for home dcor and Indian
handicrafts.

Flyrobe- Flyrobe is an online fashion rental marketplace. This startup has a strong
thinktank. Started by IITB alumni, this startup has experienced employs from firms
like Bain & Co., Inmobi, Cadbury and a HBS alumnus with experience in companies
like Amazon and Google. It has served over 4,500 customers till now.

Helpmebuild.com-It aims to empower the consumer to actively participate in the


decision making process for their homes. It is a multi-vendor marketplace in a market
which is currently untapped- Interior Design and Architecture solutions.

Fintech
Players

Current Scenario

India has all the ingredients for a fintech


revolution: A large and growing
population with low financial inclusion
and a thriving startup community.

Market Size
Online Financial Services market is
expected to be a 17,800 Cr market
by 2020.

Investment

The share trading segment is dominated by RKSV, Zerodha.

Payments and Remttances is a highly competitive area. Players in this


area have grown over years to dominate the market. They have
advanced technologically too. Competing with them will be a difficult
task.

Insurance, Crowdfunding, Lending are some relatively young areas


with high opportunity of growth

Fintech-Business Models

Lending services:These lending service startups are looking to disrupt the traditional
lending mechanisms and are using alternative methods to provide faster access to capital.
Eg. Faircent follows a P2P lending model and charges a percentage of the total transaction
amount.

Payment services:These startups aim to integrate payment processing into websites


and mobile apps without having to maintain merchant accounts. Players like PayTM and
Mobikwik have burned funding money to provide cashbacks to gain a customer base.

Remittance services:A few startups have come into existence to revolutionize


remittance services in India. E.g Instarem.

Personal finance / retail investment services:These are the companies that help
individuals manage their own finances. E.g Policybazaar.com compares various financial
policies for the consumers.

Equity funding services:Crowd funding provides early stage companies a platform to


raise capital from the retail market. E.g Catapoolt

Cryptocurrency:Cryptocurrency has not seen much traction in India in comparison


toother international markets. There are a couple of bitcoin exchange startups in India
though unocoin, coinsecure and zebpay to name a few.

Startups to look at

Shiksha Finance- It is co-founded by chartered accountants - Jacob


Abraham and V L Ramakrishnan. It helps the low income families in
paying school fees for a small interest.

Hyperlocal
Big Players New Players Market Size

Grofers
UrbanClap
Delhivery
GoJavas
Zomato
Ola Cabs

Taskbob
Opinio
Big Basket
and many more.

India Hyperlocal Market


is Expected to Reach INR
2,306 Crore by 2020

Current Scenario
The Hyperlocal market in India has grown at a growth rate of 71% in number of
orders.
Over 22 per cent of the deals by the top 10 investors in 2015 were in the newly
emerged on-demand industry.
Busy lifestyles and relatively better incomes are driving the growth of on-demand
services.

Investment

Within a short span, the on-demand beauty service segment has had
significant adoption, and given their busy working schedules, more women
are opting for them. So this area should be on the lookout for investors.

Ecommerce has paved the way for high growth in Hyperlocal Logistics sector
with key players like Delhivery, GoJavas, Rivigo, Ecom Express etc. This
segment will soon start consolidating.

Even in this sector, areas like pharmaceutical, alcohol delivery havent grown.
So these might be good areas to look at.

Hyperlocal- Business Models

These startups also have the same story. Burning fast through the
funding cash led to the shut down of startups like PepperTap. Tiny Owl
and Zomato had to cut jobs. Now Tiny Owl is now merging with another
hyperlocal logistics company.

They are facing increased costs and an inability to cut them because of
lack of scale companies typically operate on wafer thin margins in the
retail business.

There is still a question of what the correct business model is, should
you hold inventory, or just aggregate orders.

The logistics business has been relatively successful. Players like


Delhivery, GoJavas etc. have tied up with ecommerce giants to grow in
this sector.

Startups to look at

TruckSumo- The startup is an aggregator of mini-trucks and connects businesses having local
logistics needs in real-time with service providers who can fulfill those needs. They are currently
doing 17,000 orders in a month and have onboarded 900 customers. The team is bootstrapped and
is looking for funding.

Quifers- Quifers is targeting both the logistics and the labour market. Quifersuses technology as an
enabler to aggregate LCVs in order to provide hassle-free and high speed goods transfer service to
people. It has raised Rs. 2 cr in funding from IAN.

AVN Business Solution- AVN Business Solution is growing on an average rate of 50 % (mom). Till
date, it has delivered products worth Rs350 million. They offer two products Shipyaari and eRunnerz.

Fixmasters- an on-demand repair and maintenance service that helps users get verified and
qualified service providers for repair tasks at home and office. Company passes on 80 per cent of
the revenue per fix to the service provider while retaining 20 per cent for itself.

Dhobhiwala- Dhobiwala offers plenty of options: steam ironing, washing and ironing, stain removal,
and starching.

Tooler- This one will not only do your laundry but also clean your shoes and sofa. It was doing 100
orders a day back in Nov 2015.

Healthcare
Key Players

Practo
Portea
Lybrate

New Players
Attune
WelcomeCure
Goqii
and many more.

Market Size
The market size of
healthcare sector of
India is projected to
reach $160 billion by
the year 2017.

Current Scenario

This segment is relatively young when compared to other segments with only a few successfully
growing startups.
These startups have been facing various challenges like
Slow Growth
Complex Industry
Doctors are tough
Monetization

Investment

Innovation is the key to this industry. Startups will have to tackle the inherent problems with
the healthcare system in India through innovative ideas to succeed.

This segment has a lot of potential. With a successful business plan and right amount of
patience, a startup has a very good opportunity to succeed.

Healthcare-Business Models

Healthcare discovery:These platforms connect customers to doctors


and hospitals, and help them book appointments too. Examples are
Practo Search and CrediHealth.com.

Medical devices and diagnostics:These companies usually use


intelligent technology to simplify diagnostic procedures. Examples are
Perfint Technologies and Biosense Technologies.

Digitizing and tracking:These platforms help in integrating all medical


records of patients and putting them in one place. Examples are Practo
Ray and eKincare.

E-commerce:These websites help people order medicines and


healthcare equipment from various vendors. Examples areHealthKart,
Medidart and Medist.

Startups to look at

Mapmygenome- With the exponential growth in the field of genetic


engineering, there is a tremendous future for this sector in our country
and Mapmygenome looks promising.

CareOnGo- CareOnGo claims to be Indias first mobile chain of cobranded pharmacy stores. The company claims to have grown by 200
percent since its inception. CareOnGos customer app isadding 25,000
chronic patients every month onto the platform. It also provides an
analytics platform, Pharmalytics as a B2B offering.

Foodtech
Key Players

Zomato
Foodpanda

New
Players
Swiggy
Petoo
and many more

Market Size
The food services market
is touted to be a USD 50
billion market thats
growing at 16 to 20 per
cent YOY.

Current Scenario

In 2014 and 2015, around 55


food technology start-ups
raised $373 million.
Firms such as Zomato,
FoodPanda, SpoonJoy and
TinyOwl have scaled down
business. Others such as Dazo
and Langhar have shut shop.

Investment

As urban India sees a growth of double-income families, as well as a large population of


young singles with busy work schedules, theres clearly a big opportunity for food
ecommerce.

Foodtech has struggled in the past year.

The primary reasons are funds crunch and a flawed business model where start-ups offer
economically unviable discounts to get more customers on board.

Despite the setbacks, this segment remains an attractive choice for investors, given a viable
business plan.

Foodtech- Business Models

Most of the startups are based on two business models:

Food Delivery- Startups like Zomato, Tiny Owl act as a search platform
between customers and restaurants. They charge around 10% of the
transaction value.

Online Kitchen- These startups have their own kitchen and provide ondemand food delivery. We havent seen a successful startup in this category
yet. SpoonJoy and Dazo were shut down last year.

Startups to look at

Yoga Bars- With a growing market for fitness, Yoga Bars falls bang on
the target market. They are selling over 30,000 units monthly in
Bengaluru Market.

Snackible-The team claims that they are currently growing at 25 per


cent weekly, have customers from 38 cities across India, and have
processed over 6,000 orders.

Travel
Key
Players

MakeMyTrip
Yatra
RedBus
Ixigo
Cleartrip

New Players Market Size


OYO Rooms
Tripoto
V Resorts
ZoRooms
and many more

The estimated value


of online travel
industry is around
$12 bn

Investment

As the smartphone and internet


penetration increases, social media will
also help drive this sector. Consumers
will want to go out, take pictures, share
them and feel good about it.
These startups have been relatively
successful because they have targeted
very specific markets.

Current Scenario

This is a rapidly growing segment. Over


150 startups have been founded over
the last 5 years.
The funding has also increased over
the past few years.
Over $300 mn have been invested so
far in this industry.

Travel-Business Models

Many out-of-the-box ideas like food tourism, fishing tourism etc. have
helped this segment evolve.

Startups have emerged in a plethora of niches. Some of them are:

Online Travel Agents- MakeMyTrip, Yatra

Hotel Booking- Stayzilla, Hotels Around You

Vacation Rentals Marketplace-TripVillas, Roomnhouse

Asset Light Hotels- OYO Rooms, V resorts

Travel Agents Marketplace- Zostel

Local Activities-Mygola, Thrillophilia

Local Guides-SeekSherpa, GuideTrip

Content-HolidayIQ, AudioCompass

Community-Tripoto, 365Hops

Planning-TripHobo, Triptern

SaaS solutions-RateGain, Hotelogix

Others-Mowgli Bus, MyTourPhone

Startups to look at

Pickyourtrail.com- It is an online platform for personalized vacation


planning and posting quotes for personalised travel itineraries. Post
confirmation of the travel, the booking engine of the platform takes care
of the bookings. The company claims that its revenues have been
growing every month and making 1 crore+ revenues in less than 6
months.

Real Estate
Key Players

99Acres
Magicbricks
Investors Clinic

New Players

Housing
Commonfloor
Proptiger
Nestaway
Ghar360

Market Size
The estimated size
of Indian Online
Real Estate
Services is around
$5 billion.

Current Scenario

A lot of startups have emerged in


this sector and quickly
revolutionised the real estate
industry in India.
This segment has attracted a lot
of funding in the recent years.

Investment

There is a marked slowdown in the sector with homes remaining unsold


as supply exceeds demand in several major cities.

This has created a ripe situation for consolidation.

Thus it will be difficult for new startups to disrupt this segment.

Real Estate- Business Models

Research and consultingwork is mostly dominated by international property


consultants like JLL and Knight Frank and it is mostly B2B. There is a big opportunity
for consumer consulting in real estate.

Listings and lead Sellingis the most overheated space at the moment. Startups
like Housing and Commonfloor have completely disrupted the segment. Even
general free classified sites like OLX and Quikr are entering the real estate game.

Developer marketingis an emerging market as there is a significant shift in the


developers marketing budget from print to online. Players are focusing on features
like 3D glasses, drone views, virtual walk-throughs etc.

Primary Salesis the most lucrative market at this moment. Developers offer a
sales commission to the channel partner ranging from 2 to 5 per cent on primary
sales. Some of the key players in this sector are Investors Clinic, Square Yards, Prop
Tiger, and Indiahomes. In this space, aftermarket services like resale assistance and
portfolio management are yet to see some growth.

Resale and rentalsis the biggest market. It is still dominated by brokers and there
is no disruption in sight from any online player.

Startups to look at

InPod- The Mumbai-based bootstrapped startup has patented its


modular building system.

Bricks Property Investment India Pvt. Ltd.- It enables consumers to


partially own apartments in Bangalore and get monthly rentals on their
investments.

Ed Tech
Key Players
Educomp
Meritnation
Toppr

New Players
Byju
UpGrad
EduKart
and many more

Market Size
India's online
education
market size is
expected to
touch US$ 40
billion by 2017

Current Scenario
New players have
continuously emerged but
not a lot of them have
been able to make a mark.

Investment

Ed tech is a hard nut to crack in India where education is highly


regulated by government.

This sector has a high opportunity for growth. As the smartphone and
internet users grow in India, EdTech startups will play a key role in
delivering education in India

Byju has recently disrupted the test preparation area but other areas
still remain stagnant.

Ed Tech- Business Models

Classroom space- This area has been dominated by Educomp. Educomp is under
large dept which has stopped its growth. Differentiated startups might be able to
successfully tap this area.

Online Courses- SimpliLearn and Upgrad are recent startups in this area. They
both are focused on professional training with certifications focused on career
development.

Online Test Preparation- These websites feature multimedia tutorials, interactive


exercises, tests and analytical data reports to point out strength and weaknesses.
Meritnation and Toppr have dominated this segment in the past. Byju is a relatively
new startup which has completely disrupted the ed-tech industry. The reason for
their success has been the quality of the content and availability of application on
mobile platform.

Microschooling- These startups have developed a new way of schooling which


focuses on optimized learning experience for students

Startups to look at

Genius micro schools- It is founded by Advitiya Sharma(co-founder,


Housing).The product aims to optimise the individual learning
experience by continuously varying the content based on feedback.
Genius will run micro schools with about 5-8 students and the institutes
will be hyper-local in nature. The company is mirroring the path of USbased AltSchool. The start-up will hire 500-800 teachers in different
cities and train them separately.

Digital Media
Key Players

Inmobi

Gamiana

Hashcube Tech.

Saavn.

Scoopwhoop
and many more.

Market Size

Current Scenario
There are more than 250 startups in gaming industry. With increase in
number of mobile users, this industry has a high opportunity of growth.
Startups like Octro and Moonfrog Labs received $15 million in funding.
Homegrown Indian digital startups like ScoopWhoop etc., have enjoyed
far more impressive growth than their foreign competitors
A lot of niche startups are growing in AdTech space like AdSparx,
Silverpush etc

Investments

As the smartphones and internet users grow, digital media has a huge opportunity.

There hasnt been a disruption in gaming or internet industry.

Music industry has some big players like Saavn and Gaana in streaming services.
Niche startups still have a great chance in this industry.

AdTech space is highly competitive with players like Inmobi. There is still a possibility
for niche AdTech startups to emerge.

Lack of innovation and automation can create problems for AdTech startups. Vizury
laid off 80% of its employees whereas Admagnet shut down its operations.

Digital Media-Business Models

Gaming Industry- This industry is growing on the back of growing


mobile industries. The market is mainly mobile-driven. The revenue is
generated from in-app purchases and through advertisements.

Internet Industry- With the rise in number of internet users and social
networking, internet has become a major platform for content creation.
Startups like Scoopwhoop have successfully grasped this opportunity.

Music Industry- Companies like Saavn and Gaana.com are rapidly


growing in this segment. Revenue is generated through ads and
premium subscriptions

Advertising Industry- AdTech space has seen big growth in the past
few years. Innovation and Automation remain the key factors in success
of AdTech startup. Adtech is a game of niche or a game of scale.

Startups to look at

Lipikaar- In the first eight weeks, they crossed 1 lakh monthly active
users. They also have bulk licensing deals with companies like HCL and
ITC

Muzenly- Muzenly is a global community based platform that allows


music festival goers to car pool, share accommodation, post extra
tickets, and book Music Festival Packages.

Investing Framework

Products and ideas- Early-stage companies with just an idea carry the
biggest risk.But you can also find companies with an idea and a
prototype (or something else tangible), or even a clear path to revenue,
or a seasoned executive team with a history of finding ways to generate
business.

Investors should focus on the next big product or service coming down
the research and development pipeline.

You can lower the investment risk by betting on companies with a deep
inventory of fresh ideas.

Investing Framework

Competitive Advantage- Competitive advantage is an advantage that


a firm has over its competitors, allowing it to generate greater sales or
margins and/or retain more customers than its competition.

Cost advantage, is a firm's ability to produce a good or service at a lower cost


than its competitors, which allows thee firm to generate a larger margin on
sales.

Differential advantage is created when a firm's products or services differ


from its competitors and are seen as better than a competitor's products by
customers.

Investing Framework

Market performance- Every company is unique, but individual success


also depends on trends within the business sector as a whole. The
startup which targets a sector with growing demand has a lesser risk.

Market analysis reports can be helpful in determining the market trends.


The market risk is also something which should be taken into account.

Investing Framework

Financial Performance- Financial statements like Income statement,


Cash flow statement and Balance sheet can be used to arrive at a fairly
reliable measure of value.

Past performance is not an indicator of future results but past


performance will give you a better sense of the level of risk you are
taking.

Investing Framework

Team- Studies shows that younger founders and founders with


prestigious educational backgrounds or prior experience in large
technology companies tend to be more successful.

Companies that are led by solid management teams with experience,


knowledge and complementary skills are more likely to be successful.

First-time entrepreneurs who have tremendous enthusiasm and energy


and are also surrounded with experienced insiders and senior advisers
are more likely to be successful.

Investing Framework

Sociopolitical risks - Socio-political risk is difficult to avoid since most


events happen without warning. Eg. The Haiti conflict and terrorist
attacks on oil pipelines had caused artificial volatility to enter oil and
other commodity markets.

Regulatory risks - Regulation rarely affects the fate of startups. But it


has the power to stop companies in their tracks. Emerging markets that
lack the regulations have a greater risk. They can result in larger and
faster returns but the potential for loss is equally high.

You need to analyze the potential risks associated with increased or


decreased regulation to the profitability of your target company and
make the smartest bet possible.

Investing Framework

Exit Strategy- The exit strategy is how the investors who had
previously put money in a startup get money back, usually years later,
for a lot more money than they initially spent. Having a minority share in
a healthy, growing company, without any prospect of an exit, is a
terrible scenario for investors.

Investor exits traditionally happen in two ways: Either the startup gets
acquired by a bigger company, for enough money to give the investors a
return or the startup grows and prospers enough to eventually make an
IPO.

There are other startegies also like the company buying back investors
shares, dividends etc.

Valuation

Asset approach

Place a fair market value on all physical assets

Assign real value to intellectual property

All principals and employees add value

Early customers and contracts in progress add value

Valuation

Discounted Cash Flow(DCF) approach

This approach describes a method of valuing a company using the concepts of


the time value of money.

All future cash flows are estimated and discounted to give them a present
value.

The discount rate can be calculated through rigorous financial analysis or an


average discount rate for the industry can be used

If the value arrived at through DCF analysis is higher than the current cost of
the investment, the opportunity may be a good one.

DCF models are powerful, but they do have shortcomings. Small changes in
inputs can result in large changes in the value of a company.

Valuation

Earnings multiple approach

Usually applied to a more mature startup

Companys valuation is estimated by multiplying EBITDA by some multiple.

A target multiple can be taken from industry average tables, or derived from
scoring key factors of the business, and averaging the results, with the final
average called the "multiple.

Valuation

Cost approach

It attempts to measure the net value of the business today by calculating how
much it could cost for a new effort to replace key assets.

The replacement value is used to estimate the current market value of the
enterprise.

The cost approach is employed to great effect on difficult or unprofitable


businesses.

Valuation

Market approach

Another popular method to establish valuation for any company is to search for similar
companies that have recently received funding and compare with their valuation.

Public Company Method- Companies within similar industries or similar positions within their
industries will have similar valuations or characteristics upon which a valuation can be based.

Transactions Method- detailed private company financial data is unlikely to be available but
transaction value does become available, and, on such occasion, that valuation can be used as
a tool to provide a valuation for other similar companies.

Heuristic pricing rules method- The best known professional group that does this is the
business intermediaries that broker business sale transactions in specific industries. Their
knowledge of the market place and direct exposure to transactions puts these experts in an
excellent position to estimate the likely business selling price.

Revenue:valuation ~ your revenue:x

VC approach

estimating the expected earnings or revenues in a future year

The value at the end of the forecast period is assessed by multiplying the
expected earnings in the future year by the multiple of earnings (PE ratio)
that publicly traded firms in the sector trade at

The estimated value at the end of the forecast period is discounted back at a
target rate of return

Venture capitalists receive a proportion of the business in return for the


capital they bring to the firm

5 most common mistakes by startups

Lack of market need for their product

Your idea might be great but may not address a big pain point. One must
estimate if there are enough people to buy the product.

42 percent of the failed startups quizzed by CB Insights gave this as a reason


for failing.

Customer feedback plays an important role in understanding the market.

E.g. Lumos

5 most common mistakes by startups

Ignoring important metrics

Startups are being evaluated on growth related metrics(number of


transactions, vendors, customers) only and not financial metrics(profits). This
clearly is not sustainable.

E.g TinyOwl

5 most common mistakes by startups

Not the right team

People get into areas that are not their core expertise

A startup can fail if the team members are too alike. There needs to be
enough diversity for a variety of skills to come into play.

E.g Lumos, Pirates Kitchen

5 most common mistakes by startups

Lack of Cash Flow Management

Most startups focus on quick customer acquisition by burning their funds in


discounts. The more you acquire customers by giving away discounts, the
customers will go away the day you stop those discounts and that is a
dangerous situation.

Instead the focus should be on creating value for their products which help in
customer retention.

Some will focus too much on marketing and some will pay no attention to
marketing.

E.g Spoonjoy, Langhar, OrderSnack

5 most common mistakes by startups

No scalable business plan for a big enough market

A startup can get going and do well early but when time comes to scale up, it
might fail. Thats because its business model works only up to a certain size,
and is not so good when it comes to making money on a larger scale

E.g Dazo, Talentpad

5 most common mistakes by VCs

Giving in to Fear of Missing Out

On the lines of e-commerce and hyperlocal sectors, foodtech witnessed


several prominent angels and VCs funding various me-too startups. These
startups also prioritised scale and growth over basic business fundamentals.

These investments from investors were largely driven by FOMO (fear of


missing out). Dazo, SpoonJoy are some examples of recently failed foodtech
startups that didnt have a viable scalable business plan.

5 most common mistakes by VCs

Valuing team or product or market so much that the weaknesses


of a company are overlooked

It's easy to become blinded by a founder's qualifications/charisma, or by a


market in a state of hypergrowth or a product you personally find
revolutionary and to let that blindness cloud your judgment. Even if one
aspect of a company is amazing, you still have to be disciplined and make
sure the other aspects aren't terrible.

Take the example of Dazo; It had a plethora of investors. Its founder,


Shashank Kumar Singhal(ISB alumnus), was the mobile product head for
RedBus. And yet, it had to shut down in October within a year of launching.

5 most common mistakes by VCs

Investing early at very high prices

Done right, this is a total winner of a strategy. But there is no guarantee that
the company will be able to flourish. The Unicorns like Flipkart, Snapdeal
havent been able to turn profitable yet. One of the best example to
demonstrate this is Pets.com. Within two years, US$300 million of investment
capital vanished with the company's failure.

5 most common mistakes by VCs

Choosing the wrong metrics

Source of the problem is that startups are being evaluated on growth related
metrics only and not financial metrics.

One of the best example are the markdown in valuations of startups like
Zomato and Flipkart. We have also seen shutdowns in foodtech sector last
year which didnt have a viable business plan but investments were based on
growth metrics.

5 most common mistakes by VCs

No Advisory- One of the biggest reason of failure of startups and hence


the investments, has been assigned to the lack of mentorship.

Though it is not the job of an investor to mentor a company but we can all
agree that an informed client is better than an uninformed one. At the end it
is your investment.

It is a good practice to keep up with the developments in the company.

Most interesting IPOs in 2015

Etsy

Etsy, an online marketplace for arts and crafts, raised $267 million in its IPO in
April, pricing its shares at $16. The price of the stock soared to $30 on the
first day, but it has since declined because of poor earnings and the
announcement of Amazon that it will be launching a rival service named
Amazon Handmade.

Most interesting IPOs in 2015

Altassian

Atlassian launched its IPO in December with a bang. Atlassian priced its IPO at
$21 a share, raising $462 million. Atlassian soared 31% on its first day of
trading.

Most interesting IPOs in 2015

Infibeam

Infibeam Inc. Ltd. successfully raised Rs.450 crore through its initial public
offering (IPO), which made it the first Indian online retailer to go public.

Most interesting IPOs in 2015

Box

Cloud storage company Box managed to garner enough investor support to


price its IPO at $14 a share in January.

Most interesting IPOs in 2015

Square

Square, which developed and markets a mobile payment device that attaches
to a tablet computer or smartphone to receive credit card and debit
payments, took a hit for the team in launching its IPO at roughly half its
valuation. By pricing its IPO at $9 a share in mid-November, substantially
below its initial IPO pricing range of $11 to $13 a share, Square left some
room for investors to make a profit and was able to show a strong
performance on its first day of trading, with its stock closing at $13.07 a
share.

Most interesting IPOs in 2015

Match Group

The Match Group, which owns popular dating services Match.com, OkCupid
and Tinder, launched its IPO in November at $12 per share, which was at the
lower end of the expected $12 to $14 range. The company raised $400
million, with the price of its shares now up to about $14.

Most interesting IPOs in 2015

Go Daddy

Website hosting company GoDaddy was able to raise $460 million from its IPO
in April, pricing its shares at $20 each, above the expected range of $17 to
$19. Since then, the stock price of the company has grown by almost 25
percent.

Most interesting M&A in 2015

Didi and Kuaidi Dache

Didi and Kuaidi Dache, the largest car-hailing players in Chinas market, have
merged together to form a $15B ride-hailing giant. This move is especially
significant as Uber raises $1B+ in capital to move into the country. Didi and
Kuaidi Dache have now formed a united front, when they were previously
involved in a costly pricing war with each other. China, one of Ubers most
important target markets, will now be one of the toughest battle grounds in
ride-hailing

Most interesting M&A in 2015

LinkedIn-Lynda

LinkedIns acquisition of online learning platform Lynda for $1.5B in April 2015
was its largest disclosed acquisition of all time.

its the biggest VC-backed education technology exit of the last decade.

Finally, Lynda fills an important gap for LinkedIn, which links together jobs to
people with those relevant skills. Now with Lynda, users have a direct platform
to develop those skills and earn credentials, furthering LinkedIns reputation
as your online resume.

Most interesting M&A in 2015

Twitter-Periscope

Periscope was acquired for approximately $100M in March 2015, and Twitter
officially released the app after mobile live video-streaming competitor
Meerkat unveiled theirs at SXSW a few weeks before. Periscope had 1 million
active accounts after its first 10 days, and now has 10 million as of August
2015. Periscope is a proving ground for whether or not a large audience exists
for live mobile video streaming.

Most interesting M&A in 2015

Snapdeal-Freecharge

Ecommerce firmSnapdeals buyout of mobile top-up site FreeChargefor an


estimated US$400 million in April is the biggest acquisition in India to date.

Most interesting M&A in 2015

Ola-TaxiForSure

For a long time Ola and TaxiForSure vied to be Indias answer to Uber.
Suddenly times changed. A rape case was lodged against an Uber driver in
Delhi; many state governments rushed to ban on-demand taxi services; and
all taxi apps landed in one hot soup. Investors got jittery, funding dried up for
TaxiForSure, and it could not keep up with the discount war between Ola and
Uber. It is in these circumstances that its rival Ola, which had a bigger war
chest thanks to a timely funding round by SoftBank,bought out
TaxiForSurefor US$200 million.

Most interesting M&A in 2015

PropTiger-Makaan

Real estate is another space where consolidation is under way. Just as


CarWale got acquired by its younger rival CarTrade, property classifieds site
Makaan, founded in 2007, gotswallowed up by Newscorp-backed
PropTigerwhich is four years younger

Most interesting M&A in 2015

Twitter-ZipDial

Customers could send missed calls to brands which would respond and
engage with the callers. Twitter found the ZipDial platform a perfect fit for its
plans to grow its user base and engagement in emerging markets. ZipDial
thus becameTwitters first acquisitionin India last January, reinforcing the
attraction of India-specific innovations.

Genius micro schools- It is founded by Advitiya Sharma(co-founder, Housing).The product aims to optimise the
individual learning experience by continuously varying the content based on feedback. Genius will run micro schools with
about 5-8 students and the institutes will be hyper-local in nature. The company is mirroring the path of US-based
AltSchool. The start-up will hire 500-800 teachers in different cities and train them separately.

InPod- The Mumbai-based bootstrapped startup has patented its modular building system.

Pickyourtrail.com- It is an online platform for personalized vacation planning and posting quotes for personalised travel
itineraries. Post confirmation of the travel, the booking engine of the platform takes care of the bookings. The company
claims that its revenues have been growing every month and making 1 crore+ revenues in less than 6 months.

Mapmygenome- With the exponential growth in the field of genetic engineering, there is a tremendous future for this
sector in our country and Mapmygenome looks promising.

CareOnGo- CareOnGo claims to be Indias first mobile chain of co-branded pharmacy stores. The company claims to have
grown by 200 percent since its inception. CareOnGos customer app isadding 25,000 chronic patients every month onto
the platform. It also provides an analytics platform, Pharmalytics as a B2B offering.

Fixmasters- an on-demand repair and maintenance service that helps users get verified and qualified service providers
for repair tasks at home and office. Company passes on 80 per cent of the revenue per fix to the service provider while
retaining 20 per cent for itself.

Teesort- Teesort claims to have delivered more than 2 million orders so far. It isgrowing at a rate of 300% YoY, expecting
to achieve a revenue of Rs. 100 crores in this fiscal year. It is profitable and claims to have a gross margin of 40%.

Flyrobe- Flyrobe is an online fashion rental marketplace. This startup has a strong thinktank. Started by IITB alumni, this
startup has experienced employs from firms like Bain & Co., Inmobi, Cadbury and a HBS alumnus with experience in
companies like Amazon and Google. It has served over 4,500 customers till now.

AVN Business Solution- AVN Business Solution is growing on an average rate of 50 % (mom). Till date, it has delivered
products worth Rs350 million. They offer two products Shipyaari and eRunnerz.