ONDC's Evangelising Movement Gains Ground Among Startups And VCs

The long-touted Amazon- and Flipkart-killer, Open Network for Digital Commerce (ONDC), appears to be undergoing a transformation beyond its original scope as a mere "communication protocol enabling interaction between Buyer Network Participants and Seller Network Participants." In fact, the platform has emerged as a hub of innovation within the startup ecosystem, captivating the attention of venture capitalists (VCs) and entrepreneurs alike. A flurry of innovators are now embracing the opportunity to join the ranks of visionary founders aiming to develop services centered around the ONDC framework.

On Wednesday, Antler in India, an early-stage VC firm, unveiled the country's first venture platform dedicated to the Open Network for Digital Commerce (ONDC). In partnership with Nandan Nilekani (Infosys co-founder and Chairman of the Board), FIDE (Beckn Protocol), and ONDC, the Antler ONDC platform will look to unite capital, content, and community resources to empower entrepreneurs in establishing successful businesses within the open protocol ecosystem.

This new ONDC-focused collaboration is looking to support startup founders at various stages of development. For startups with ready teams and ideas, the Antler ONDC platform will offer an initial pre-seed capital injection of USD 300,000. In addition to this, potential exists for an additional investment of up to USD 200,000 from prominent partners within the Antler network, which includes unicorn founders and strategic backers.

(L-R) Pramod Varma (Ex-Chief Architect of Aadhaar and India Stack and co-founder, FIDE); Nitin Sharma, Partner at Antler in India; Magnus Grimeland, founder and CEO, Antler; T Koshy (CEO at ONDC); Nandan Nilekani (Infosys co-founder and Chairman of the Board), Rajiv Srivatsa, Partner at Antler in India; Sujith Nair (co-founder at FIDE)

The Antler ONDC initiative was launched amidst an enthusiastic crowd of 300+ entrepreneurs, VCs and angel investors during an event in Bengaluru which was headlined by the likes of Nandan Nilekani, T Koshy (CEO at ONDC), Pramod Varma (Ex-Chief Architect of Aadhaar and India Stack and co-founder, FIDE) and Sujith Nair (co-founder at FIDE).

Why Are Startups Interested In ONDC?

Fragmentation casts a wide net over various Indian markets, revealing a situation where platforms and aggregators have managed only superficial penetration. A stark illustration of this lies in the fact that a mere 5-6 per cent of MSMEs currently harness platforms, highlighting the extensive untapped potential. A parallel narrative unfolds in the mobility sector, where a mere 6 million daily trips out of 100 million occur through platforms. This narrative extends to the retail sphere as well, with experts projecting that 80-90 per cent of groceries will persistently be vended by small retailers in the next 5-7 years, diverging from platforms due to intricate cost dynamics.

This is where ONDC comes in. The Indian government-made protocol endeavours to bridge these gaps with an interoperable network, fostering inclusivity and participation at scale. The protocol facilitates integration for entities ranging from local retailers to specialised suppliers, ushering an all-encompassing approach. This open network is aiming to not only amplify market outreach but also propel equitable growth by empowering businesses of all sizes to partake in a unified ecosystem. 

Consider the ecommerce realm: industry giants such as Amazon and Flipkart have the potential to coexist harmoniously with local kirana stores throughout the nation, enabling not only delivery services but also a spectrum of other growth avenues. This dynamic ensures that no singular entity can exert a monopolistic grip on the market, regardless of its scale, leaving ample space for other contenders to thrive.

While ONDC's impact on the e-commerce realm has been extensively covered in the media, its newest significant application has emerged within the realm of mobility. The Namma Yatri app by Juspay Technologies, developed in alignment with ONDC's common network standards, has remarkably facilitated more than 6.9 million auto rides and successfully engaged over 1.6 million users and 85,000 auto drivers in Bengaluru. Impressively, this achievement has been realized without any marketing expenditures. At the time of writing, the app had facilitated over Rs 103.2 crore in driver earnings.

“There are already 1.6 million registered users in Bengaluru on this platform and there are 85,000 drivers. It's all happening by word-of-mouth and no marketing,” exclaimed Nilekani, speaking at the Antler ONDC platform launch.

“So, you can see that if you use this (ONDC) infrastructure, you can create companies and they'll attract customers because it's fundamentally changing the way business models operate,” he added.

Another startup, LoadShare Networks, which reportedly processes over 300,000 last-mile deliveries per day and serves over 200 clients, has been tinkering and deploying ONDC-backed use cases since 2022. 

“We have been able to launch things like industry-first multi-pick up, multi-drop, multi-client patching because of the use cases that platforms like ONDC open up. We are also finding great synergies in doing cross-utilisation of our riders across different businesses through the day,” said Pramod Nair, co-founder and CTO at LoadShare Networks.

Meanwhile, an ONDC rails infrastructure startup Plotch.ai has effectively made enabling companies to get on ONDC its sole mission. The company has facilitated the rapid entry of more than 15 prominent and medium-sized enterprises, including Meesho, IDFC First Bank, Paytm, Spicemoney, and Ideamasters, into ONDC's fold. It also boasts a robust queue of over 100 upcoming enterprises scheduled to integrate within the coming six months.

During the launch event, Ex-Chief Architect of Aadhaar Pramod Varma said that he was extremely bullish on ONDC and likened it to the internet. “People can comprehend linearity but when non-linearity kicks in, you will see exponential growth for ONDC in places that we can’t even expect,” he said. “No VC, no entrepreneur can predict its growth.”

VC's Delight

Investments in Indian startups have experienced a significant decline of 36 per cent during the January-June period in 2023, amounting to USD 3.8 billion. This marks the lowest half-yearly figure witnessed in the past four years. The reason behind this downturn is attributed to investors adopting a more meticulous approach, conducting thorough due diligence across all aspects of businesses, as outlined in a report by PwC India. But according to VCs, the enthusiasm to start-up has hardly diminished in the country and ONDC-focused solutions and businesses are already a thing that investors are increasingly interested in. 

During a press conference at the launch event, ONDC CEO T Koshy revealed that VCs have been wanting to collaborate with the platform for months, if not longer. 

In a statement, Nitin Sharma, Partner at Antler in India, said, "India has digitised identity and payments, and we believe it is time to now set our sights on the next major unlock - digitising commerce. Only 6 per cent of MSMEs are active sellers on digital platforms. With ONDC, we believe this has the potential to grow to 30-40 per cent over the next decade; boosting massive growth for India." 

“As the first VCs to launch a platform to increase talent density and enable opportunities on ONDC, we are excited to partner with visionaries such as Mr Nilekani and the FIDE, ONDC leadership. We are excited to see founders building at population scale in themes like complex commerce, vernacular commerce and flow-based lending, to name a few. The Antler ONDC platform will provide everything from the best resources to a vibrant community and seed capital for them,” he added.

With the unveiling of additional use cases by startups harnessing the ONDC protocol, an increasing number of venture capitalists are anticipated to join ONDC's ranks. This surge in VC participation will clearly catalyse the startup ecosystem's momentum in aligning with the platform, drawing parallels to how companies embraced the UPI framework.