More than $100 million will flow into the industry through acquisitions and investments, writes Vishal KrishnaOver 6 lakh engineers pass out of colleges in India every year. Additionally, professional colleges churn out 5 million graduates every year as well. According to MeritTrac, a meagre 15 per cent of them are employable. To increase the number of employable people in the country, several certification courses have cropped up. NIIT and Aptech were the pioneers of certification courses for almost two decades. Of late, many entrepreneurs have taken a bet on training this generation on to a new set of skills. Simplilearn, Jigsaw Academy, Edutor and Edureka have been fighting it out to win students and universities, too. These companies combined can also raise more than $100 million in 18 months.For universities, the main challenge in training people is huge. These startups are aiding employability in the country. In fast-changing world, students have to be certified in technologies such as big data engineering, computer languages like Python, PHP and Hadoop distributed computing architecture. Some of these courses are heavy terms and can leave any graduate with an uneasy feeling about moving ahead in their career. These days the sartups play a vital role in shaping the future of the country. According to the National Skill Development Corporation, the firms are not only betting on the valuations, but also betting on 300 million young people who are actively seeking jobs by 2030. To boot LinkedIn acquired online skill development firm Lynda in the US for $1.5 billion. Now Lynda — in its LinkedIn avatar—will look at startups that have built efficiencies and scale in education.“Education and professional skilling is a big bet if these companies use technology to make learning easier,” says Sanjeev Agarwal, co-founder of Helion Ventures.Helion’s first bet was on Simplilearn where it jointly with Mayfield and Kalaari Capital invested $28 million. In the six years, Simplilearn has scaled up to 400,000 customers in 150 countries. It offers more than 250 courses with an option of either taking it in a classroom or online module.“India needs certification and vocational training courses. There is a big opportunity to expand these courses globally too,” says Krishna Kumar, founder of Simplilearn.Recently, Simplilearn acquired a marketing training company called Market Motive in the US for $10 million. This will give the company a firm foothold in the US.To add to the opportunities in India and the US, there is a shortage of 200,000 data scientists by 2015. Gartner — the research firm—predicts that there will be a ten fold growth for training data scientists in five years.Two profitable startups, Edureka (an annualized revenue of Rs.30 crore) and Jigsaw Academy (an annualized revenue of Rs 12 crore.) have hit big by training data scientists. Their students are sought after in analytics firms such as Fractal Analytics, MuSigma and TEG Analytics.Similarly, Wipro and Infosys, which have been adding analytics teams, are working with these two startups to train their employees. Edureka and Jigsaw are in advanced talks with investors to raise more than Rs 20 crore."Our scalable platform works with more than 1,000 curated teachers and over 1000 courses," says Lovleen Bhatia, co-founder of Edureka.The Bangalore-based Manipal Group of Institutions is known to swoop in on these profitable companies to scale up their data training courses."We have been training engineers to use data creatively and intelligently," says Gaurav Vohra, CEO of Jigsaw Academy. They have plans to hit revenues of $50 million in eighteen months.Jigsaw is founded by Sarita Digumarti and Gaurav Vohra, both data scientists in the US-based firm before founding the company in 2012 in Bangalore.There are some betting on schools, too. Edutor Technologies is betting on building interactive technologies that aid in education. They have raised Rs 2 crore from Hyderabad Angels and will raise more when their tablet based application is adopted by over 50000 schools in India. It currently has more than 40000 paying students. The company is betting on self learning through tablets.Other startups focused on building school based practice tests and learning are Embibe, Nayi Disha and Purple Stream have raised money to focus entirely on schools.BW | Businessworld predicts that global funds will focus on education technology and we can witness small acquisitions in 12 months. However, there has not been a big acquisition since 2011, in education tech. The last one was Pearson bought online tuition firm TutorVista for Rs 700 crore. Prepare for big monies coming into the sector to make many more Indians employable.
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Ajay Batra's advice for startups os before you declare yourself to be one – have some honest conversations with self and other co-foundersAlok and Reeba have known each other from their school days. Their families have also come to know each other well. Alok is an engineer from IIT-Delhi, and Reeba has a Masters in Education from Jamia. Both are exceptionally bright and hard-working. But, that’s not all that’s in common between them – they are also co-founders of a startup called “iLearn360”-that is hoping to revolutionize school education in India. Given the lack of capable teachers, and focus on rote learning – iLearn360 has developed technology enabled teacher-training curriculum for B.Ed. students that specializes in learning assessments, and are planning to equip teachers in schools across the country with a cell phone app that takes the drudgery from CCE (Continuous Comprehensive Evaluation). Their dream is to make learning productive and fun for all.They have been working on their idea for six months; developing it, getting inputs from schools, making it multi-lingual and running it by experts in education. At this point they are quite clear on what their first product will offer, and they are excited about it. It’s time to take their startup from idea to implementation. Fortunately, their families have been supporting them all through – and the project has actually been funded by them.While discussing market positioning, they have identified two clean segments – CBSE schools in urban areas and State-run government schools in rural India. Currently, Alok and Reeba are discussing their revenue models and pricing framework for these schools. The technology has been given free to about 50 B.Ed. institutions – where it is being used fairly regularly, and to good results. Alok is convinced that an annual per-child fee of Rs. 500 and Rs. 300 will work for the two segment of schools. Reeba is not convinced about the latter.She has been watching the app being used in B.Ed. colleges (as a freebie) and feels that the socio-economic profile of students in government-run schools does not merit a charge – she want to give it free – as that’s the only the solution will be affordable.In fact, Reeba is increasingly becoming sceptical of the revenue and profitability of their venture. Her social leaning gives her unique perspective of the ground realities; whereas Alok’s business-sense prevails all analysis.Their differences are starting to grow – Reeba has been talking to the country’s biggest NGO’s to see if they would like to adopt their technology for free; while Alok has been busy tinkering their 5-year revenue/sales projections to show healthy profits to possible investors. Last week, in their meeting with the Chairman of a prominent private school chain – Reeba looked indifferent and distant.When Alok confronted her, Reeba admitted that her social leanings are way too strong for her to seek profit in a tool that enables learning in children. She sees their endeavour more as a nation-building exercise than as a commercial enterprise. This was a total “no-go” for Alok; he was angry and frustrated with Reeba; but had the composure to honestly ask for a dissolution of their startup. They still have to decide about the ownership of the IP that they had both created together.The above is a true story – with some facts changed. So often, we have witnessed passionate co-founders come together to create magic. Equally frequently, unfortunately, we have seen enterprises flounder because the co-founders’ ideas or value-systems don’t match.So, our advice to Startups is that before you declare yourself to be one – have some honest conversations with self and other co-founders around three areas:1. What excites me in life? What am I really passionate about?These questions are to be pondered by each co-founder individually. Don’t just be analytical about it; feel your emotions as well. These could result in vast range of possibilities, e.g. I am really passionate about: reading and writing fiction / improving the quality of education / mobile technology / helping others / taking care of animals / travelling the world.2. What are my life’s goals?This is also an exercise to be done personally by each co-founder. Some answers we hear are: building a hugely admired company / create something unique and innovative as my legacy / do social work for the under-privilegedLet’s not forget, that given how broad this question is, the above answers are often supported by some examples like: be happy / make lots of money / compassionate / caring3. How aligned are we as co-founders?With the first two questioned answered in their privacy, it’s time for some honest and open conversations between the co-founders. Care must be taken to ensure that the exchange does not go down the path of their shared passion, i.e. business of launching the startup. Instead, the dialogue is about fundamental values, emotions and dreams that each founder cherishes. The co-founders share, discuss – but don’t question – each other’s answers to the first two questions. The real impact of these discussions happens when they ask themselves the fourth, “Does our proposed startup align with our collective passions and goals?”This is not only a difficult question to answer, but the answers to this question can result in awkward situations. If all goes well, the team comes out with a clearer understanding of each other, and their overall purpose. If not, it’s better to surface these differences sooner than later.Wish Alok and Reeba had these conversations six months ago. The author, Ajay Batra, is the founder og Lutyens Startups
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Growth Enabler, a mentoring centre for startups, helps a rural youth to develop his idea of creating a phone-based voting app. K Chandra Mohan reports This is the story of Lavanya Kumar, an engineering graduate from Mogili village, in Andhra Pradesh and his dreams of developing a voting app and how Growth Enabler, a mentoring centre for startups, helped him achieve his dream. Starting life in a village, Kumar had to work in sericulture farms and save up for his University education. With sheer tenacity he finished his software engineering, at NIT-Suratkal, and landed a job in Hyderabad. However, he had plans of becoming an entrepreneur and came to Bangalore with an idea. His idea was simple, why shouldn’t the power of smartphones be used to allow citizens to vote from the comfort of their homes. There are 200 million senior citizens and more than 60 million Indians work abroad. “I have been thinking of the concept of ‘One India One Vote’ since my college days and I have created a platform where voters can cast their vote from smartphones,” says Lavanya Kumar. He adds that he has created an SMS based system for lower end phones as well. His cloud-based platform captures information of every registered voter and securely allows a citizen to cast the vote with a click of a button. His algorithm verifies the user and does not allow them to re-vote, thereby protecting the system from graft. If this product takes off then rigging can be curbed and costs of re-polling can be avoided. In a national election or re-polling, the nation spends more than Rs 400 crore. Growth Enabler, a mentoring centre for start-ups, took note of his idea and latched on to it. The team began mentoring the Kumar and gave him six months to make the product ready and will also eventually help him to present the plan to the Prime Minister’s ‘Digital India’ initiative, where one can vote with an SMS too. The usage of smartphones is rapidly growing in India. It is the fastest growing smartphone market in the world. According to Gartner, the rise in smartphone users in India since 2015 is 260 per cent and is expected to reach 200 million users by 2018. However, there are 400 million rural youth who cannot connect to India’s fast growing technology and some of them have ideas that can use technology to solve rural problems. The Unitus Seed Fund has earmarked $24 million for rural funding and to invest in companies that can make a social impact. While this fund focuses on some business plans and potential companies, there is an entire mentoring part that is missing. This is where Growth Enabler, a mentoring centre for startups, takes over. “This product, once ready, is a great product for angel investors and other large investors to back,” says Rajeev Baduni, founder of Growth Enabler. The story of Growth Enabler dates back to the year 2013, when three highly passionate and committed individuals decided to wave good-bye to their flourishing corporate careers and began life as entrepreneurs. “Our journey has been a real mix of many events, emotions, experiences and moments – most of which have been revealing lessons of how we can become great human beings’ says Aftab Malhotra, one of the founders of Growth Enabler. Rajeev Banduni, Lars Lin Villebaek and Aftab Malhotra were on a mission to make a difference to the world of entrepreneurship. They realised early on that to grow and scale a business requires not only experience and a winning mind-set, but many other ‘never talked about’ assets. These assets have a ‘multiplier effect’ on a startup’s ability to grow, and often make the difference between success and failure. These assets are accessible only to a select few; Growth Enabler calls them ‘the other 5 per cent’ or the city based businesses. These are people with connections, great academic background and plenty of access to money. So, what about the other 95 per cent of the assets? This is what Growth Enabler wants to tap.Growth Enabler’s first goal is to ensure that they reach as many people as possible and therefore decided to create a business model and an online platform that is democratic and scalable. The intention is to provide access to the following:• Any person wanting to start a business and has an idea (Growth Enabler calls them Wantrepreneurs)• Those who have recently started a business (Startups)• Those who have already established business and eager to grow (SMB’s)• To support startups by connecting them to elite investors. • Growth Enabler will also provide free mentoring and help these“wantrepreneurs” to find out the right funding.
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Arshad Khan traces the investments made by the great Ratan Tata in startupsSince his retirement as the chairman of Tata & Sons, Ratan Tata, one of India's most respected businessmen, has donned the new avatar of a venture capitalist. With an estimated personal wealth of around Rs 6,000 crore, he is on an investment spree to help hot startups get established into successful enterprises. Over the last one year alone, he has bought stakes in 10 companies, mostly e-commerce firms. He also ventured in sectors like automobiles, retail, jewelry and telecom through his personal investment company, RNT Associates. He also has a stake in two new entrants in aviation sector, Air Asia and Vistara. Domestic startups are also excited about attaching their names with Tata to benefit from his experience of over five decades. Snapdeal’s Kunal Bahl comments, “an investment by a legendary and respected figure like Mr Tata is an excellent validation of our focused strategy on building a long-term enterprise and marks the start of a very important phase for the company.” Tata bought stake in the e-comm giant last year. Not just domestic startups, even foreign majors are keen to associate themselves with the business tycoon. Xiaomi founder and CEO Lei Ju said, "He (Tata) is one of the most well-respected business leaders in the world. An investment by him is an affirmation of the strategy we have undertaken in India so far." BW|Businessworld makes a list of famous startups where the business honcho has made investment in less than a year. Snapdeal: The e-commerce giant became the first destination of post retirement Tata investment. It is believed that tata holds 0.17 per cent stake in the e-tailer, his stake being worth around Rs 21 crore. Founded in 2010 by two IITians, Snapdeal became one of the fastest emerging e-commerce players. Tata’s attachment will prove to be strategic for the firm as it faces high competition from Flipkart and Amazon in the domestic market. Paytm: Another e-commerce firm which grabbed the business honcho’s attention, Tata has acquired an undisclosed stakes on March this year in One97 Communications, which owns and operates the Paytm. Initially an online recharge service provider, it rapidly grew into one of the major e-commerce player. Bluestone: It is a Bangalore-based online jewelry retailer. In September 2014, Tata made a strategic investment in the e-tailer. On Tata's investment, its co-founder Gaurav Singh Kushwaha said, “an investment by Ratan Tata who has been at the helm of India’s most successful and respected conglomerate is a validation of our approach in building an innovative brand that is disrupting the jewellery market.” CarDekho: In February 2105, Tata invested in Girnar Software, a parent company, which owes and operate the online automobiles classifieds website CarDekho.com founded in 2008, the website leads in its segment. Urban Ladder: founded in 2012 Urban Ladder is an online furniture retailer which sells wide range of products like bed, sofas, wardrobe etc. At present the website has its presence in 12 cities.It became an interest of Tata in November 2104. OlaCabs: the taxi-hailing app OlaCabs is the latest destination of the business tycoon’s personal venture. Founded in 2011 by twp IITians, Olacabs is one of India’s largest aggregator of rental cabs with operations in over 100 cities and 1.5 lakh vehicles registered on its platform is backed by Japan's SoftBank. What is worth noticing that Tata is not the only stalwart to show interest in the startups. The trend was probably started by Wipro’s chairman Azim Premji in 2006 with his investment firm PremjiInvest. Azim Premji has investments in Myntra and Snapdeal. Narayana Murthy, Infosys co-founder also has a joint venture with Amazon to help small and medium businesses enterprises to go online.
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Realty portal Housing.Com's board has sacked its CEO and co-founder Rahul Yadav with immediate effect, saying that his behaviour towards investors and media was not "befitting" of a CEO. Yadav will not be an employee or part of the SoftBank backed portal in any manner, the company said. "Housing.Com has released its CEO Rahul Yadav, with immediate effect, after a regular board meeting, held earlier today," it said in a statement. "Yadav who is also the co-founder of the company, will no longer be an employee of Housing and be associated with the company in any manner, going forward," it added. The board, unanimously agreed to bring Yadav's tenure to a close, with reference to "his behaviour towards investors, ecosystem and the media". "The Board believed that his behaviour is not befitting of a CEO and is detrimental to the company, known for its innovative approach to product development, market expansion and brand building," the statement said. Yadav has been in the thick of a controversy after he put in his papers questioning the intellectual capability of his company's board. Later, he apologised to the members. Last month, he hogged the limelight again when he gave away all his holding, worth about Rs 200 crore, in the company to the employees. In December, Housing.Com had raised USD 90 million through private equity infusion from SoftBank Group along with Falcon Edge and other existing investors. While the search for an interim CEO is underway, Housing.Com said, a transition plan has been put in place. "The current senior executives of Housing will continue to run the operations on a daily basis, and ensure its continued smooth functioning. The Board and the Operating Committee will remain closely involved with all key decisions," it said. The board, investors, management team and employees are keen to see Housing maximise its huge potential in India and beyond, as well as run in professional and world class manner, the company said. The Board thanked Yadav for his contributions and wished him well, for his future endeavours. Within two years of its founding, the company expanded from its original rent and resale proposition to include PGs and hostels, serviced apartments, land, plot projects, and new projects. Housing.Com has more than 2,551 employees in over 100 cities across India. (PTI)
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CyberChef offers middle eastern, continental, south east Asian and even regional cuisine from all over India, cooked by home chefs Raghav who lives alone in Gurgaon has asked his cook to not come on evenings from Friday to Sundays. For, these are the times when he craves for that special ghar ka khana. It is not that his parents have started parcelling him the food from his hometown in Himachal but it is the new startup in Gurgaon, CyberChef that delivers homemade continental or Lebanese to his house. Neha Puri, co-founder of CyberChef, got the idea of starting this virtual marketplace for home cooked meals when she was doing her Masters in Marketing and Strategy from Warwick Business School, UK. There she saw how a lot of women of Indian origin would cook and sell Indian food to the students in the university. As a student, she absolutely loved it and it made her life so much easier. When she returned and saw the increasing cosmopolitan crowd in the metros, she put the two together to tap on the business opportunity and started the company along with her brother Anuj Puri in February 2015. From the very beginning she was sure she doesn’t want to hire professional chefs. “Home chefs offer the novelty of changing the menu every day which lets us offer more variety to our customers on a daily basis.” Another thing, she adds, is these women keep trying new recipes, and some are their family recipes passed on from generation to generation. “We would never get a chance to try such heirloom recipes if it wasn’t for these home cooks.” This is essentially why their business shouldn’t be compared with the Indian dabbawallas. For, they don’t offer dal, roti and sabzi but middle eastern, continental, south east Asian and even regional cuisine from all over India. She started with 25 home chefs, all housewives, in Gurgaon. In two months they have got 30 more chefs and expanded their base to Mumbai. They do more than 1,000 orders on a monthly basis, wherein the price range for a meal is between ₹150-275. The advantage of this business model is it doesn’t only offer affordable and home cooked food to the customers but also gives an opportunity to the housewives to become entrepreneurs, with whom they work on a revenue sharing agreement. Anjali Adya, a Gurgaon-based home chef, who has been with CyberChef since its beginning says, “This has been a great opportunity because they encourage me to try different recipes and master my skill. This has also helped me get market access and my kids are proud that their mother has now become a ‘professional’.” The responsibility of the home chefs is to cook the best meals and try innovative recipes, packaging, delivery, marketing and logistics is taken care by CyberChef. It is these women who act as brand ambassadors for CyberChef and spread the word in their social circles. “If they grow, we grow with them,” says Adya. One of the main concerns of being in this business, shares Puri, is the problem of time. People don’t want to wait for too long for their food. They should get it within 30-40 minutes of ordering. So, getting the right logistics can make or break this business. Moving on, Puri wants to focus on expanding their base to Pune, Bangalore and South Delhi and get 150-200 chefs at each location by end of this year.
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Housing.com co-founder and CEO Rahul Yadav's resignation news on Thursday (25 June) sparked a buzz on the social media platforms. Economictimes.com quoting two people directly aware of the development said this time his resignation will be accepted by the board of the real estate portal, .However, both Housing.com and economictimes.com later denied that Yadav has resigned. Yadav, 26, who has been involved in a string of controversies, will be asked to stay on at the company and oversee product development. In May this year, Yadav resigned as the CEO of Housing.com, capping several weeks of drama at one of India's most watched startups. Yadav wrote a scornful resignation letter on April 30 to board members and investors denigrating their "intellectual capability" and giving them a one-week deadline to "help in the transition". The portal shot to fame as one of India's startup success stories after Japan's SoftBank led an investment of $90 million ( Rs 550 crore) in December, valuing it at Rs 1,500 crore. Since then, Yadav has been in the spotlight for the wrong reasons — he became embroiled in a social media dust-up with Sequoia Capital Managing Director Shailendra Singh. Housing was founded in 2012 by a dozen college-mates from IIT-Mumbai, of whom three have left the company.
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The newly proposed institutional trading platform for start-ups is going to put Indian regulation on the global map of being investor friendly, says Vishal KrishnaThere have been several start-ups that had the potential to list on the Indian bourses if such an opportunity had existed in the past. The entrepreneurs of popular start-ups such as RedBus, Myntra and BookPad exited, selling off to large companies (Naspers, Flipkart and Yahoo), because the only card they could play was to either to sell or merge their companies. The Indian entrepreneurial community registered their parent companies in Singapore or New York or Hong Kong because of easier listing norms. They also went to those cities because of the tax norms and easy exit offered to private capital. Sensing a loss in value for Indian entrepreneurs the Securities and Exchange Board of India (SEBI) has finally agreed to create an Institutional Trading Platform exclusively for startups, which will be part of the BSE-SME platform. Thanks to the experts, such as Rajeev Khaitan, of Khaitan and Company, Sudhir Sethi, of IDG Ventures and Mohandas Pai, chairman of Manipal Global Education Services, Sebi, is in the process of releasing a blue print for listing startups. However, for now the entire details have not emerged in full because the regulator has laid out some procedures of how a startup could list in India (See guidelines to listing table). What it means now is that the likes of Flipkart and Snapdeal have a chance to go public without showing profits and the intrinsic long term nature of the ecommerce business is validated. These firms can now survive in the long run with institutional capital and not be dependent on short term capital. “The move allows investors to exit in India and it allows entrepreneurs to build long term businesses,” says R Natarajan, CFO of Helion Ventures. He adds that this discussion was in the making for the last three years and has finally come to fruition. The trading platform will allow companies to list in the Bombay Stock Exchange Sensex at the company’s discretion on the basis of their growth. “India has several startups solving problems related to the country and offer global solutions. For founders, it is a great way to raise capital,” says Sanjay Swamy, founder of Angel Prime Partners. He adds that this platform would be investor friendly and promise exits. Reports add that $1.5 billion, worth of private capital, flowed in to India in the first half of the year. Most of these are Venture Capital investments that come in for five years. An exit within the country and that through an IPO will make India a startup friendly nation. May be global investors are smiling now and Indian entrepreneurs have a reason to cheer up. Here is what Sebi has proposedThe Guidelines• The platform shall now be called as Institutional Trading Platform (ITP) and shall facilitate capital raising as well. • The said platform will be made accessible to: a. companies which are intensive in their use of technology, information technology, intellectual property, data analytics, bio-technology, nano-technology to provide products, services or business platforms with substantial value addition and with at least 25% of the pre-issue capital being held by QIBs (as defined in SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009), or b. any other company in which at least 50% of the pre-issue capital is held by QIBs. • No person (individually or collectively with persons acting in concert) in such a company shall hold 25% or more of the post-issue share capital. • Considering the nature of business of companies which may list on the said platform, disclosure may contain only broad objects of the issue and there shall be no cap on amount raised for General Corporate Purposes. Further, the lock in of the entire pre-issue capital shall be for a period of 6 months from the date of allotment uniformly for all shareholders. • As the standard valuation parameters such as P/E, EPS, etc. may not be relevant in case of many of such companies, the basis of issue price may include other disclosures, except projections, as deemed fit by the issuers. • Companies intending to list on the proposed ITP, shall be required to file draft offer document with SEBI for observations, as provided in SEBI (ICDR) Regulations, 2009. • Only two categories of investors, i.e. (i) Institutional Investors (QIB as defined in SEBI (ICDR) Regulations, 2009 along with family trusts, systematically important NBFCs registered with RBI and the intermediaries registered with SEBI, all with net-worth of more than Rs. 500 crore) and (ii) Non-Institutional Investors (NIIs) other than retail page: 2 [ www.sebi.gov.in ] individual investors can access the proposed ITP. • In case of public offer, allotment to institutional investors may be on a discretionary basis whereas to NIIs it shall be on proportionate basis. Allocation between the said two categories shall be in the ratio of 75% and 25%, respectively. • In case of discretionary allotment to institutional investors, no institutional investor shall be allotted more than 10% of the issue size. All shares allotted on discretionary basis shall be locked-in in line with requirements for lockin by Anchor Investors i.e. 30 days at present. • The minimum application size in case of such issues shall be Rs. 10 lakh and the minimum trading lot shall be of Rs. 10 lakh. • The number of allottees in case of a public offer shall be 200 or more. • The company will have the option to migrate to main board after 3 years subject to compliance with eligibility requirements of the stock exchanges. • For Category I and II AIFs, which are required under the SEBI (Alternative Investment Funds) Regulations, 2012 to invest a certain minimum amount in unlisted securities, investment in shares of companies listed on this platform may be treated as investment in 'unlisted securities' for the purpose of calculation of the investment limits. Grandfathering of existing companies listed on SME-ITP. • The existing companies listed on SME-ITP may continue to be guided by the existing regulatory framework for them including applicable relaxations from compliance with corporate governance requirements. Rationalisation of disclosures for proposed ITP as well as main board. • Further, in order to rationalize the disclosures requirements for all issuers whether intending to list on the main board or the proposed ITP, it has been decided that the disclosures in offer document with respect to group companies, litigations and creditors shall be in accordance with policy on materiality as defined by the issuer. However, all relevant disclosures shall be available on the website of the issuer. Also, the product advertisements of an issuer will not be required to give details of public/rights issue.
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If you play in the share market and have the capacity to invest Rs 10 lakh in an IPO, very soon you might be buying the shares of an India start-up. But be cautious, as the relaxing of norms for the start-ups by the Securities and Exchange Board of India may make a lot of investors lose their money. “Start-ups by their very nature are risky investments. Thus Sebi has done well to keep the retail investors out of the start-up market. The retail investors, given their limited access to research and data, are ill-placed to take exposures in companies with fewer disclosures. However, institutional investors should also remain wary since rules such as these doing away with standard valuation parameters such as P/E,EPS (which of course may not be relevant for start-ups) may have a tendency to create a bubble in the start-up market which may bust later on,” said Deep N Mukherjee, Senior Director, Corporate Ratings, India Ratings & Research. The decision has been taken despite historical data indicating that a majority of IPOs start trading below their listing price within one year of their launch. According to data provided by Prime Database, in 2008, 81 per cent of the listed IPOs were giving negative returns within one year of their listing. In 2009 and 2010, the percentage was 50 per cent and and 82 per cent respectively. The situation was a little better in 2014 because of the stricter disclosure norms that Sebi had brought in for traditional companies. However, the relaxation for start-up in the disclosure norms is likely to spurt the percentage of negative returns once again. Mukherjee further adds “if there are not enough disclosure by such companies, investors may lose money because start-ups often have unique business models or products which may only give an illusion of easy understandability." According to the Sebi statement, the standard valuation parameters such as price to earnings, earnings per share and so on may not be relevant in case of many such (Start-ups) companies and the basis of issue price may include other disclosures, except projections, as deemed fit by the issuers. By doing away with disclosures like price to earnings, earning per share of the company, Sebi is allowing the companies to not disclose the profitability of the businesses. Instead of these norms, the companies will be disclosing information like ‘traffic on the website, conversion of visit into customers etc. “A lot of tech companies have not made money in many years. There would be many such companies which will look attractive as per revenue but take decades ,if ever to generate free cash flows,” adds Mukherjee. For example, Jabong, an online fashion retailer, incurred a loss of Rs 293 crore on revenues of Rs 438 crore in 2013-14. This means the company loses Rs 33 on revenue of Rs 100. Even Flipkart, the largest online retailer by revenue, has not made profit yet. The company is valued at $11 billion but investors like Rakesh Jhunjhunwala have questioned the business models of the company openly. While Sebi is under pressure to stop the flight of Indian start-ups to the foreign markets to raise money, but it also needs to ensure that the Indian investors do not lose money by investing in these companies. Sebi is treading a risky path by allowing start-ups to list without letting investors understand their business models. A question from Jhunjunwala in a TV interview explains the risk of investing in start-ups, “the real companies who have given returns to investors had been built by the cash flows of those businesses, not by investors”. We know that most of the Indian start-ups have been burning investors’ money to show revenues on their books. Should one invest in such start-ups without knowing enough about their profitability?
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The Indian School of Design and Innovation (ISDI) signed a three year partnership with Microsoft India to set up ISDI Creative Accelerator, a programme that offers design and innovation for successful start-ups. With this collaboration, Microsoft will provide access to software and technology. A memorandum of understanding was signed between the two in Mumbai on Wednesday. “We are creating solution to translate young dreams into reality through integrated entrepreneurial environment and continue to be the focus for students, design innovators and corporate.” said Radha Kapoor, founder and executive director of ISDI, “Design in technology must be human centered to spark new innovation, it must be user friendly and create value without disrupting technology.” she added. Creative Accelerator programme has been designed in way that it will bring universities, students, young entrepreneurs, investors and corporate under a common platform. Bhaskar Pramanik, chairman of Microsoft India (BW Photo by Umesh Goswami)“Design is core and integral aspect of many industries. We are happy to work together with ISDI to develop a design accelerator for start-ups. We will bring the best technology and industry expertise to fuel the growth of this entrepreneurship and India, ” said Bhaskar Pramanik, chairman of Microsoft India. India is the third largest base for young business with 3000 technological start-ups after US and United Kingdom. It will touch around twelve thousand mark by 2020. This initiative will begin from Mumbai by providing six month program in design, technology and business innovation. Participating start-ups will have access to business mentors, technological support and designing experts to gain valuable market analysis and global scenario. This will be launched on a pan India basis after its launch in Mumbai in August.
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