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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Whether you are building or buying, there are some guidelines to follow, says Karan KuraniIn a startup, there are always has 100 different things that need to be done at any given point of time. There are umpteen ways you can accomplish those tasks. Many of them can be solved by using tools that other companies provide. Some of them clearly require something to be custom built internally in your organisation. And then there are some, often pesky, things that are in the middle. You can solve the problem by using some third party tool/software, or you can also build a replica of that tool internally with a few tweaks here and there that would be nice to have. It’s these situations which cause a lot of sunk time in wasteful projects that could have easily been solved by just using some existing solution out there. But how do you decide when it’s good to build something in-house vs just buying your way out of the problem? I would like to walk you through two situations where the build vs buy question typically pops up. The first one is the problem of “Big data” (or even little data for that matter). The world is awash in data, but data is not the same as information. Data is just a fact, or an observation. It is information which empowers your organisation to make decisions. There are entire companies built to help you convert your data into actionable information. Whether it is to help you track your funnel for sales conversions, keep track of how many times in a user returns to use your product per day/week/month, at what points are your users getting frustrated and dropping off, and a million other things. Karan KuraniBuilding and maintaining such systems in-house is an expensive, time consuming affair. Adding to the difficulty is the fact that the people who are well versed in this field are rare, and are super hard to recruit. Therefore, there are a lot of companies out there who promise to provide you the same kind of insight into your data at a fraction of the cost and time of building in-house systems. Many of the products currently on the market are pretty good at their specific use cases. New Relic, for example, is an excellent way to monitor your infrastructure and the raw performance of your application. Google Analytics is another great free solution to measure the basic metrics of your website / mobile app. But, it’s not as well defined when it comes to business metrics - especially if you are a startup. A startup by definition is something new and its business model is undefined early in its life. This means that nobody - including the founders themselves - know what the best way to measure the business is. This means there is no one stop shop which will have all the things that your startup needs to measure its health. DoctorC’s dashboard was customisedAs an example, at my current company - DoctorC, we needed a dashboard which measured all our critical metrics for the current day at a glance. We wanted to know how well each of the city was doing and what was contributing to its progress as well as how far or close we were to our daily goal overall. It should also update in near real-time so we know what’s happening now as opposed to 60 minutes later. There is simply no solution out there which would provide such functionality out of the box or that can be modified like this without significant tech development. And since it is so critical to our business we built the dashboard from scratch. Each bar would turn green if the goal of each acquisition channel is hit. The circle for the city would also turn green once its goal passed. The bar on top would similarly green once our overall daily goal was hit. The more green we saw the better our business was doing - we can process everything in a very visual manner. It also acts as motivational tool where the entire company would try together to get as many greens as possible every day.This investment has paid off immensely. This is exactly what is right for our organization specifically, not for anyone else. It has helped us move fast in decisions since we have the right data at our fingertips. It was an explicit, conscious choice we made to strengthen our business.What we did not do - we did not build our own infrastructure monitoring tool - we use New Relic, we did not build our a/b testing/optimization tool - we use Optimizely, we did not build our own servers - we use Amazon Web Services, we did not build our web analytics software - we use Google Analytics and Heap Analytics. We use off the shelf software as long as they are saving us time and money and are very well defined in nature. Anything that is specific for our business and which we absolutely must have our way - without any compromises - is built in-house. Learning from the NYTimesThe second example of an in house tool that is core to a large business is New York Times’ internal Content Management System (CMS) called “Scoop”. It powers all their workflows for publishing articles on the web, mobile and print. Apart from that, it allows them to render images that are automatically cropped and aspect ratios adjusted so that the writers and editors don’t have to worry about managing how images are displayed. There are several other features which are very specific to NY Times such as “Story Budgeting and Planning”, a tool used to coordinate the publication of articles across multiple news desks across the world in different time zones in a painless way. It’s tightly integrated into their workflow in a way that is not found in a generic CMS. For NY Times, the entire experience of writing, copy editing, publishing and post publication editing is handled seamlessly with minimal friction with Scoop. They are currently changing “Scoop” so that they became a digital first organization. They have this flexibility because they have built Scoop from the ground up for themselves. It is beholden to no other organization than NY Times itself. The results speak for themselves, nytimes.com and its mobile site are industry leading media websites in the world that improves constantly day after day after day. Anything that you find unsatisfactory in the market and doesn’t serve your business needs is up for grabs. After that, it’s all a question of prioritizing what you want to build. Another point to note is that the “in-house tool” does not need to be fancy or use heavy technology. It can be as simple as a simple spreadsheet which is filled manually every day - we still do that for some of our internal projects. In the end, there are 2 simple things that you must ask yourself -1. Is the thing you want to do critical (and I mean really absolutely “Oh my god, my business will die without this!” critical)?2. Are there zero off the shelf tools that will allow you to do exactly that critical thing?If the answer to both is yes, you should seriously consider building it in-house, even if you just started your startup yesterday. This philosophy is, rightly so, independent of the size of the organization. Karan Kurani, is co-founder of DoctorC, a startup clustering diagnostic centres and consumers with technology
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The Scaale Group, a Venture Resource Ecosystem, is spreading its wings in India. Based in San Francisco, it works with over 150 venture capital funds to find startups that can make an impact in areas such as but not limited to education, healthcare, SaaS, big data, travel, food tech and more . Scaale’s investment club called Cross Border Angels has already invested in a Hyderabad incubated company, Jay Robotix, for an undisclosed sum. It has also invested in seven companies, across the world, with an average angel round of $200,000. The group’s founder, Kaushal Chokshi, says that India has enough ideas that could be funded and taken global. However, talking to BW|Businessworld's Vishal Krishna he feels a policy framework, for startups, is the need of the hour for India to become a powerhouse of entrepreneurship. Here are the excerpts of the interview. Where is funding headed, is there some reality today that there could be a bubble?I think the motivation comes from exits. Thousands of people get excited about it and the exit rates are so high that there are so many entrepreneurs who want to start businesses. Yes the best ideas get funded; the bubble hype is the valuation itself. It is not the quality of ideas. It is a business model that everyone is betting on and it is fine. This is how entrepreneurs are made. It is just the beginning of some good things to happen in India because of private capital. The bubble itself is a process. It is a necessity to find the best ideas. I agree there is very high valuation today but it is not a bubble that will stop investments from happening. I think any innovation around the world has gone up because of immigrants. The case in point is India. There are so many Indian companies going abroad. So, such entrepreneurs need Angels that can fund companies going global. These companies have implications to change society and we need to de-risk their presence or focus from the Indian market. There is better exposure if one goes global and the best practices can be implemented on a global scale. It makes exits all the more easier. What markets are your favourites?USA, Spain, England and India are growing in terms of entrepreneurs. Even Estonia has startups; it is tremendous. I have met several companies in the product software and hardware side there. If they can do it, why can’t India? India needs to make it easier for startups from a tax and listing perspective. One of our startups, Jay-Robotix, has gone to Singapore. They started out of Hyderabad. The city state is wise at picking companies that can keep them ahead in the future. Robotics is such a good bet. The current Indian government is very serious about entrepreneurship and wants to help such companies. Let us what comes from policy to foster growth of startups in the next four years. What do you think India should do?Tax incentives, for investors and entrepreneurs, are a must. We need to define the best practices for a nation of entrepreneurs. Today we do not have a framework and this why intellectual property goes abroad. The state governments should also look at this in their budgets very seriously. To be honest, job creation happens from startups. It is a compelling story to change society. Technology innovation today is getting people get noticed and people around 30 years of age have a career goal of changing society with their idea. Such businesses command transparency and, today, people are saying that they can go achieve things. This is a change in India. You no longer need contacts to grow; it is a culture of meritocracy. I must also add that education can aide this growth. People of all ages should be given the opportunity to learn. Age is no longer a barrier. To be honest, city states can run things much better than large nation states. How much of our entrepreneur pool is stuck in investment jargon?Yes people spoke about cloud, mobility, big data services three years ago; now they call it SMAC, which is social, mobile, analytics and cloud. These are just terms. But what is the difference between research and innovation. Research is about spending money to drive innovation. Innovation is using an idea to triple bottom lines of a business. We are looking for innovation. I do not look for Unicorns, as they call it. I want people who can change lives. We like companies with technology intervention in Health care, security and education. Technology for future cities is also very interesting. We need to look at how Singapore, Hong Kong, Estonia and Kosovo are fostering growth for entrepreneurs. With the Indian government starting a smart city called Gujarat International Financial Tec-City it is a great move to set up a financial centre for financial tech startups. We are already aligned with that program. This is the intention that we are talking about. So India has to seize this. Look at it this way, that startups are creating a cashless economy and Indian banks should embrace these companies. Today Aadhar, which has such great technology and data, has opened up its APIs to build applications. Imagine the applications that can use data to change lives. Social impact is very important for India. Will legacy companies open up to change?Take the example of ZipCar which got sold out for $450 million. This disrupted the car industry. Nobody has to own a car anymore. Most exits around the world are corporate buy outs and are all under $30 million. Legacy companies are the ones who are running accelerator programmes. Startup companies can get bought within two years. This is another area which will see major growth in the coming year.
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Microsoft Ventures, a technology startup accelerator, by software giant Microsoft, announced the launch of a new corporate engagement initiative called Innovation for Corporates (ICI). The new initiative aims to work with enterprise based startup businesses to innovate and drive growth. Innovation for Corporates offers three programs titled MAP, PIA and Hi-Po. The Market Access Program (MAP) will bring startups and enterprise businesses together to work together. The Partner in Acceleration (PIA) program allows corporates to know their resources and network to set up their own engagement with startups. The High potential (Hi-PO) program works with top startups backed by corporates to build them into stronger business respectively. Ravi Narayan, director of Microsoft Ventures in India, said "We have been working with various corporates for years to help them with their business problems with innovation from startups." He says that many enterprise businesses are looking at Microsoft for guidance. Over the last three years, Microsoft Ventures in India has built a portfolio of 74 startups through its program, with an impressive $500,000 average funding and four exits till date. Microsoft has also partnered with Reliance Industries for their accelerator program, GenNext Innovation Hub. On the partnership Vivek Rai Gupta of GenNext Venture fund says, "We have been able to mentor the startups and help them gain traction very fast." It also partnered with NASSCOM's 10,000 startups program. Tyler Bryson, general manager for marketing and operations at Microsoft India, told Businessworld that the culture of innovation at Microsoft is driving excitement and enthusiasm across the ecosystem. The new series - Think Next Talks, bringing speakers from across the industry and cultural spectrum to discuss how the innovation can improve work and life. Think Next 2015 saw over 400 CXOs from leading corporates and the conclave witnessed the top technology products in the country and the graduating Summer 2015 batch- AdPushup, Frilp, iReff, DailyRounds, Uninstall, iBot, FortunePay, Customer XPs, FlamencoTech WAGmob and Gazemetrix.
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Healthifyme raises close to $1 mn, announces its partnership with Micromax Mobile, report K Chandra Mohan and Vishal KrishnaHealthifyme, a nutrition and wearable technology company, announced an undisclosed second round of funding at a startup conference held by Microsoft Ventures on Thursday (18 June). Sources added that this second round was close to $1 million led by Bala Parthasarthy of Angel Prime and Amit Gupta of InMobi. HealthifyMe had earlier raised $250000 from angel investors. This signals the interest of investors in investing in wearable health device companies that offer services. According to IDC, a research firm, vendors will ship a total of 45.7 million wearble units in 2015, up a strong 133.4 per cent from the 19.6 million units shipped in 2014. By 2019, total shipment volumes are forecast to reach 126.1 million units, resulting in a five-year compound annual growth rate (CAGR) of 45.1 per cent. Healthifyme also announced its partnership with Micromax Mobiles, one of the largest mobile device manufacturers, in the country to sell their UFit band. This device purchased by the first 1000 people will offer free nutrition services through the Healthifyme app downloaded from any app store. This move will give Healthifyme a market access of nearly 20 million smartphone customers. The company will now compete with the likes of GoQii and GetActive which offer wearble technology health services. GoQii has added over 500 nutritionists and is a leading startup in the wearble technology industry. Sources say it has invested over $5 million in the seed round itself. The next rounds of funding for both companies could be more than $50 million. Meanwhile Healthifyme plans to recruit 1,000 nutritionists, currently it employs 100, and fitness trainers in the coming days. It also plans several low cost plans to its customers and has managed to acquire 100,000 users. Thushar Vashist, CEO and Founder, Healthifyme says, "We are on a mission to HealthifyIndia. I am glad to have received support from investors who believe in our mission." He adds that with this fund raising round they are going to democratise healthy living - providing fitness and weight loss at a fraction of market value, while simultaneously providing employment to hundreds of nutritionists and trainers. HealthifyMe, built for the Indian customer, provides access to the world's first and largest food database, a sophisticated calorie counter for regional foods and a thorough exercise tracker for logging in physical activities. While GoQii tracks calorie count based on food intake and has a nutritionist assigned to each individual. HealthifyMe also works in partnership with leading giants, in healthcare, such as Apollo and Manipal, where the app has proved effective in treating and preventing clinical obesity, diabetes, cardiovascular problems and other lifestyle diseases. The only problem is that regulation does not allow these companies to share data with insurance businesses. Therefore customised insurance plans cannot be sold to individuals. Regulators also fear that the data of consumers, stored in the cloud of these service providers, could be stolen by hackers for malign intent. If regulation comes through these businesses are in for $1 billion valuation with added services. "All wearable companies have to provide services to scale up. They have to define their business models," says Sanchit Vir Gogia, CEO of Greyhound Research. Currently, the wearable and health services makes sense if hospitals and insurance companies can use this data to track and reward users. The data is a gold mine. Since the hardware is already commoditised, the companies should make good with the data to increase revenues. GoQii is focusing it's plans entirely in the USA because the propensity to using data is higher in the USA. Healthifyme wants to focus on South Asian markets where the price points are lower and is a challenging market to conquer. "Today everyone wants to have a great lifestyle with good advice; its the service that makes us unique," says Vishal Gondal of GoQii. Meanwhile GetActive is focused on the Indian market and is offering fitness tracking at an affordable price of $80. They have raised an undisclosed round from angel investors. But it offers no advice on nutrition. India has 600 million people below the age of 40 and it surely is a large market for the nascent wearable health technology industry.
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In his four years of engineering, 28-year-old Paras Chopra, founder of Wingify, launched four startups. In the long summer breaks of Delhi College of Engineering, he didn’t allow himself the luxury of “chilling out”, as it is typical for students on holiday. Instead, he would hatch a new business idea, develop it, and even launch the product.
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It wouldn’t be wrong to say that amidst all the controversies between the different ideologies of faith, it is the religion of entrepreneurship that has engulfed and unified the country. Stable, highly-paid jobs at bluechip companies no longer seem as attractive. Young people today want to step out and start up on their own. They want to create value, make an impact and solve a pain point.
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