Consolidation and customer experience are expected to be the buzzwords for startups this year as entrepreneurs focus on bringing in innovation across sectors like education, healthcare and financial inclusion. Consolidation is a natural progression, but one can expect more big scale consolidation in 2016, according to industry players.
Shopclues founder Sandeep Aggarwal said e-commerce and food technology will see noticeable consolidation. "Consolidation activities will be the next big trend in the landscape and will help the startup ecosystem to strengthen itself, building strong foundation for growth and leveraging strengths of each other," added Rajat Tandon Vice President of NASSCOM 10,000 startups. Tandon said startups with a strong and intensive planning and execution strategy will survive and lead to bring in structured growth. The year 2015 saw two big bang M&A deals with Snapdeal acquiring online recharge platform FreeCharge (estimated to be about USD 400 million) and Ola buying TaxiForSure in a USD 200-million deal.
Rajnish Wahi, Snapdeal's SVP Corporate Affairs and Communications said both multi-million dollar and smaller investments would continue as companies look to efficiently use funds to create value for their investors. Padmaja Ruparel, President of Indian Angel Network said there will be a lot more seed or early stage investing happening this year though growth stage monies could get a little harder to raise and this could impede companies. However, there are challenges ahead for the industry as well, be it concerns around correction in valuations or bubble around e-commerce bursting.
Prateek Srivastava CEO of Basil Advisors said investors want to invest in businesses that will drive the next level of innovation in consumer life behaviour. Some of the existing business are focussing on reworking their growth model to make themselves break even at operation- level, he said. "Monetisation will also undergo innovation as companies using discounting and offers (while burning cash) were able to bring consumers to adopt to the product, the products which have been able to drive change for a consumer will get monetised and will help them grow towards an evolved financial independence," Srivastava added.
While 2015 saw intrinsic use of new technologies like digital payments, Internet of Things (IoT) and smart data storage, this is poised to pick up pace as other technologies in renewable energy, advanced robotics and autonomous vehicles catches the fancy of clean-tech, ed-tech and fin-tech companies. "Niche categories such as Agri-tech, Clean-tech & Health-tech will see a lot of entrants as well as focus from the investors," Tandon said. Year 2016 will be year of "customer experience" rather than discounts as well as a year of 'asset light, hyper-local business models', Manav Sethi, Group CMO and Head Digital Strategy at Askme.Com said.
He added that focus has already moved to more impact areas: personalisation, recommendation, last mile delivery, returns and refunds. Peppertap CEO Navneet Singh agreed saying the focus will be on customer experience rather than just customer acquisition. The Indian startup industry bloomed in 2015 with rapid adoption of smartphones and increased usage of Internet driving the trend. Companies like Ola, Snapdeal, Quikr, Zomato and Paytm crossed USD 1 billion in valuation and joined the elite Unicorn club.
The year 2015 also saw e-commerce major Snapdeal and cab aggregator Ola together lapping up over a billion dollars from investors like Alibaba, Foxconn, SoftBank Group and others, while others also received millions of dollars in funding. According to data compiled by domestic technology and startup blog trak.In, as many as 936 deals worth over USD 8.4 billion have been inked this year -- up from 304 deals worth USD 5 billion that took place in 2014.