India is an incubator for e-commerce, cashback, technology innovations, early-stage investments and new product and service developments. Because the market is so active, it’s a valuable market to keep an eye on. Here’s another of our regular updates and insights into recent happenings.
VC investment in tech sectors in India total more than $6.4 billion in the first nine months of 2015 according to data from Tracxn and Tech in Asia. With more than 3 billion page views, news app Dailyhunt is a hit with customers in local languages in India as well as top news app in 19 other countries. No wonder VCs are interested. Japanese-based SoftBank will invest billions, including more investments in India. Flipkart fashion subsidiary Myntra will reach $1 billion in sales in 2016 and hopes to hit $5 billion before 2020.
Bangalore had the highest rise in seed funding in the last three years among all the startup ecosystems in the world and grew six times in India according to research from US-based Compass. According to SoftBank’s Nikesh Arora, Indian e-commerce market is a $12-15 billion market now. International Finance Corporation (IFC), the private-sector lending arm of the World Bank, invested $25 million in online grocer BigBasket. British teleco NewCall Telecom plans to invest $300 million in India. Vinod Dham, regarded as the father of the Intel Pentium chip, calls for a new investment in virtual education better rules to encourage investments in technology. Finally, ecommerce company Jabong expects to be profitable soon according to interim CEO Nils Chrestin.
The hottest sectors for venture capital in India
Not surprisingly, the lion’s share of the US$6.4 billion of total funding for startups in India in the first three-quarters of the year has again gone to the B2C (business-to-consumer) segment of ecommerce marketplaces, with US$500M+ funding rounds for Flipkart, Snapdeal, and Paytm.
Online marketplaces cornered nearly US$3 billion of investments in 166 deals over the first nine months of 2015, according to data from venture capital analytics firm Tracxn. This continues the trend we saw last year, when Flipkart had a billion dollar funding round to scale up and fight off local rivals, even as global giant Amazon pumped US$2 billion into India.
What’s new this year is the emergence of B2B (business-to-business) as a hot area for funding. This augurs well for Indian startups targeting global markets with software products. SaaS (software-as-a-service) startups had 83 deals worth US$435 million in the first nine months of the year Via techinasia.com
How India’s Dailyhunt rose from zero to 3 billion pageviews
Dailyhunt, a Flipboard-like news aggregation app targeted at Indians, is firing on all cylinders. Three billion monthly pageviews. And that excludes the home screen. It’s no wonder the Bangalore-based startup raised a US$40.5 million round from illustrious investors like Sequoia Capital and Matrix Partners. Dailyhunt’s numbers compare favorably with leading news aggregation app Flipboard, which had 2.5 billion monthly pageviews in 2014 but over 80 million monthly active users compared to Dailyhunt’s 22 million.
Dailyhunt has scored well not just among smartphone users in India. At the time of writing, it’s the number one news app in 19 countries, and top ten in five more, according to mobile analytics firm App Annie. These countries range from Asia to the Middle East, South America, and Eastern Europe. Via techinasia.com
India’s ecommerce market to breach $100 billion mark by FY20: Goldman Sachs
The overall online market, including travel, payments and retail, in the country could reach $103 billion, the US investment bank Goldman Sachs said in a report this month. The figure is a 27% jump from the $81 billion it estimated in May. The majority of this upward revision is contributed by the etail segment, which is estimated to reach $69 billion by FY20 compared with $47 billion earlier. For one, there’s been a strong push in the key ecosystem enablers for ecommerce growth. Bharti Airtel launched its 4G service in about 300 cities and Reliance Jio Infocomm is set to launch the high-speed data service in the fourth quarter. Via economictimes.indiatimes.com
Softbank expects to invest several billion dollars a year
Tokyo-based Softbank Group Corp. expects to invest “several billions” of dollars a year in promising start-ups and established businesses, as the Japanese firm seeks to expand into a global corporation and cultivate a future generation of leaders, a media report said quoting its chairman Masayoshi Son. According to a Bloomberg report, SoftBank is “searching for passionate entrepreneurs with good ideas who are targeting the right markets”, with the template being Alibaba Group co-founder Jack Ma, in which SoftBank holds a 30 per cent interest….
With this in mind, SoftBank is particularly interested in the market opportunities presented by India, a nation has seen a technological upswing in the last decade, generally dominated by a positive growth narrative. During a conversation with company president Nikesh Arora, SoftBank led investments of $627 million in Snapdeal.com, an Indian e-commerce provider, and $210 million in the owner of Indian taxi booking service Ola Cabs. Via dealstreetasia.com
Indian online retailer Myntra eyes $1b sales in 2016
Flipkart-owned online retailer Myntra is targeting to achieve $5 billion in gross merchandise volume (GMV) by 2018-2020 from current $500 million, according to an Economic Times report. The company plans to achieve $1 billion sales in 2016 and eyeing to have $5 billion GMV by 2018-2020, Ananth Narayanan, CEO, Myntra said in the report.
Narayanan, who was appointed in July this year as CEO, said, “my strategy, from January 2016 onwards, will be to keep fixed costs constant. With more scale, fixed cost absorption will become better.” Fashion e-tailer Myntra has private labels such as Roadster and HRX which contribute 20 per cent to total sales. Via dealstreetasia.com
Growth signal: seed stage funding sextuples in India
Bangalore had the highest rise in seed funding in the last three years among all the startup ecosystems in the world, showed research from US-based Compass (formerly known as Startup Genome) in its ranking of startup hubs released earlier this year. A report released last week by software industry body Nasscom prepared with the help of research firm Zinnov showed that the trend has only accelerated this year. The report estimates tech startup funding in India will cross US$6.5 billion before years end, significantly higher than last years US$5 billion, which included a billion dollar funding round for ecommerce behemoth Flipkart. Via techinasia.com
Start-up ecosystem is at a very, very nascent stage in India: Softbank’s Nikesh Arora
Alibaba has a GMV (gross merchandise value or cost of goods sold) of around $300-400 billion. No Indian e-commerce company comes close. My guesstimate is that the Indian e-commerce market is a $12-15 billion market now. India’s GDP is $2 trillion. If the economic winds shoot up and the $2 trillion grows at 1.7%, it doesn’t change the outcome of $12 billion because now people are purely opting for e-commerce for the convenience or the deals.
When you grow to $400 billion you get buffeted by the GDP growth more than when you are at $12 billion. The buffeting that is happening in China is happening because of general economic concerns and Alibaba being one of the bellwethers (in that country) from a commerce perspective. Hence, people from a purely mathematical perspective are projecting a lower growth rate and hence they are presuming that the valuation of the company will be lower than what was earlier anticipated. In the Indian context, it is too early for people to worry about the general economic landscape and its impact on e-commerce. First thing would be to take a share from offline and the second phase is going to be a significant share in GDP. Via dealstreetasia.com
IFC to invest $25M in BigBasket
International Finance Corporation, the private-sector lending arm of the World Bank, will invest around $25 million (Rs 163 crore) to pick up an undisclosed minority stake in online grocer BigBasket. This is IFC’s first known bet on India’s bustling e-commerce sector.
IFC said on Tuesday it will invest in Bangalore-based SuperMarket Grocery Supplies Pvt Ltd, the firm which is a wholesale products supplier to BigBasket and owns the brand. A separate firm, Innovative Retail Concepts Pvt Ltd, runs the BigBasket property under licence from SuperMarket Grocery. The ownership of Indian e-commerce firms that operate through an inventory-based model is typically structured in this way to confirm to regulatory norms. Foreign investment in Indian retail e-commerce is not allowed. Via vccircle.com
Rewards app Bounty gets seed funding from Fireside, others
The Bounty platform works by letting users earn rewards each time they check in at a Bounty-recognised business location. Medapati said that nanolocal commerce is about information that is predictive, real-time and contextual providing customers what they need at the right location, just in time. He added that brands need to personalize offers, services and experiences to suit a consumer to drives sales and that Bounty offers a platform for brands to reach out to consumers in a cost-effective way. Via vccircle.com
British telco New Call Telecom plans $300m investment in India
British telco New Call Telecom Ltd, one of the fastest growing residential telecom service providers, will invest $300 million in India to further strengthen and increase its presence in the country, said a report in PTI. The proposed investments will be spread over the next 12-18 months, a part of which will be used for acquiring some more companies in India.
In 2014, the company acquired India’s Nimbuzz, the instant messaging, voiceover-internet call and mobile ad services provider, boasting 210 million users globally. It recently bought India’s public Wi-Fi provider Ozone Networks. The startup deployed 2,000 public wi-fi hotspots in educational institutions, hospitals, and hotels across major cities of India. New Call also recently announced that it is in discussions with 12 more Indian companies with a view to acquiring further businesses over the next year. Via dealstreetasia.com
Jabong will be among the first Indian e-commerce firms to turn profitable: Nils Chrestin
Last year, we did €630 million ($688 million) in revenue and that is real revenue. India is interesting in that sense because a lot of companies are throwing a lot of GMV (gross merchandise value) numbers around and I have never seen somebody deconstruct them for the public. I think a lot of people don’t understand what real revenues are. Frankly, I can double my GMV tomorrow, but is it the right way of building a sustainable business? No.
We are in the growth phase where companies around us are investing in discounting and marketing. Now that is one way of gaining market share but that is not a sustainable way of building a business. Ultimately at some point, the e-commerce space needs to follow the patterns of the offline retail space where you have a full-price season and you have the end-of-season sale… there is no reason why that should not be the same. Via Mint
We need to simplify rules for investing in startup firms: Vinod Dham
In India, I am just delighted that some of us came here to start venture capital in 2005-06. Till that time, venture capital was still very nascent here. So four or five of us pioneered the idea of creating a serious ecosystem, and establishing a possibility for entrepreneurial type companies, where people can become successful and become millionaires.
In the 21st century, we have to take risks, create this new paradigm, and that requires a different mindset that’s why I am so excited. In India, VC is not just for the sake of it, but in India it is needed to be the third leg of the stool for the government to look at that to say 10 years or 15 years from now, 15 companies that came out of the thousands that were invested in have become the next multi-billion giants in India. It is going to happen. It is just a matter of time. Via retail.economictimes.indiatimes.com
That’s your update on cash back, e-commerce, technology and VC investments in India. If you like what you’re reading in the daily Cashback Industry News, don’t forget to subscribe. And, as always, this is your invitation to send along your story ideas, suggestions and observations on the industry.