An Investor's Outlook on 2016 & the Start-up Ecosystem

By Dr. Apoorva Ranjan Sharma, Co-Founder, Venture Catalysts

Dr. Apoorva Ranjan Sharma, Co-Founder, Venture Catalysts

Venture Catalysts is India’s pioneer seed stage investment firm. It ideally invests $100,000-$250,000 in early stage startups in IoT, Artificial Intelligence, Education, e-Commerce and Retail domains.

Numbers, it is said, do not lie. Considering the numbers supporting the rapid growth that the Indian start-up ecosystem has embarked upon in the last couple of years, it will be tough to argue that stance. With more than 4200 start-ups and growing, India today is not only home to the third largest start-up industry in the world, but is also the fastest growing start-up community in the world.

However, as an investor and serial entrepreneur, what has delighted me the most is seeing the increased involvement from both the Indian as well as global investors in the country’s start-up landscape, especially during the early growth phases. India witnessed a 100 percent increase in the number of private investors and investment firms within the last year itself. Government initiatives such as Start-up India and Digital India have also received a warm welcome for their contribution in nurturing entrepreneurship in the country and raising the investor involvement. This growth in the number of participating investors drove the investments made into Indian start-ups up by 125 percent, bringing the total investment into the country’s start-up industry in excess of $5 billion.

That brings us to what is expected from the Indian start-up community in 2016, from the perspective of an investor. One thing that I am eagerly looking forward to is an increase in the number of start-ups which focus on technology and innovation as their key drivers. Indian start-ups, during the last couple of years, have made a name for themselves around the globe owing to their differentiated approach that leverages technology as an integral part of their service provision. As a result of this approach, Indian ventures have been gaining several awards and recognitions; vPhrase Analytics Solutions was recently named amongst the top 100 innovators in the world by the Royal Academy of Engineering, London, under its ‘Leaders in Innovation Fellowship’, while other ventures such as Crayon Data, which won TieCon 2014, and ClearTax, which was chosen for Y Combinator Summer batch of 2014 (YCS14), have also made their presence felt on a global scale.

This dedicated focus on technology has also led to strategic investments by leading international players, as can be seen by Google Capital’s investment in Girnar Soft, the parent company to leading auto portals such as CarDekho, BikeDekho, Zigwheels and Gaadi.com. With more and more start-ups looking at building an excellent technological framework that leverages artificial intelligence (AI), heuristic learning and adaptive self-evolving models, we will witness an increase in the country’s innovation quotient in 2016.

Another thing that both investors and entrepreneurs will be eagerly looking forward to is the on-ground implementation of the government’s Start-up India initiative. While the start-up blueprint that was outlined excited some with its progressive outlook, others were disappointed with what they considered to be a conservative approach that will make no tangible difference to the country’s burgeoning start-up segment. Without delving into the debate, it can safely be said that these steps herald a progress in the right direction, as can be witnessed by a renewed optimism within both the investment as well as the entrepreneurial community. I am very hopeful that once the measures are implemented, the start-up ecosystem in India will receive a much-needed boost to power the country’s push as the start-up hub of the world. We might even see foreign entrepreneurs and start-ups setting up operations within India as a result of this development.

Talking about specific industries within the start-up ecosystem, we can expect certain segments to really come to the fore as major contributors to the country’s economy. Tech-enabled logistics services is one such industry which has been stealthily rising in prominence; we are today seeing several start-ups which are competing in both last mile and long haul logistics segments and supporting the growth of other industries dependent on their services. AI, as mentioned above, will also be another keenly observed area of interest by the investors, as we see a rise in the number of ventures focusing on visual recognition, neuro-linguistic programming (NLP) and enabling technologies; their global appeal and massive scope of opportunity will appeal to the investors. Start-ups in the fintech and Security as a Service (SAAS) space are also expected to be on the rise, as are on-demand home healthcare services and diagnostic lab tests.

Speaking purely in terms of an investor’s outlook, I am expecting the investment industry to mix a cautious approach with heavier funding; investors will be more analytical in their investments, but will be willing to invest greater sums in ventures they find promising. This is good news for ventures which are looking to disrupt the sectors they operate in with their differentiated offerings, as these are the ones which will attract the most investor interest. We will also see more innovation platforms and early-stage support networks being established to assist the growth of the start-up industry.

All in all, investors have great expectations from the Indian start-up ecosystem, which is expected to continue setting new landmarks in its ongoing success story. The developments so far have been extremely positive – here is to hoping more of the same from the future!

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