By Alok Bardiya, Director
There has been quite a bit of activity in India since last summer, starting with a new Federal government elected with a full majority (after 30+ years of coalition governments!). The new government has begun moving ahead with market reforms that are needed to transition India to its next cycle of growth. The stock markets have rallied and India is the fastest growing economy in the world – even the recent budget from the government brought in several policy changes that should help the startup and investor community.
The government is also driving specific initiatives that will add to the tech startup momentum in India. Under its “Digital India” initiative, the government is rolling out fiber connectivity to hundreds of thousands of villages and also plans to deliver government services on the mobile (e-governance). It’s not just about the government though. India, with its largely young population, has taken to the Internet and smartphones in a big way. There are 200M+ mobile internet users in India now (and 112M+ Facebook users)* and this number continues to grow. Many of these users are experiencing the internet for the first time via mobile device. This massive consumer base is driving the growth for a lot of startups. E-commerce is booming; digital wallets are adding a few million subscribers every month and many more consumer plays are scaling up….revenue models are getting proven and the conversation in the startup world in India will soon be about “p2p” – path to profitability.
At Cisco Investments we saw an increasing number of product startups coming out of India as an emerging trend and our thematic investment approach was largely based on this hypothesis. The momentum continues to grow with entrepreneurs, companies and VCs aggressively getting in to the Indian marketplace. Particularly, in the last six months there has been a big jump in VC investments with some committing to several hundred million dollars in single deals.
Cisco Investments has been very active, closing new investments and evaluating several others. We also announced a partnership with India’s leading accelerator, GSF, focused on opportunities in IoT/IoE. Our value is also in the strategic business partnership that we bring to the table. Covacsis, one of our portfolio companies, is a great example of this, where we have taken their transformational solution for the manufacturing floor and integrated it with our platforms.
If I put on my “futurist” hat, I believe that while B2C will continue to scale and likely see consolidation, B2B will also start gaining more traction in the region. Expect to see a lot more action around enterprise software type plays coming out of India. One caution though: the pendulum went a lot on the side of seed and early stage (pre-revenue) investment in India. But when it comes to post-revenue growth stages, money seems to be chasing a similar set of few players. Series A or post-seed money will thus be a test case for a large number of startups.
*Source: “Mobile Internet in India – 2014” by the Internet & Mobile Association of India (IAMAI) and IMRB International.