5 key trends in the Indian startup ecosystem

Girish Gupta, angel investor, CEO, Kaolins Solutions, former Founder-Director, Rajasthan Venture Capital Fund, and Hot 100 2017 jury member, identifies the opportunities and challenges in the industry. By Satyaki Sarkar

Since its founding in 2002, Rajasthan Venture Capital Fund has raised three funds, combining together to create a corpus of Rs 465 crore under Girish Gupta’s leadership. Over 27 tech-based startups around the country have benefited from this corpus, along with invaluable mentorship from Girish himself. He has rich experience as a director on the board of several of these companies, ranging from logistics and IT to healthcare. Girish has 35 years of experience under his belt, of which 20 have been spent in project finance, and 14 in venture capital finance, primarily in the SME space. Currently, Girish is also the CEO of an angel investor group Kaolins Solutions, and sits on the Investment Committee of a seed fund. He lets us in on the key trends he expects to see in the Indian startup ecosystem in the near future.

1. Digital payment processing
“Payment processing is one of the areas that is sure to continue dominating the ecosystem, especially because of digitisation and demonetisation. Cash transactions are reducing to a bare minimum level and will soon become by and large obsolete. Growth in payment processing and digital transactions will lead to a completely standardised mode of digital payment that will be accepted nationally, and even penetrate the rural areas in time. This will lead to a huge benefit for the government as it will substantially reduce unrecorded money and transactions from the country’s economy and stop it from draining resources.”

2. Enhanced synergy between startups and think tanks
“Research organisations/experts will increase their interactions and relationships with startups, right from budding entrepreneurs in colleges to growth stage startups. The role of mentors will be more and more important in assisting early stage startups in improving their business models to achieve the break-even point early.”

3. Aggressive development of AI, AR, VR, and IoT
“Artificial intelligence (AI), augmented and virtual reality and IoT will also continue to develop aggressively, and it will get integrated into each and every sector. This will lead to improved performance and value creation in all industries. With a large number of startups working on creating unique AI-based solutions and services for businesses more and more automation will take place, which will require re-skilling of existing workers. Also, this will call for an increased number of trained professionals, who have expertise in using these cutting-edge technologies to drive success for a company.”

4. POCs needed to win investors
“Investors will be a lot more selective when it comes to investing in a startup. The recent trend of any and all startups securing funding will change, with measurable performance garnering more support, instead of idea stage startups. Startups may have to come out with a sustainable model to win the trust of investors, as a large number of startups have been closing down rapidly in recent times. The entrepreneurs will be required to work extensively on POC before they can hope to secure the funding.”

5. Consolidation in e-commerce
“E-commerce will undergo a consolidation, and while some existing companies will shut down, a number of mergers will also take place. There will be three to four big players in each vertical, be it travel, fashion and lifestyle, wellness, consumer goods, etc. Investors will look to combine and consolidate their investments, instead of being pitted against each other. A number of startups dealing with specific segments of the e-commerce sector will get merged with large players, offering a full bouquet of services; with everything from logistics and payment to supply chain becoming automated.” 

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