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Enterprise Readiness of the Indian Startup Ecosystem, 2016


Enterprise Readiness of the Indian Startup Ecosystem

Contents Introduction................................................................................................................................................................ 2 Methodology ............................................................................................................................................................. 3 1.

A new paradigm in evaluating startups ............................................................................................. 3

2.

The E = mc2 technique ............................................................................................................................. 3

A periodic table view of the enterprise ready Indian startups: .......................................................... 5 Sector Overview ........................................................................................................................................................ 6 1.

Banking........................................................................................................................................................... 6

2.

Manufacturing ............................................................................................................................................. 8

3.

Retail and Supply Chain ........................................................................................................................ 10

4.

Healthcare .................................................................................................................................................. 12

5.

Security ........................................................................................................................................................ 14

6.

IT/ITES .......................................................................................................................................................... 16

7.

Media ........................................................................................................................................................... 18

8.

EdTech ......................................................................................................................................................... 20

9.

Data Sciences ............................................................................................................................................ 22

10.

Internet of Things (IoT) ..................................................................................................................... 24

Key Takeaways ....................................................................................................................................................... 26 Closing Thoughts .................................................................................................................................................. 28

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ŠMicrosoft


Enterprise Readiness of the Indian Startup Ecosystem

Introduction The last several years has seen tremendous activity in the tech startup space. The number of tech startups and the quality of the startup ideas and entrepreneurs matured dramatically. From a slow start in 2005 to rapid growth in 2015, India is the fastest growing ecosystem, and the arguably the 3rd largest startup ecosystem in the world. In 2015, Microsoft decided to take stock of the progress we had in the startup space and published it as a blog. The viewpoint of the blog was developed with the lens of funds raised. Not surprisingly, startups from ecommerce, consumer services and marketplaces dominated the growth stories, the mindshare and the numbers. We realized that in the nascent stage of the ecosystem, startups were being treated as an alternative solution to replicate US offerings in India. However, as the ecosystem evolved, startups started building unique solutions targeted at solving problems deeply embedded in the Indian landscape. Today, startups are building disruptive solutions that are not only addressing problems in India, but also solving issues globally. This time, we decided to take stock of a phenomenon which has been growing rapidly in the country – the enterprise – startup partnerships. Over the years, the need for digital transformation has created a demand for startup technologies across all sectors, lowering the entry barriers for the startups. However, during our conversations with enterprises and startups, we could see that the identification of a startup who has the product and team which can scale up as per the enterprise’s needs and deliver continues to be a challenge. In other words, determining the ‘Enterprise Readiness’ of the startup is the bottleneck. By the end of the process, we were able to identify the top 151 Enterprise Ready startups in the ecosystem today. Instead of evaluating startups solely on the basis of external validation i.e. funding, we decided to take in account the other non-funding factors. These include recognizing important VCs, analyzing incubators & accelerators, and looking at other catalysts in the ecosystem which, according to us, are clear indicators of startup maturity. With Microsoft Accelerator having received inbound interest from various sectors, we chose the top ones based on growth potential, complex tech solutions sought, and openness to innovativeness to arrive at a satisfactory, productive conclusion. An accelerated startup growth has led to emergence of challenges unprecedented in reach, volume, and complexity. Some of these include (a) Lack of technology-intensive solutions, as certain sectors such as Banking are hitting tipping points (b) Inexperienced local talent leading to acquiring skillsets and expertise from the Valley and (c) Unawareness of large-scale issues permeating the startup sector. This report, aims to deep dive into these sectors to take a stock of the speed at which startups are growing, understand complexity of issues these sectors are facing and analyze solutions that can address these hurdles. We hope this initiative will help the ecosystem to strategize on how to take it to the next level.

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Enterprise Readiness of the Indian Startup Ecosystem

Methodology 1. A new paradigm in evaluating startups Our research indicated that startups were being categorized ‘successful’ on the basis of funding. We realized that this trend could foster a biased perspective for evaluating startups as it doesn’t take into account a simple fact – that startups may choose not to raise funds; they may want to stay bootstrapped instead. Hence, we decided to move beyond funding as a measure of startup success.

2. The E = mc2 technique As we began to identify and analyze the most enterprise-ready startups in India, we were faced with a hurdle: How to define enterprise readiness of a startup? To put it simply, enterprise readiness can be defined as the level of efficiency a startup shows in handling multiple users with minimal downtime. It is dependent on three questions: 

Does it have enough customers? A huge customer base translates into greater confidence amongst enterprises while proving the viability of a startup. In addition, it also provides a ready list of references that can be called upon, allowing for an easier sell. Does it entail adequate support to run its business? Supporting any business requires extensive back-end help. For instance, it needs – ● An engineering team that helps develop new features ● A sales team that aids greater reach ● A product support team that deploys solutions at customers’ site ● And lastly, a support team that focuses on smooth operations The presence of all four elements signals sustainability of a startup. Can it scale up to meet increased demands? As a startup grows, it should be able to scale up by adding new features, products, or increasing headcount to support its commitments.

Once we defined enterprise readiness, the next question that presented itself was: How to quantify and measure enterprise readiness in a startup? For this, we systemized three signals that enterprises look for in a startup. This culminated into three measurable variables: 1. Customers: In the enterprise space, most startups highlight logos of key customers. So, a simple logo count should suffice. But since we were focusing on varied sectors, setting an absolute scale by logo count would not be accurate. While some sectors are open-ended, others are extremely closed. For instance, the banking sector has only 27 public sector banks and 30 private sector banks. Plus, 3|Page

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Enterprise Readiness of the Indian Startup Ecosystem

the only addition one can see in this sector is the entrance of payment licenses. When we compared this with the IT/ITES sector, we see a huge difference. We decided to adopt a relatively subjective scale of scoring a startup on a 3-point scale: Low, medium, and high (depending on customer traction). 2. Teams: The main challenge lies in identifying the team size of a startup. Therefore, we used the proxy of company size with the assumption that as startups grow, their overall team headcount would also increase, thereby boosting productivity. For example, a startup with company size of 50 will be more operationally robust than a startup of 30. 3. Scalability: A startup can scale up its operations in various forms. These include increasing team size, deploying greater products, scaling up Cloud consumption, etc. But all these factors have one common underlying element – money. All startups need money to scale up any aspect of business. So, we used a metric called Funding Velocity to measure scalability. In simpler terms, Funding Velocity is the amount of money raised over various rounds of funding. A high funding velocity signifies that the startup can raise significant funds in each round of funding. Additionally, Funding Velocity also indicates two critical points: a. Strength of a startups’ inherent basics such as products, technology, product market, team etc. Endorsing this belief are Venture Capitalists who think that if the inherent basics are in place, startups can get a substantial return. b. Level of dilution in its equity. This highlights the level of flexibility management extends in decision-making which, in turn, determines longterm profitability. Finally, we took inspiration from Einstein’s ‘General Theory of Relativity.’ We decided to model variables codifying enterprise readiness in the following manner: E = mc2 i.e. đ?‘Ź = đ?’Ž + đ?’„đ?&#x;? + đ?’„đ?&#x;? Where: E denotes enterprise readiness of a startup m denotes funding velocity of a startup which is calculated as: đ?’Ž=

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ŠMicrosoft


Enterprise Readiness of the Indian Startup Ecosystem

c1 denotes level of startup’s customer traction. It is calculated on the basis of a subjective score where, 1 = Low customer traction; 3 = Medium customer traction; 5 = High customer traction c2 denotes startup’s size that is defined as the interval mean of employees listed in LinkedIn. Using this formula, we ranked and categorized startups. In the quest of keeping it concise and accurate, we restricted our exercise to startups that are headquartered in India, founded post 2000. Note: As we take a macroscopic view of the Indian startup ecosystem, we are witnessing an interesting trend. Multiple startups were funded and founded in 2014 and 2015. However, that trend seems to have changed in 2016. We see this as a period of cyclic consolidation of the ecosystem. This has to be factored in when looking at the graphs in this report.

A periodic table view of the enterprise ready Indian startups:

This periodic table can be downloaded at https://aka.ms/entreadyindia

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Enterprise Readiness of the Indian Startup Ecosystem

Sector Overview 1. Banking India's banking sector is at the cusp of digital revolution. Driving this innovation is the SMAC technology (Social, Mobile, Analytics, and Cloud), that is transforming the way banks are operating in India today. Backed by rapid smartphone penetration, increased government focus, innovation-driven FinTech startups, and speedy acceptance of the IoT, the banking industry is moving from cash to cashless and from physical to online. In addition, alternative payments are emerging as the most sought-after medium, allowing consumers to spend pragmatically and save more. Over the years, financial institutions have been plagued with multiple challenges such as low bank penetration, rigid cash-driven mentality, authentication and security issues, lack of government initiatives promoting banking services, and absence of infrastructural support. In order to address these roadblocks, banks are working closely with FinTech startups to get hold of futuristic solutions and accelerate growth for core banking platforms. Some of these include:   

An Open API Artificial Intelligence-based customer service interface by RBS Bank and Luvo. Artificial Intelligence-based Chatbot apps by startups like Fluid.ai, CustomerXPS, and Niki.ai that prevent banking fraud in real-time. Software robots by ICICI Bank across 200+ processes, resulting in reduced response time by up to 60% and increased accuracy up to 100%.

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of Banking startups in India: ● Considering their high growth potential, Banking startups are able to considerable amounts of funding, which is driving accelerated growth for startups. ● Taking into account growth potential, these startups can also raise more funds in each round. ● Considering scope of banking operations, startups have built robust in-house systems to support customer interactions ● While there is a lot of demand for banking solutions, regulatory challenges hamper prompt adoption of startup solutions.

b) Top FinTech startups: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Startup Mswipe TechProcess Solutions (Formerly BillJunction) BillDesk Fintellix (Formerly iCreate) Ezetap Paymate India Transerv itzcash MobiSwipe JUSPAY Razorpay Paynear Chargebee Zaakpay ToneTag Mosambee FortunePay Newgen Payments

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Enterprise-Readiness Score 67.93 65.71 62.67 53.93 51.67 50.01 48.10 47.91 47.48 46.35 46.33 45.72 42.77 41.76 41.76 41.29 41.29 40.91

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Enterprise Readiness of the Indian Startup Ecosystem

2. Manufacturing Automation is becoming a change-enabler for the high-volume Indian manufacturing industry. At the forefront of this pivotal phase is technology-enabled mechanization that helps companies scale up without additional hiring, thereby reducing the need to rely on people to get routine work done. In addition, government programs like Make In India and Startup India are boosting investment, promoting manufacturing, and aiding cutting-edge infrastructure. This is further being reinforced by the emergence of IoT-driven technologies. Over time, several factors have contributed to the stagnant growth of manufacturing industry. These include decreased investment, outdated technology, growing attrition, and poor infrastructure. However, the advent of inventive automated technologies and accelerated IoT adoption is leading to ground-breaking innovations in this sector, such as: ● India's first 'smart' two-wheeler – S340 E-Scooter by domestic hardware startup, Ather Energy ● Car monitoring devices – SmartPlugs by CarIQ offering real-time car health alerts, speeding/geo-fence alerts, roadside assistance, etc. ● Connected processors by iBot that help manufacturers convert physical products into subscription-based services ● IoT products by Altizon Systems providing real-time alerting and monitoring services

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of Manufacturing startups in India: ● Startups are using automation to deliver operational expense savings to customers. This results in relatively smaller teams and higher customer traction. ● Funding for startups is in line with customer traction. ● Manufacturing is one of the few sectors with high potential for growth, resulting in greater funding velocity.

b) Top Manufacturing startups: 1 2 3 4 5 6 7 8 9 10

Startup Grey Orange Ineda Systems ConnectM ArkRobot Maven System Securifi Embedded Systems Altizon Systems SmartVizX Nimble Wireless LogicLadder

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Enterprise Readiness Score 100.00 76.14 66.05 51.65 50.88 50.88 48.79 44.15 44.15 43.45

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Enterprise Readiness of the Indian Startup Ecosystem

3. Retail and Supply Chain E-Commerce has seen an unprecedented rise over the last few years. Consequently, so has logistics. According to Novonous, India’s logistics industry will grow at a CAGR of 12.17% by 2020. The primary drivers of this surge include disr uptive technological solutions such as automated warehousing services, inhouse logistic arms, increased connectivity due to IoT, and P2P shipping at lower costs. However, the industry is still suffering from wide-ranging problems such as low production, faulty infrastructure, delivery and storage issues, and decreasing margins. This, in turn, leads to rapid downsizing. To fill in these gaps, startups are transforming the logistics and delivery ecosystem by push ing the envelope through extraordinary innovation. The emergence of intra-city logistics and technologyenabled hyper-logistics is proof of the same. Some of these modern startup solutions include: ● Tailor-made offerings for retailers and small sellers by Delhivery ● IoT-integrated products such as LogiNext Mile, LogiNext Haul, LogiNext Force etc. by LogiNext that help locate resources, plan routes, and view analytics in real-time ● Comprehensive delivery services such as real-time coordination, job execution, and customer requests on a mobile platform by FarEye

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of Retail & Supply Chain startups in India: ● While there is greater automation and analytics-based optimization driving startups in this sector, there is also a sizeable human element to the process; necessitating a large workforce to cater to customers. ● It has a high growth potential resulting in higher level of funding. However, investors are relatively cautious resulting in a low funding velocity. ● There is an increased demand for startup solutions, but the operational challenges are extremely complex. This is why customer traction is moderate in this space.

b) Top Retail & Supply Chain startups: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Startup Ecom Express Delhivery Rivigo BlackBuck GoJavas Grofers Trucking Cube Xpressbees Boomerang Commerce Unicommerce eSolutions StoreKing Runnr (Previously RoadRunnr) Holisol logistics CloudCherry LogiNext Solutions Opinio OfBusiness Connect India Shadowfax Snapbizz

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Enterprise Readiness Score 82.31 81.96 62.98 57.61 54.86 51.07 50.26 49.33 47.45 47.28 46.47 45.90 44.35 44.23 44.04 43.94 43.83 43.67 43.42 43.16

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Enterprise Readiness of the Indian Startup Ecosystem

4. Healthcare Health-tech is fast emerging as the new buzzword. And for good reason. According to Equentis Capital, the Indian healthcare sector is expected to grow at a CAGR of 15% by 2017. Due to new-age startups bestowing health-related information into everyone’s hands, people now have access to smart health services. There are several factors propelling this development, such as increased access to quality, online healthcare (Telemedicine), digitization of healthcare services, and greater awareness of personal well-being and specialty care. However, the ground reality is not as growth-affirming as it should be. Even though private and public companies are launching initiatives to improve services, the sector is struggling with rigid policy frameworks, inferior infrastructure, lack of engagement tools, and limited access to diagnostics and consultation across the country. Naturally, it presents startups with a huge opportunity to innovate – which is exactly what some Health-tech startups are doing: ● Practo has been acquiring a host of startups to deliver varied services such as Fitho for holistic wellness, Insta Health for medical records and management, and Qikwell for appointment booking ● Praxify is India’s first Cloud and iPad-based app that allows easy appointment scheduling and access to digitized patient records ● DailyRounds is a social networking platform that facilitates communication amongst doctors for productive discussions and easy case-sharing ● HealthifyMe is a free app that enables users to keep a track of calories, set personal fitness goals, and measure progress

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of Healthcare startups in India: ● Demand for healthcare startup solutions is limited by two main factors. One, most solutions continue to be consumer-focused, rather than enterprise-focused; and two, regulatory challenges hamper the adoption of these startup solutions. ● Healthcare startups have a relatively high consumer focus but they don’t cater to all enterprise-related functions in-house. Hence, this leads to moderate employee strengths in this space. ● Consumer-facing aspect has soaked maximum funding in this sector, thereby reducing the amount of funds enterprise-focused startups can leverage. ● A low funding velocity is a function of low fundraising as seen in this sector.

b) Top Healthcare startups: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Startup Practo & PractoRay Celon Laboratories Medgenome Labs MphRx Strand Life Sciences Attune Technologies Ecron Acunova Leixir Resources Pvt. Ltd Cellworks Research India Ltd StridesSoftware Forus Health Pvt. Ltd HealthHiway UE LifeSciences Vyome Biosciences Mitra Biotech Pvt. Ltd Wrig Nanosystems Groupe Athena Instahealth Mapmygenome India Ltd Perfint Healthcare

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Enterprise Readiness Score 73.33 70.13 55.34 52.65 50.74 50.74 50.44 48.34 47.41 40.47 47.22 46.94 44.53 44.06 43.76 43.45 43.36 42.16 41.89 41.87

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Enterprise Readiness of the Indian Startup Ecosystem

5. Security With the explosion of financial services and E-Commerce, security startups are booming in India. Armed with premium services such as low-cost solutions, greater support, faster turnaround, and increased flexibility, security startups are enjoying accelerated adoption by various organizations. However, like most successful businesses, this sector also needs to constantly evolve to keep up with the dynamic environment. The need for innovation is particularly high due to long development cycles, rising corporate fraud and security breaches, increased cyber-attacks, and frequent data leakage. To tackle these threats, startups are solving specific problems as opposed to their MNC counterparts which provide generalized, non-customizable solutions.

Some of these next generation security solutions comprise: ● InfiSecure detects and blocks online security threats and addresses all aspects of website security, including bot protection, click-fraud protection, and fake traffic prevention ● Aujas, an analytics and visualization platform, helps organizations manage information security risks by streamlining identity management, safeguarding proprietary data, and meeting compliance requirements ● Pawaa Software helps organizations send files that can't be copied, saved, forwarded or printed using the company's software ● FRSLabs comprises a patented system for detecting fraud, especially for high-risk domains ● SignEasy is a Cloud-based mobile application that enables businesses to sign documents legally using smartphones and tablets thereby eliminating paperwork

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of Security startups in India: ● Being one of the few sectors addressing a broad bouquet of industry verticals, it attracts more number of users, leading to increased customer traction. ● Security domain has high potential for growth resulting in higher funding velocity. ● There’s a greater need to develop robust teams that can deliver promised values to customers. ● While security startups have high customer access, the funding is still relatively low as most of them occur in Israel and the US.

b) Top Security startups: 1 2 3 4 5

Startup Paladion Seclore Aujas Networks Uniken CryptoPhoto

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Enterprise Readiness Score 100.00 82.74 71.07 52.99 48.34

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Enterprise Readiness of the Indian Startup Ecosystem

6. IT/ITES For over a decade, India’s IT/ITES industry has played a monumental role in shaping digital advancements across the world, and has been primarily responsible in bolstering the Indian economy. Growing success in specialized cuttingedge technology products, solutions, and services are once again helping businesses reinvent themselves and put their best foot forward. Advances in SMAC and Cloud technology are helping IT/ITES industry address challenges such as high operational costs, lack of innovative technology solutions, substandard customer service, ambiguous time-to-deployment, and product rigidity. In turn, businesses are able to define what end-customers want and also increase profitability by reducing time-to-market. Tech startups, with their deep expertise in specialized fields, are wired – strategically and operationally – to know beforehand which value will be most beneficial to businesses. By using digitization, mobile, social media, and other platforms, startups are able to infuse innovation into every project and offer customized solutions, driving competitive edge in this very dynamic scenario. Some of these innovative solutions include: ● Multi-channel customer support platform that enables customers to connect with brands via built-in phone and live chat facilities developed by Freshdesk ● An intelligent Cloud-based suite that offers end-to-end Omni-channel customer engagement by Capillary Technologies ● Innovative, highly configurable contract management system developed by Icertis ● Mindtickle’s sales readiness platform for onboarding, product training, and coaching with multiple integrations

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of IT-ITES startups in India: ● IT-ITES startups are able to find customers with ease since it is a relatively commoditized space and can cater to a broad base of industry verticals. ● Combination of low employee counts and high growth potential has pegged the funding for this sector at a moderate level. ● Relatively low fund-raising initiatives in this sector contributes to a moderate funding velocity. This sector is built on the premise of providing lowcost services, thereby driving automation and reducing employee headcounts.

b) Top IT-ITES startups: 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Startup Freshdesk Capillary Technologies Icertis Helpshift Vizury Arkin Net Knowlarity Vserv Ameyo Drivestream Mindtickle Indix Reverie Lets Corp

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Enterprise Readiness Score 100.00 98.23 75.88 74.12 72.09 68.62 68.30 64.51 61.98 61.98 61.42 58.26 53.46 52.27

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Enterprise Readiness of the Indian Startup Ecosystem

7. Media The Indian Media industry is progressing towards innovation-driven tech platforms, advertising mediums. With digitalization and automation being the game-changer of the century, traditional mediums are transitioning into newer forms such as mobile advertising, banner ads, and the much-talked social media marketing. This increases advertising revenues as well as the customer demand in the industry. High Internet usage has resulted in a key challenge for media – keeping up with popular market trends and social media analytics. Rampant globalization and digitization has further intensified competition and led businesses to find newer markets.

In order to meet these challenges, the Indian media industry is turning to new-age startups for ground-breaking solutions, such as: ● Personalized mobile advertising to acquire long-term customers by InMobi ● Optimization of advertisement layouts to increase revenue from existing ads by AdPushup ● Targeted advertising solutions and smart monetization for TV, broadcast, and OTT platforms by Amagi Media Labs ● Growth techniques to boost app installs and engagement by AppVirality

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of Media startups in India: ● Media startups address a profitable combination of high growth prospects and low employee costs, making it a moderate funding sector. ● These startups are consumer-focused resulting in relatively lower enterprise customer traction. ● It has small-sized teams since it is high on automation and thrives on analytics-driven content delivery. ● While there is decent growth potential, investors are relatively cautious resulting in low funding velocity.

b) Top Media startups: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Startup Inmobi Amagi Media Labs RevX Touchfone Kulzy AdWyze AppVirality AdPushup Wigzo Adsparx Simpli5d Vertuals Vidgyor Frrole TommyJams Visarity

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Enterprise Readiness Score 100.00 50.61 45.72 42.89 42.43 42.43 41.74 41.68 41.67 41.66 41.45 41.45 40.81 40.39 40.37 40.31

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Enterprise Readiness of the Indian Startup Ecosystem

8. EdTech Startups specializing in learning technology and programs are currently booming in India’s corporate space. With increased Internet connectivity and PC/smartphone penetration, EdTech startups can now offer training solutions to wide-ranging companies. These startups provide disruptive solutions such as interactive digital content, Massive Open Online Courses (MOOCs), and online personalized tutoring – thus becoming the preferred choice of large corporations such as KPMG, HP, and Edelweiss. EdTech companies have also carved a niche for themselves in primary and secondary education. However, one of the key challenges for these startups is providing an alternative to India’s largely unstructured, substandard education. With the rise of new-age sectors such as digital filmmaking and Cloud technology, startups have to cover for the lack of specialized courses and tutors in these areas. Another major roadblock in the industry is low access to virtual learning technologies – a prerequisite for every sector. To conquer these obstacles, EdTech startups are charting new territories with quality education and training solutions. Some examples are: ● Experiential learning products and customized content for corporates by Knolskape ● Learning programs for new-age sectors such as Cloud technology and digital filmmaking by iNurture ● Swiss vocational and education programs for companies and training institutes by SkillSonics India ● Corporate courses and training through diverse mediums such as web, instructors, virtual classrooms, E-tutoring, and podcasts by Liqvid

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of EdTech startups in India:

● Considering the market size, EdTech has a high growth potential, which results in a high funding velocity. ● EdTech has a relatively low customer score since its primary focus continues to be in the consumer space, coupled with a limited offering set for enterprise customers. ● Since enterprise-focused EdTech is a relatively immature space, it has limited ability to raise funds and has low employee strength.

b) Top EdTech startups: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Startup Global Talent Track K-12 Techno Services iNurture 24x7 Learning SkillSonics India LIQVID WizIQ Karadi Path Education Company Pvt. Ltd Knolskape Harness Edutel Technologies Pvt. Ltd Impartus Innovations Foradian Embibe Jigsaw Academy Edutor

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Enterprise Readiness Score 92.74 91.45 78.03 65.22 61.77 60.06 60.05 58.26 57.48 56.61 54.90 52.40 51.45 48.44 46.72 46.64

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Enterprise Readiness of the Indian Startup Ecosystem

9. Data Sciences With the capability to help organizations make better decisions across all verticals, Big Data has proven to be the future of business development. In the past, analytics was isolated from everyday business operations and decisions, limiting its true value. However, with the emergence of a niche analytics community that is transforming decision-making, the scope of Big Data is all set to change. The inability to sift through terabytes of data efficiently have historically kept businesses from making informed decisions. Transparency of data analysis processes, reliability of information sources, and high cost of data analysis are also major contributors. But analytics companies have now developed robust tools with enhanced features and easy data consolidation capabilities that can process valuable insights quickly. This technology, combined with SaaS business models and cost-effective infrastructure, has facilitated large-scale market penetration. Today, data science startups are solving a wide range of problems with datadriven solutions such as: ● Social media intelligence to monitor and analyze virtual conversations in real-time by Germin8 ● Intelligence-led cyber solutions to detect active threats to organizations by Antuit ● Analysis of machine-generated data to uncover hidden insights for global oil and gas corporations by Flutura ● Evaluation of data from news sources across the globe to gain financial market insights by Heckyl

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of Data Sciences startups in India: ● Data Sciences startups are able to find customers with ease since they cater to multiple industry verticals. ● These startups use machine learning algorithms to maximize output, thereby limiting employee strength to deliver value to customers. ● Considering the relatively low amount of funding needed to develop machine learning solutions, the funding score is low. ● Due to low funding requirements in this sector, the overall funding velocity is also low.

b) Top Data Sciences startups: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Startup Antuit Manthan Systems Fintellix Solutions Spire Technologies Hansa Cequity Sapience Unmetric Sokrati Germin8 IntelligenceNODE Cians Analytics Peel-works InterpretOmics Heckyl Textual Analytics Solutions Dataweave Affine Analytics Flutura BRIDGEi2I Indus Insights

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Enterprise Readiness Score 84.47 77.01 65.58 61.27 63.22 56.64 53.61 53.54 50.14 49.04 48.67 48.67 44.46 44.43 45.00 44.93 44.68 44.68 44.68 44.57

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Enterprise Readiness of the Indian Startup Ecosystem

10.

Internet of Things (IoT)

Today, IoT has moved far along the path of becoming a mainstream technology – machine-to-machine interaction is a thriving trend that finds application in almost every sphere of our lives. IoT is now the backbone of the information society. In fact, experts estimate that approximately 50 billion objects will be IoT-integrated by 2020. Clearly, the emergence of futuristic communication technologies like ZigBee, 5G, and Fiber have directly sped up IoT adoption. Additionally, the advent of data sciences like Big Data has empowered systems and processes to be more robust and efficient. While being a productivity enabler in any field of work, IoT too, has its own set of pitfalls. Some of which include how companies can gather data and ensure its optimal usage. Realizing the sector’s incomparable potential, there are new players joining the IoT revolution every day. Thus, the creases caused by IoT’s scope are being ironed out through innovative startups such as: ● ● ● ● ●

IoT-integrated connecting machines by iBot Intelligent Power Management in mobiles, PCs, and data centers by Vigyanlabs Power-efficient devices that adapt to user habits and lifestyle by PluggX Smart cars which provide driving-related data by CarIQ Mobile electrocardiographic diagnosis tool by LifePlot

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Enterprise Readiness of the Indian Startup Ecosystem

a) Growth of IoT startups in India: ● IoT has the lowest customer acceptance because of two reasons. One, technology is still maturing, and two, communication platforms that enable broad-based technological adoption are still underway ● It is driven by two factors. One, ever-evolving technology and two, dynamic communications platforms that enable broad-based adoption of these technologies. Since this sector is now reaching a maturity level, robust solutions are increasingly being deployed. ● Factors such as presence of engineering teams and limited funding dominate these startups because of its ever-evolving nature. ● This sector is fit for high funding velocity as it has a high growth potential.

b) Top IoT startups: 1 2 3 4 5 6 7 8 9

Startup iBot Smartron VigyanLabs FlamencoTech KlickH Pluggx Labs CloverBoard Mindhelix CarIQ

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Enterprise Readiness Score 60.42 48.61 46.87 46.87 33.53 33.53 33.53 33.32 32.07

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Enterprise Readiness of the Indian Startup Ecosystem

Key Takeaways The heat map below gives a single screen view of the enterprise readiness of the startup ecosystem in India.

Sector

Average Customer Score

Average Employee Strength Score

Average Funding

Average Funding Velocity Score

Average Enterprise Readiness

Banking Data Sciences EdTech Healthcare IoT IT-ITES Manufacturing Media Retail & Supply Chain Security

1. Healthcare and Banking are Leading the Digital Transformation Almost 50% of enterprise-ready startups belong to Healthcare, Retail and Supply Chain, and Banking sectors. Driven by optimization, these sectors have emerged as the biggest adopters of enterprise technology solutions. While high technological penetration in Banks and Retail businesses has led to increased customer traction and satisfaction, increased application of machine learning and Data Sciences is helping medical companies attract customers and make deeper technological penetration across domains. Dynamic sectors such as Banking, Healthcare, and IoT are most receptive to startup solutions, as determined by the percentage of enterprise-ready startups in this space. With rising digitization, deep technology companies are playing a pivotal role in empowering corporates to build innovative solutions that address complex business requirements and promote customer engagement.

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Enterprise Readiness of the Indian Startup Ecosystem

2. Demand for Data Sciences, IT/ITES, and Security is on the Rise Data Sciences, IT/ITES, and Security startups attract maximum customers as reflected in the high customer scores in these sectors. This growth is further accelerated by the presence of a broad customer base that these startups can address natively. Technological disruption has also helped businesses build deep expertise and position themselves uniquely.

3. Banking, EdTech & Security get more Investor Attention Versatile and dynamic startups such as Banking, EdTech, and Security can raise the highest funds as seen by their funding velocity scores. While banking is evolving and continues to find newer ways to connect with customers, startups in the enterprise space are building platforms that enable creation and delivery of customized content for corporates in India. Banking, Retail and Supply Chain, and Media startups have been able to raise the highest amounts of funding as these startups are at the forefront of digital transformation. With 1 billion smart phone subscriptions and digitized Aadhaar users, there is tremendous scope to scale up and draw greater funding.

4. Data Sciences, IT/ITES, and Media have the nimblest company structures Startups are known for their agility and nimbleness when it comes to reacting to market and customer situations. They have very low inertia in terms of their ability to change directions and pivot as needed, and this is a function of their small sizes. In these terms, Data Sciences, IT/ITES and Media startups are the nimblest, since they operate on very lean team sizes to keep their costs low, and which also enables them to price their offerings at very competitive terms.

5. Retail & Supply Chain & Banking have the strongest company structures Considering the markets they are serving, Retail & Supply Chain, Banking and Security startups have very high manual interventions in their offerings. This has necessitated that the startups have sizeable teams in order to scale their businesses. In addition, as team sizes grow, there is also an increased need for various support functions like HR & Finance, which only adds to the company size.

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Enterprise Readiness of the Indian Startup Ecosystem

Closing Thoughts This study of tech Indian startups has been quite an interesting exercise for us at Microsoft Accelerator. We approached this exercise with apprehension as to whether we would find enough tech startups in the India, especially startups that catered to the enterprise customers. We were pleasantly surprised to find respectable number of startups that met our criteria and were building interesting solutions. Not only has India emerged as the third largest startup ecosystem in the world, but the tech startup landscape shows tremendous potential in terms of revenue growth, business stability, and disruptive creation.

This is Just the Beginning However, the absolute numbers compared to some of the other startup ecosystem are sobering. The journey has just begun. Enterprise-ready startups are still far from maturity for two primary reasons – one, we are building solutions that are addressing surface level problems and two, we haven’t yet unlocked our ability to scale and grow these startups. Our findings indicate that it will take at least five to seven years for the tech startup ecosystem to fully mature. The maturation of this ecosystem will depend of getting mature entrepreneurs taking on larger problems (especially those found in India) that pose challenge in scale, cost structure and distribution. Such solutions will draw upon not just our technical talent but also talent in areas such as product management, operations, marketing and sales.

Even Traditional Businesses want Digital Transformation Our research shows that contrary to popular belief, the most conservative sectors (such as BFSI) are embracing startup solutions more openly than others. This should inspire other sectors to also open up to finding solutions from startups. The enterprises are coming to the realization that the rapidity of changes in the business environment can no longer be addressed by incremental changes from traditional vendors, but with help from small and nimble startups.

India Needs to become more Startup Friendly While the Indian government has made a good start with initiatives under Startup India, Make in India and Skill India programs, the lack of sufficient infrastructure, both hard and soft, continue to be impediments to starting up and scaling up. A complete digitalization of the startup process — from setting up the company to tax registrations — can bridge these infrastructural gaps, operational delays, and sustainable growth.

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Enterprise Readiness of the Indian Startup Ecosystem

According to a report in Inc42, 90% of Indian startups prefer getting funded by foreign venture capitals, as funding from domestic investors is treated as taxable income. Clearly, when it comes to regulatory and infrastructural readiness, there is a need to revisit the country’s norms. Lack of clarity and uniformity in tax incentives continue to blur the agility that startups need in their rapid evolution phase. Simplicity in tax structures, bold regulatory policies – self certification for example – and a centralized tax information portal are some of the areas that can transform the regulatory landscape in the favor of startups and investors, domestic and international. While the startups and investors continue rapidly up the maturation trajectory, enterprises can be trump card for the Indian startup ecosystem. They can source disruptive solutions from startups. As competitive pressure transforms the business landscape, there’s a growing need to look for alternative, cost-effective solutions – ones that startups can provide with faster turnarounds. At Microsoft, we believe that in order to fast track startup growth, we not only Success Government need to draw upon existing technology • Sustainable, • Enforce startuprevenue-generating friendly regulatory but also unlock the potential of business reforms promising, emerging technologies. One way of doing this is through Think Startups Corporates Tanks and innovation forums that are • Create disruptive • Define business solutions problem designed to help leverage the expertise of seasoned entrepreneurs and new Think Tank & entrants. The Microsoft Accelerator – a Incubators • Facilitate conducive, co-innovative, and innovation-driven ideas collaborative program brings corporates and startups together to address development pain points from the ground up and build solutions collectively. India’s potential to produce disruptive solutions lies in the hands of all three dynamic change-agents – startups, corporates, and the government. This report was an initiative aimed at understanding these innovationdrivers and speeding up the startup metamorphosis. After all, it’s not just about curating ideas, it’s about bringing them to life.

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Enterprise Readiness of the Indian Startup Ecosystem

Credits Project Head

Ravi Narayan Global Director

Contributors

Ashwini B. S. Program Manager

Abhishek Bajaj Manager, Marketing

Data Source

Tracxn

Research Partners

ResearchFox

Creative Partners

Pink Lemonade

ŠMicrosoft

Enterprise Readiness of the Indian Startup Ecosystem, 2016  

A deep dive into the various sectors and technologies that are driving enterprise adoption of tech startup solutions, insights on 7 industry...

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