Page 1


Evolution of Indian IT Industry from a local hardware manufacturing model in a closed economy to a globalized IT services model in a liberalized economy.

Evolution of the ďŹ rst generation Internet companies and the genesis of the second generation of entrepreneurs, who showed that companies can be built on internet with strong

business

models,

democratizing

various sectors & igniting a new are for entrepreneurship

Evolution of the organizations that anticipated the market needs, whose focus was to develop top notch products and build a world-class ecosystem to enable the growth of next generation product companies

Evolution of the supportive environment that facilitated the establishment of new, innovative organizations across the country, which gained spectacular valuations and global recognition, leading to overall growth of the ecosystem

01


Content Table of Content 1. Preface........................................................................................................................................................................................................................ 03 2.0 Introduction............................................................................................................................................................................................................ 04 2.1 Software Services and Global Delivery Model................................................................................................................................ 05 2.2 The Dotcom era.......................................................................................................................................................................................... 09 2.3 Rise of Product startups............................................................................................................................................................................12 2.4 Growth of startup ecosystem..................................................................................................................................................................15 3. Conclusion..................................................................................................................................................................................................................18 4. References.................................................................................................................................................................................................................. 19 5. Credits..........................................................................................................................................................................................................................20 02


Preface

1980s

1990s

2000s

2010s

In the 1980s, India was recognized for commodities like cotton, jute or spices and was regarded an exotic land far removed from global path of progress. In contrast, today India is a powerhouse of Software and Information Technology capabilities. The size and nature of change of India’s image and relevance in today’s economy is indeed enviable. The interesting thing about this sea change is that it happened not too long ago, and it happened around us. It is possible that each one of us has known the organizations, people and events that we refer to in this ebook. As one of the contributors to the startup ecosystem in India, Microsoft Accelerator, decided to take a bird’s eye of the developments, and the view is breathtaking. In four decades the progress in IT and entrepreneurship has radically changed the landscape offering new entrepreneurs unmatched opportunities.

Today

03


Introduction Technology entrepreneurs in India are building world-class startups, attracting global investors in large numbers and creating their fair share of unicorns! It is a historic juncture for Indian tech startups as they are poised to take on larger problems and enter the global stage. Sharad Sharma, co-founder of iSPIRT, says that “entrepreneurs in the Silicon Valley built products for the 1 st Billion people on the planet, India is poised to serve the next 6 billion people!�

24 h Global Delivery Model

.com

Ecosystem & Unicorn

Products

Chronicling the history of an ecosystem is never easy. This exercise involved several man-hours in perusing hundreds of documents, research papers, newspaper articles and deliberations. Conversations with many technology and startup stalwarts like Sharad Sharma (Co-founder and Governing Council Member, iSPIRT Foundation), Ravi Gururaj (Chair - Product Council & Member - Executive Council, NASSCOM), and Bharat Goenka (Managing Director, Tally Solutions) helped us go deeper into this research. We began by delineating major milestones in last several years of the journey and understanding its impact. As we analyzed, we came up with four distinct phases of growth and maturity that we have traversed so far: Software Services and Global Delivery Model The Dotcom era Rise of Product startups Growth of startup ecosystem 04


Software Services & Global Delivery Model

24 h Global Delivery Model

Pre-1978 1978

Hinditron, TCS, Datamatics, DCM, HCL and Patni founded

Minicomputer policy announced

1979 1980

Softek founded Sondhi Committee Report released

Wipro forayed into InstaPlan Microsoft released XENIX OS

1981

Electronic Commission accepted Rajaraman’s committee report

Wipro sold 8086 based minicomputer i.e. Wipro 86 series

GDM started as body shopping

TRDDC setup

1982

Infosys and NIIT founded

Asiad Games computerized

1983

MAIT established

Bank unions agreed to limited computerization in public sector banks

1984

Wipro Systems Limited founded

Computer industry was liberalized Railway passenger reservation project was given to CMC by the Railways Rangarajan Committee report on bank computerization released CDOT setup Citibank setup software development unit– Citibank Overseas Software Ltd. (COSL)

1985 Texas Instruments entered India and setup first R&D center Infosys banking product launched Indian companies came out with their own versions of UNIX OS

The Indian IT Industry owes its genesis to institutions such as IITs and the IISc, where the faculty groomed the minds of the key people who developed the Indian IT Industry. The initial crop of completely new field called computer science, went on to build companies like Hinditron, TCS, Datamatics, DCM, HCL, and Patni, where they got the first taste of developing software to meet global software development requirements, thus laying the foundation of the IT services industry. In the mid-1970s, entrepreneurship in the IT Industry was not readily welcomed. However, the Minicomputer Policy in 1978 and the Sondhi Committee Report in 1979, broke the barriers and encouraged new players to venture into the industry. This allowed private industry to manufacture peripherals and computers, and broke open the public sector monopoly. Computers became more accessible to corporations and affordable enough for a select few who were passionate about this field to start their own businesses. By 1980, Unix had become a global sensation and in the United States, IBM collaborated with Microsoft and released a PC with XENIX OS (Microsoft version of Unix), which could be regarded as the first successful PC-based Unix and brought a software product trend globally. 05


Software Services & Global Delivery Model

24 h Global Delivery Model

1986 ERNET project started with UNDP assistance VSNL established to improve overseas comm. and MTNL to operate telephone services in Mumbai & Delhi Project IMPRESS initiated to computerize Indian Railways reservation of tickets A lot of Joint Venture came into picture Hinditron‐DEC, HCL‐HP & PSI‐ Honeywell-Bull

1987 Indian Banks’ Association agreed with Bank Unions to computerize standardized use of UNIX Satyam founded Texas Instrument started the revolution of “off shore” software development with a link to their Dallas office

1988 1978

Centre for Development of Advanced Computers (CDAC) established

National Association of Software and Service Companies (NASSCOM) established Excise duty exemption was provided for software The Indian IT industry crossed the Rs 500 crore mark and it showed an average growth rate 25%

1989 Bell Labs got its first satellite link for software development Datamatics used satellite link to the USA to export software first time VSNL setup 64 Kbps link to the USA HCL took over IDM

1991 1978

VSNL launched gateway for email services Infosys began formal in-house centralized training for fresh engineering recruits and established E&R India defaults on IMF loan and is forced to liberalize International Informatics Solutions (IIS) was the first Indian company to get ISO 9001 quality certification

1992 IBM re‐entered India through a JV with Tata group MASTEK went public

Concurrently, Indian companies began the export of software services by primarily sending software engineers to client sites. As the work being done by software engineers at client sites started to get standardized, the IT companies of that time started to develop the software locally in India, anddeliver the software to clients onsite. This eventually transformed to what we now refer as the Global Delivery Model (GDM). By 1980, Unix had become a global sensation and in the United States, IBM collaborated with Microsoft and released a PC with XENIX OS (Microsoft version of Unix), which could be regarded as the first successful PC-based Unix and brought a software product trend globally. Concurrently, Indian companies began the export of software services by primarily sending software engineers to client sites. As the work being done by software engineers at client sites started to get standardized, the IT companies of that time started to develop the software locally in India, anddeliver the software to clients onsite. This eventually transformed to what we now refer as the Global Delivery Model (GDM). Over the next 3 years, there was a massive upsurge in the use of computers due to events such as computerization of the Asiad Games, railways and that of the banks. 06


Software Services & Global Delivery Model

24 h Global Delivery Model

1993 1978

Import of software packages was allowed on regular duty Motorola India became first company in the world to get CMM level 5 certification for software quality Infosys listed on BSE and NSE Private software companies allowed dedicated satellite links with customers in the USA Wipro Genius launched its ‘Little Genius’ notebook VSAT links allowed for private Internet links

1995 1978

100% tax holiday was allowed on software export earnings

Infosys listed in NASDAQ

1999 1978

1994

Indian copyright act amended and imposed penalties on infringement of copyright Oracle setup a development centre in Bangalore American Express setup Business Process Outsourcing Centre in Mumbai Government monopoly in telecommunication ended and private companies were allowed to start their own mobile communication services Tandem Computers entered India

1998

Microsoft setup a development centre in Hyderabad, 2nd largest centre after Redmond Microsoft bought Hotmail

Fabmart founded

2001 1978

Government of India formed a National IT Task Force

Tata group acquired 51% of CMC Ltd.

Wipro became world's first PCMM level 5 company

2002

Private corporate bodies were allowed to set up Universities

Due to the introduction of fresh policies, there were a huge number of new moguls venturing into peripheral and computer manufacturing. To voice their opinion, these groups formed the Manufacturers' Association for Information Technology (MAIT), a manufacturers’ lobby group. Also, lots of exceptional entrepreneurs estabslished ventures such as Infosys, Wipro Infotech, Wipro Systems, NIIT, Cybermedia and Mastek during this time. 1984 was a milestone year when Rajiv Gandhi became the Prime Minister. He declared the “liberalization of computer industry”, removing various rules & regulations which were previously imposed on the IT Industry. Next year, Texas Instruments set up a software export facility in Bangalore, which paved the way for Global Delivery Model from India for Multinational Corporations (MNCs). The late 1980s laid the foundation for the ascent of the Indian Software Industry. Videsh Sanchar Nigam Limited (VSNL) and Mahanagar Telephone Nigam Limited (MTNL) were established in 1986, to develop native and overseas telecom infrastructure. The same year, UNDP funded the ERNET project, an academic network which exposed the new generation of engineers to services such as emails and networking.

Tata group acquired VSNL

07


Software Services & Global Delivery Model

24 h Global Delivery Model

2003 1978

CDAC designed a parallel machine named PARAM PADMA which was ranked 171 in the top 500 list of high performance computer in the world Yahoo setup R&D Centre at Bangalore (first outside the USA)

2004

TCS, INFOSYS, HCL and WIPRO all crossed USD 1 Billion revenue TCS became a publicly listed company Google setup first R&D Centre outside the USA in Bangalore

2005 1978

Bill Gates visited India and announced investment of $1.7 billion and opened Microsoft Research India

Tata Consultancy Services (TCS) became country's first IT company to cross the $2 billion mark

2006

Wipro became world largest R&D services provides

Followed by this, a group of young men decided to separate software as a distinct entity from the hardware body and formed NASSCOM (National Association of Software and Service Companies) in 1988. The maturation of the Indian IT Services industry, and its consequent global recognition came in the late nineties with the role played by the Indian software service industry in the deployment of the solution to the Y2K bug. This also led to services companies growing at more than 100% profits, quarter on quarter for a couple of years. The culmination of this episode saw the establishment of Microsoft Research India in 2005 and a visit by Bill Gates, where he announced an investment of USD 1.7 billion.

Microsoft Research India released MultiMouse Software Development Kit and resulted in MultiPoint SDK

2011 IGATE Corp acquired Patni

Capgemini acquired IGATE Corp

2015 1978

TCS ended RIL's 23-year run as most profitable firm

08


The Dotcom Era .com

1995 Dotcom boom

1996

Info Edge founded India got non commercial mobile services

Rediff.com and Shaadi.com founded

VSNL launched public internet services in India

Hotmail founded Justdial founded Vijaya bank went online with Cisco routers

1997 ICICI introduced online banking

1998 Bangalore IT.Com conference initiated Rediff launched India's first ecommerce service Satyam Infoway became first private ISP

1999

Internet Policy was passed

NASSCOM started with 38 members in 1988 and in 1999 it had 464 members New telecommunication policy was announced 6 out of 12 CMM level 5 certified companies in the world were in India Ramco Systems established as an independent company

2000 Information Technology Act 2000 passed Bazee.com founded Indiaworld acquired by Sify MakeMyTrip Limited founded Rediff.com India Limited became India’s first dot.com company to be listed on Nasdaq.

While the Indian IT industry was gearing up to become a full-fledged services industry, a small covert network in some military computers (ARPANET) in the US laid the foundation of what we call as the Internet. The Mosaic browser that was introduced in 1993 added impetus to the growth of the Internet. However, the commercial aspect of this unique creation was only realized with the advent of "dotcom" companies in the US. They showed that companies could be built on the Internet with strong business models. The dotcom era in India began in 1995, when VSNL launched the first commercial Internet service exposing Indians to the World Wide Web. The same year, Info Edge was founded, which is regarded as one of the earliest Internet companies in India. Ajit Balakrishnan registered the first domain in India and launched Rediff.com. Major newspapers such as the Times of India, The Hindu, The Indian Express and Hindustan Times went online. Also, Shaadi.com was first matrimonial website launched and became a global pioneer in this space. The year 1997 saw, ICICI Bank become the first bank in India to offer Internet banking with the help of Finacle’s e-banking solution. In 1998, Microsoft acquired Hotmail, the first web-based email service company in the US, for a whopping USD $500 million, which was the biggest acquisition made by Microsoft until then. 09


The Dotcom Era .com

2002 Fabmall founded e-Seva and Bhoomi initiated

2004 National broadband policy was announced to promote DSL eBay acquired Bazee.com and enters India

2005

Jobsahead acquired by Monster

Rediff took a huge leap by setting up “Rediff-on-the-net” which could be regarded India’s first e-Commerce platform. Breaking the VSNL monopoly, Satyamonline was launched, India's first private sector Internet access service. In 1999, Sify bought India World for USD $115 million, and later got listed on NASDAQ becoming the first Indian ICT provider to be listed on a US Stock Exchange. The year 2000 saw Rediff.com become India’s first dotcom company to be listed on Nasdaq.

Bangalore Linux was renamed as FOSS.in Tutorvista founded

2006 redBus founded

2007 YourStory founded BabaJobs founded Pluggd.in founded Infibeam founded bookmyshow.com was officially founded

2010 Vakilsearch founded MakeMyTrip went public on NASDAQ

2008 VoIP was finally legalized by the Telecommunication Regulatory Authority of India (TRAI)

The government acknowledged that connectivity was creating a revolution across various industries and announced the New telecommunication policy in 1999. From 2000 to 2004, the government announced few vital policies that permeated technology across businesses and individuals. The year 2000, saw India’s first cyber act with “Information Technology Act 2000”. Just 2 years later, the Government initiated programs like e-Seva and Bhoomi to develop e-Governance capabilities and the Indian Railways launched Irctc.com. The National broadband policy was announced in 2004, to promote DSL. The next 4 years saw an unprecedented growth phase. In 2004, eBay acquired Bazee.com, India’s first online auction site, and Monster acquired Jobsahead. In 2006, Info Edge went public, which by then had several lucrative ventures such as naukri.com and 99acres.com. This led to the emergence of second generation Internet companies like redBus, Infibeam and bookmyshow.com. 10


The Dotcom Era .com

2011 Walt Disney acquired Indiagames Pearson bought over 80 percent of TutorVista

2012 Fab.com acquired True Sparrow Housing.com founded Jabong founded IndiaMART became world's 2 largest B2B marketplace after Alibaba

2013 Ibibio acquired redBus Ticketgreen acquired by Bookmyshow Voonik founded

2015 Newscorp acquired VCCircle Mahindra Group acquired BabyOye Infibeam went public in India and became first ecommerce company to get listed in India

The global industry stalwarts like Kanwal Rekhi, KB Chandrasekhar and others have been instrumental in the Indian startup story for their investments and guidance to budding Indian entrepreneurs. Their early initiatives like the Infinity Capital-India and e4e that enabled cross pollination of ideas and provided funding and support. This diffusion created many success stories. Dotcom boom in India owes a lot to the Dotcom boom in the US. While the Dotcom phase reached its peak in the US, in India it was yet to peak with a lot more success stories yet to be scripted. The end of the first decade of the twenty first century was marked by MakeMyTrip going public on NASDAQ. The subsequent year saw a UK based publishing and media group, Pearson, buying over 80 percent of TutorVista. By then, IndiaMART had made its mark and became India's largest online marketplace and more importantly world's second-largest B2B marketplace after Alibaba. Also, Naspers group acquired redBus in 2013. Lastly, Infibeam went public and became India’s first ecommerce site to get listed in India. What the dotcom era did to India was, it opened opportunities that were not earlier possible or viable to the common India. It opened up entrepreneurship to everyone by removing software engineering skill as a necessity for starting a IT enabled company. This era also fired the imagination of people, who started companies with very diverse business models, which laid the ground work for the next phase of the ecosystem. 11


Rise of software product companies Products

1980 Accelya Kale Solutions Ltd. founded

1982 Mastek and Cybermedia founded

1985 SOFTEK was the first company to develop compilers for COBOL, BASIC & FORTRAN for locally made computers

1990

1986 Nucleus Software founded Tally founded, first codeless accounting software

1992

SunTec founded

1993

A unit separated from CITIL, Citi group subsidiary. Later rebranded as i-Flex. Newgen founded

Quick Heal founded

1995 1996 Zoho founded

Infrasoft Tech founded

1997 2001

Kayko founded

i-Flex launched Flexcube for banks

2002 CRMnext founded i-Flex went public

2004 eka founded Rategain founded

2005 Zoho launched cloud based CRM Oracle acquired i-Flex

The product phase began as a breakaway of the GDM phase, some early employees from the IT services companies taking the plunge into entrepreneurship. However, the India was not mature enough as a market for such companies, especially in the early 1980’s, when a lot of the software product companies struggled for survival due to immature Indian markets being unable to absorb these companies’ products. While Tally was the first, homegrown software product company setup in India, way back in 1986, it was not till the early part of 1990s that we saw a multi-national company focusing in software products being setup. This started in earnest with a vital unit of Citi Corp group getting separated as CITIL which was later rebranded as i-Flex Solutions. The latter part of the decade saw i-Flex launch its flagship product FLEXCUBE which attained global recognition in a very short span of time. The first decade of the 21st century saw i-Flex going public, and just 3 years after its listing, i-Flex was acquired by Oracle, creating Oracle Financial Services. In the early days, the Indian product ecosystem was up against numerous challenges like rampant piracy and low customer adoption, which compelled Indian players to find a suitable market elsewhere. However, post the dotcom boom, improved connectivity enabled the origination of the SaaS (Software as a service) model. Zoho, a late 1990s establishment, launched its cloud (SaaS) based CRM, Zoho CRM in 2002. Moreover, entrepreneurship became a rage resulting in the founding of innovative startups such as PubMatic, SlideShare, SVG Media, InMobi, Druva, Vizury, Capillary and GirnarSoft. 12


Rise of software product companies Products

2006 SVG Media founded Subex Systems acquired UK-based Azure Solutions for $140 million (Highest M&A by Indian firm at that time) Pubmatic founded

2007 InMobi founded GirnarSoft founded NASSCOM initiated the NASSCOM Product Conclave

SlideShare founded

2008 2009

Druva founded Vizury founded

Knowlarity founded

Capillary founded

Wingify founded

2010 Mobile banking started VSERV founded

2011

Freshdesk founded

BrowserStack founded

Indix founded

Wooqer founded

2012 LinkedIn acquired SlideShare Near founded Healthifyme founded TripHobo founded KISSFLOW founded NowFloats founded

Chargebee founded WebEngage founded

The product phase began as a breakaway of the GDM phase, some early employees from the IT services companies taking the plunge into entrepreneurship. However, the India was not mature enough as a market for such companies, especially in the early 1980’s, when a lot of the software product companies struggled for survival due to immature Indian markets being unable to absorb these companies’ products. While Tally was the first, homegrown software product company setup in India, way back in 1986, it was not till the early part of 1990s that we saw a multi-national company focusing in software products being setup. This started in earnest with a vital unit of Citi Corp group getting separated as CITIL which was later rebranded as i-Flex Solutions. The latter part of the decade saw i-Flex launch its flagship product FLEXCUBE which attained global recognition in a very short span of time. The first decade of the 21st century saw i-Flex going public, and just 3 years after its listing, i-Flex was acquired by Oracle, creating Oracle Financial Services. There were multinationals and associations which were enabling and contributing to this movement. Microsoft Research India released MultiMouse Software Development Kit, resulting in MultiPoint SDK. This offered new pedagogical opportunities to the rural children and instantly multiplied the value of a single PC. Also, NASSCOM which had 38 members in 1988 became a robust 1100 members group in 2007.

13


Rise of software product companies Products

2013 Hitachi acquired Prizm Payment Vuclip acquired Jigsee Oracle acquired Blitzer Grofers founded Amazon entered India

2014 Facebook acquired Little Eye Labs Google acquired Impermium Cigital acquired iViZ Security Swiggy founded Yahoo acquired Bookpad

2015 Zoho Online clocked 15 million users Grofers a hyperlocal startup scaled from 500 orders to 30,000 in 8 months & raised $120 M from the likes of Softbank and DST Global Practo raised its Series B and C & acquired Qikwell, InstaHealth and Fitho &product outsourcing firm Genii

It was during this time, NASSCOM launched the “Nasscom Product Conclave (NPC)” and created a platformwhere folks from product companies could openly share their learnings and experiences. This decade began with the enablement of Mobile banking. By 2012-13, there was sizeable growth in the product and the SaaS ecosystem with LinkedIn acquisition of SlideShare at $119 million. It was in the mid of 2013, when a global giant silently entered India without major announcement on its media center. Amazon.com entered India and launched its flagship marketplace by selling books and DVDs. The year 2014 can be regarded as the acquisition year for the SaaS product ecosystem. Indian startups like Impermium, Little Eye Labs and Bookpad were valued and acquired by global players like Google, Facebook and Yahoo. This was followed by Twitter acquiring Zipdial the next year. The development of product ecosystem indicates the pace of the ecosystem maturation. India’s product journey was en-route to an accelerated growth phase. The last thing this episode saw was Quick Heal going public in 2016.

Twitter acquired Zipdial

14


Growth of Startup Ecosystem Ecosystem & Unicorn

1988 Technology Development and Information Company of India (TDICI) founded

1990 Software export reached USD 100+ million

1997 APIDC Venture Capital Ltd. founded

2000 Software export reached USD 5 billion Westbridge Capital entered

2004

1989 Canbank Venture Capital Fund was the first Public Sector Bank to setup Venture Capital Fund

1996 Software export reached USD 1 Billion

1999 100% Foreign Direct Investment in IT allowed, paved way for MNCs to enter India TiE entered India with TiE Bangalore Chapter Chrysalis Capital established

MuSigma founded Number of employees in IT industry reached 1 million Silicon Valley Bank setup shop in India, AND invited other US VCs to explore possibilities

2007 DARE founded with focus on Entrepreneur's Publications Flipkart founded OCC Bangalore founded Proto.in founded

2006 Mentor Partners founded India’s software and services export revenue reached USD 10 billion Bar Camp Bangalore held Helion Ventures founded Cross border VC from India - Nexus Ventures founded

India’s startup ecosystem journey began with the founding of Technology Development & Information Company of India (TDICI) which was a collaboration between ICICI Bank and UTI, and can be regarded as India’s first private VC fund. The year 1989 saw Canbank Venture being setup, which was India's first Public Sector Bank sponsored venture fund. The Indus Entrepreneurs (TiE), world's Largest network of entrepreneurs and a non-profit global community, started in Bangalore in 1999, to promote entrepreneurship. The uniqueness of TIE in India was that it consisted of Indians who had successful startups in Silicon Valley, and had returned back to India to make a positive impact on the Indian economy by promoting and supporting Indian entrepreneurship. The early 2000s saw Silicon Valley Bank setup offices in Bangalore and they invited the US VCs to explore potential investments in India. Also, a group of successful entrepreneurs established Indian Angel Network (IAN) and the Mumbai Angels, with an intention to give back something to the ecosystem. The same year, cross border VC from India - Nexus Ventures was established. Mentor Partners, with its unique focus on mentoring and market access, helped build several product startups that has cross-border linkages to the Silicon Valley. This became a template for several other virtual and space-based accelerators later on. 15


Growth of Startup Ecosystem Ecosystem & Unicorn

2008 Morpheus founded Zomato founded Quikr founded Microsoft Ventures launched BizSpark

2009

In 2008, Startup funding crossed USD 1 Billion

Satyam Scandal

2010 Export increased from USD 2 Billion in 1998 grew to USD 50 Billion in 2010

2011 Shopclues founded

OLA founded Paytm founded Snapdeal founded

2012 Microsoft Ventures launched in India Flipkart acquired Letsbuy Flipkart became the 1 st India Unicorn; acquired Letsbuy

2013 NASSCOM initiated its flagship program to aid startup NASSCOM 10000 startups iSPIRT founded

The last decade witnessed companies like Flipkart, Mu Sigma, Quikr, Zomato, OLA, Paytm and Snapdeal being founded, wherein Zomato became India's first global app. In 2012, Microsoft Ventures was launched in India providing a platform to young and great entrepreneurs to help them build their business via accelerators, partnerships and help them scale. Subsequently, NASSCOM announced its ambitious aim to aid 10,000 startups and launched its flagship program “NASSCOM 10,000 startups�. The same year, iSPIRT, a non-profit industry think tank was founded with a charter to act as market catalysts for the software product industry. Startups may seem insignificant compared to large multinational companies that have trillions of dollars of wealth. However, with strong ecosystem support, even small organizations can become mammoths. In 2012, Flipkart acquired Letsbuy to increase its market penetration. In 2014, Flipkart raised USD $1.9 billion which is more than 5 times the money it had raised in 2013. Subsequently, in the same year Flipkart also acquired Myntra which was one of the biggest acquisition of that time. The same year, Paytm launched its mobile wallet and seller apps enabling the easy and quick payments. The next year saw Zomato make its biggest purchase ever, acquiring restaurant search guide Urban spoon for USD $52 million. Furthermore, Ola acquired TaxiForSure and Snapdeal acquired Freecharge.

16


Growth of Startup Ecosystem Ecosystem & Unicorn

2014 Ola & Snapdeal became Unicorns In 2014, total deal value stood at approx. $5 billion (disclosed) & volumes at over 300 deals Paytm launched Mobile wallet and seller apps Flipkart acquired Myntra Flipkart raised $1.9 billion over 5 times the money it raised in 2013. 5.3x, to be exact

2015 India Ranked 3rd in global startup ecosystem & Bangalore ranked as 2nd fastest growing Startup Ecosystem Ola acquired smaller rival TaxiForSure Snapdeal acquired Freecharge In 2015, capital worth $9 billion was invested in Indian startups across 1,005 plus deals India became 3rd largest smartphone market in the world 65 mergers and acquisitions deals occurred, worth about $800 million

2016 RBL Bank launched 'India Startup Club' “Start-up India, Stand-up India” initiative launched Estimated 375 million Internet users, India is now 2nd largest Internet market in the world India's new budget offered tax holiday for Startups for 3 years & exemption on capital gains

Zomato acquired Urban spoon and

With the right support, startups advance to become Unicorns, attaining a USD 1 billion valuation. In the year 2012, Flipkart officially joined the Unicorn club. Post this, many players such as Ola, Snapdeal, Mu Sigma, Paytm, Zomato, Quikr and Shopclues also joined the unicorn club. The Indian government acknowledges the role and impact of these occurrences, and under the dynamic leadership of Prime Minister Modi, has taken many game changing initiatives, where PM Modi’s trip to Silicon Valley was the first visit to California by any Indian leader in more than 30 years. Such impactful movement, complimented with milestone initiatives like the launch of “Digital India” and “Startup India Stand up India”, have added the right impetus to the entrepreneurial energies of the nation.

NexTable Overall VC/PE funding grew by 2.2 times over 2014 Seed stage funding has grown by a dramatic 6.5 times Number of incubators and accelerators grew by 40 percent over 2014 Paytm, Zomato & Quikr became unicorns

Indian startups raised $1.42 billion across 307 deals in Q1 2016 Shopclues joined the unicorn club

17


Conclusion

All of these happened in four short decades. The pace of formation of startups and the quality of startups is truly impressive. While all the four episodes of the journey has a lot to contribute to the evolution, the last episode is very exciting – Growth of Startup ecosystem. Ravi Gururaj, Chairman of NASSCOM Product Council, shares the optimism. He says that India is among the four most vibrant startup ecosystem in the world. Other three being US, Europe and China. It has a unique opportunity to build products and solutions for the southern hemisphere of the world.Unlike in the early days, the startup ecosystem has evolved to cater to multiple of startups, to advent of large corporates setting up Global Innovation Centres (GIC) in India, proliferation of accelerators and incubators, advent of micro-VCs, large influx of past entrepreneurs into India and cross-border collaboration between India and the global ecosystems. We are living in exciting times for building startups in India!

18


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19


Credits

Project Head

Ravi Narayan

Contributors

Ashwin B.S

This narrative has been possible by the inputs of:

Abhishek Bajaj

Sharad Sharma

Global Director

Program Manager, Insights Manager, Marketing

Naman Narain Intern, Insights

(Co-founder and Governing Council Member, iSPIRT Foundation)

Ravi Gururaj

(Chair - Product Council & Member - Executive Council, NASSCOM)

Bharat Goenka

(Managing Director, Tally Solutions)

Research Team

Pranab Sen

Project Manager

Anirudh Parvatikar

Research and Insights

Design Team

Sunil Naik B.K

Creative Designer (E-book and Graphics)

Thejas Kumar

Creative Designer (Infographic) 20


Profile for Microsoft Accelerator India

History of the Indian Startup Ecosystem  

This ebook, titled ‘History of Indian Startup Ecosystem’ contains over 150 events which shaped the thriving entrepreneurial world that exist...

History of the Indian Startup Ecosystem  

This ebook, titled ‘History of Indian Startup Ecosystem’ contains over 150 events which shaped the thriving entrepreneurial world that exist...

Profile for msaind
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