On-demand home services like calling a plumber or beauty services had several players like Housejoy, Urban Clap, Task Bobb, Zimber, Stayglad, Doormint, Good Service. Barring the first two, others have shut down or have been acqui-hired. In online real estate, PropTiger merged with Housing, while Quikr bought HDFC Red and HDFC Realty.
‘‘The big change is it is happening faster, as the market is not deep enough. Only 50-100 million buying online and this is not a market of a billion. Eventually, they will buy, but not yet,” says Mukherjee. ‘‘If you are a No.1/ No.2 player, this is the best time to be in business as the worst is behind us; they will find ways to open up the market.” This year has been all about a return to basics for start-ups, a trend that started last year. It’s no longer about raising capital and burning money to buy growth. In 2017, start-ups focused on profitable growth and building moats, says Abhiraj Bahl, co-founder, UrbanClap.
‘‘Cash burn in companies
has reduced. While profitability might still be a couple of years away, clear line of sight to profitability has emerged in many firms,” Dhruv Agarwala, CEO, PropTiger.
In terms of fund-raising, it was not a bad year. Start-ups raised $3.15 billion in 2017 in venture capital from 336 deals, a notch lower than $3.44 billion raised in 2016 from 452 deals, as per an early estimate by VCCEdge, the data arm of VCCircle.com. This include large fund-raise by three start-ups Flipkart, Ola, and PayTm but doesn't include angel and seed stage deals, which infused another $251 million from 450 deals.
Consolidation also drove M&As, when many acquired companies
of scale to quickly access markets (EBIX acquiring Itzcash or AXIS Bank buying Freecharge) or reduce competitive pressure. The acquisition of Jabong by Flipkart/Myntra was seen complimentary and helped it cater to various segments of the market. ‘‘Myntra is seen as premium, while Jabong was more mass market and young. Myntra has performed well and emerged as a strong leader in apparel space,” says the managing partner with a leading VC firm.
2017 saw a return to technology-based investing, which is likely to accelerate in 2018. 2017 saw an increased focus on core technologies like IOT, AI and enterprise software, which had fallen out of favour in 2014 and 2015 when the attention shifted to consumer internet.
‘‘There was a question mark on how big a business you can build in enterprise software but firms like FreshDesk has been an inspiration for others,” says Rahul Khanna, managing partner, Trifecta Capital.
Start-ups in enterprise software are trying to be globally competitive by targeting markets in South-east Asia, West Asia or North America.
In fintech, Indian start-ups have a good chance of building cutting-edge solutions which are globally competitive, especially those in the interface of fintech and AI. That’s because India did not have much of legacy infrastructure. ‘‘While lending is a large opportunity, there are many firms doing great work in compliance, operational efficiency or underwriting. Some of these firms are under the cover,” says Khanna.
2017 was also an year when start-ups had to cope with economic slowdown, GST and the effects of demonetisation end-2016. Investors say agri-related businesses will see more action in future as companies
like to oraganise the supply chain. ‘‘The payment, logistics, computing and connectivity (cheap data) is mostly in place. The next wave of investing will be for Bharat,” says Khanna.