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6 �THE ECONOMIC TIMES | NEW DELHI | WEDNESDAY | 29 JUNE 2016Disruption: Startups & Tech
MD at Matrix Partners, who is also onthe board of the company.
Five Star plans to grow the loanportfolio by over 50% this year, ex-pand its branch network from 67 to250 in the next three years and have apresence across Tamil Nadu, Karna-taka, Andhra Pradesh, Telanganaand Kerala. Its average loan size is ̀̀ 3lakhs, with a tenure of up to 7 yearsand it has 9,000 active customers
right now. Five Star has also streng-thened its management in the lastone year, roping in Asirvad Microfi-nance’s Srikanth G as chief financialofficer and Spark Capital’s Rangara-jan Krishnan as chief operations offi-cer. Funding will be used by the FiveStar Business to expand into housingloans as well. The company recentlyreceived a licence from National Ho-using Bank, and is poised to set up asubsidiary.
This is the second investment byMorgan Stanley, which has also back-ed former Citibank senior executiveRamesh Ramanathan’s microfinan-ce company Janalakshmi.
“We think the portfolio in small bu-siness financing can pan out the waymicrofinance did in 2005-06,” saidVenky Natarajan, managing partnerat Lok Capital.
This Co Gets `̀114-crore FiveStar Credits from MS PE Arm
Bengaluru: When digital enter-tainment startup TVF MediaLabs launched a comedy series onYouTube called ‘TVF Pitchers’ inJune last year, exploring the livesof young entrepreneurs, it wasquick to get about 1.5-crore views.
Ever since, entrepreneurs, bit-ten by the startup bug and enter-prises seeking to leverage India’sstartup boom, have launched si-milar web series or webisodes,podcasts and even an online reali-ty programme that backs new bu-siness ideas. Only, they are still fi-guring out how to monetise thisexplosion of startup-related con-tent. “Today, almost everyonewants to become an entrepreneur(and)… content about startups isespecially exciting for viewerswho get to learn more about theindustry and the dos and don’tsfrom a reality programme like‘Hauslay Ki Udaan’,” said DeepakNath, vice president of marketingat SABMiller India.
The company is the main spon-sor of the show through itsbeer brand Haywards5000. Touted to be India’sfirst startup reality pro-gramme, ‘Hauslay Ki Uda-an’— which loosely translates to‘Wings of Confidence’ — providesseed- or early-stage funding to thewinner, in the process documen-ting the struggle of entreprene-urs to get an idea noticed. In thefirst season, the programme, web-cast on YouTube, received morethan 40,000 applications and gotabout 64-lakh viewers. The win-ner won ̀̀ 15 lakh for a startup cal-led ‘Bina Dudh Ki Dairy’, whichuses the excreta of animals likecows to create eco-friendly mos-quito coils, biogas, flower potsand even distilled cow urine. Formonetisation, though, SABMil-ler India is waiting for the pro-gramme to gain more traction.
“Creating digital content aro-und the startup culture is… a po-pular trend because it’s very to-pical and interesting for the yo-uth and business community,”said Jehil Thakkar, media andentertainment head at KPMG.
“But most companies will not beable to profit from digital mediacontent at this stage because therevenue numbers are low. Evenpopular series have a hard time.It’s a targeted audience size andviewership is slowly picking up.”
Manu Srikumar and Hasa Sam-udrala, cofounders of contentproduction startup Denture Capi-tal, post video shows on YouTubeevery Friday at 9:00 pm coveringdifferent aspects of India’s star-tup ecosystem — on the Uber-Olarivalry; episodes simplifying Bit-coin and India’s startup policies;and shows featuring little knownstartups’ apps. The duo get on bo-ard entrepreneursand Bollywood cele-brities for discus-sions and playpranks while si-multaneo-
usly disseminating informationon how the industry works. “Theidea is to weave in a lot of pop cul-ture references from (Tamil mo-vie star) Rajinikanth to (Ameri-can television series) ‘Game ofThrones’ and relating that to theIndian startup ecosystem, whichmakes it more entertaining andincreases the number of vie-wers,” said Srikumar.
Launched in March, Denture Ca-pital gets about 1,000 views perepisode. While such online showsgain viewers, at least 15 startup-related podcasts have emerged,covering everything from how topitch ideas to venture capital in-vestors; what business modelswill work in what sectors, andhow to handle hiring and layoffs,among other topics.
Neil Patel, a UK-based softwaredeveloper and marketing expertwho teaches podcasting, has laun-ched ‘The Indian Startup Show’.
The podcast, which has close to1-lakh listeners, often tops the
Indian iTunes techchart.
For all this, “it’s very diffi-cult to make money,” said
Patel. “Only a handful ofpodcasts make moneyvia advertising. Adverti-sers typically offer $10-
20 (`̀680-1,350) per1,000 listeners, so ifyou hit over 1-lakh
listeners you could make a decentamount. When I publish on Goog-le Play, I will go to advertisers.” There’s potential, though. “Product placement and adverti-
sing through digital content is go-ing to be more profitable thanspending lakhs or crores on tele-vision commericials,” said JeteshMenon, cofounder of advertisingand marketing platform Free-jinn. Arunabh Kumar, founder ofTVF Media Labs (or The Viral Fe-ver), agrees.
Reel Drama AwaitsFirms on Webisodes
The pace and trajectory ofgrowth of the ecommerce sec-tor in India has been breathta-king over the past three years.Poised to be worth more than$103 billion by 2020, ecommerceis scripting the next chapter inIndia’s robust consumption sto-ry. In the process, it has introdu-ced dynamic new business mo-dels, spurred domestic innova-tion, created unprecedentedchoice for the consumers andmassive reach for the small andmedium businesses. Its impacton job creation is less spokenabout, but is perhaps the mostimportant — it has created mil-lions of jobs, across cities bigand small and spanning the en-tire continuum from high tech-nology to last-mile logistics.
The digital commerce indust-ry is at the early stages of long-term growth that will continueacross decades, similar to the te-lecom and IT revolution. As theIndian economy grows at a stea-dy clip, growth for ecommercewill come from many fronts, in-creasing Internet and mobilepenetration being the most im-portant. Morgan Stanley’s In-dia Technology Report in Fe-bruary 2016 indicates that per-centage of internet users shop-ping online will grow from 12%in 2015 to 40% in 2020. Favourab-le demographics, growing ac-ceptance of online payments, asupportive policy frameworkand improvement in physicalinfrastructure will acceleratethis growth.
Growth when it happens atsuch pace, comes at a cost. Thiscost is largely driven by signifi-cant forward-looking invest-ments in technology, infrast-ructure and people. When theseinvestments are leveraged app-ropriately, they yield signifi-cant results in delivering a gre-at customer experience in thefuture while driving sustainab-le growth for the company.
In the US, Amazon lost $2.8 bil-lion in the first seven years ofits existence before it posted itsfirst ever quarterly profit in2002, as they were investing ahe-ad of time in building the requi-red capabilities for the US mar-ket. Needless to say, not all in-vestments made are as efficientas they could have been. Howe-ver, it would be unfairly specu-lative to paint a picture of doomand gloom without trying to un-derstand the deeper and morepositive trends at play here.
In 2014-15, the focus was onachieving scale to demonstratethat this industry can deliver aneedle-moving impact in termsof the quantum of merchandisethat can be sold through the on-line channel.
Now that the scale and impactof ecommerce has been clearlyestablished, the focus has tur-ned towards achieving efficien-cy in operations.
This is a natural cycle for anybusiness — rapid period ofgrowth followed by a measured,sustainable progress.
The industry’s shifting focusfrom volume-driven metricslike gross merchandise value(GMV) to profitability-drivenmetrics like better unit econo-mics, repeat customers anduser experience, is evidence ofthe same. Companies that conti-nue to lose money per order willhave a tough time sustaining inthis market. In perpetuity, cus-tomers will be loyal to platformsthat deliver reliable and fric-tionless experiences.
The focus in ecommerce has tobe on investing in capabilities tobuild for the growth coming atus down the line. The opportu-nity we all have is to solve for to-day as we build for tomorrow
and for this, the three key areasthat companies will need to fo-cus on are experience, cost andgrowth.
Just like physical retail buildsbigger and better malls, techno-logy is the building block for di-gital commerce to offer a virtualexperience that is better thanthe physical one. Key drivers ofa great consumer experience —predictive analysis, intuitiveproduct discovery, embeddeddigital wallets, personalisedcommunications, social com-merce, omni-channel integra-tion — are all enabled by signifi-cant investments in technology.While sharp discounts drivetraffic, ultimately it is consis-tently good experience that en-hances conversion, builds trustand habit.
Delivering experience at anycost isn’t the hardest thing inthe world. True execution capa-bility is demonstrated when acompany delivers great experi-ence at best-in-class cost. Andthis entails very tightly mana-ging the total unit cost it takes tofulfil an order from purchase todelivery. It is also very critical tomanage the overall recurringmonthly expenses of the com-
pany so that maximum opera-ting leverage can be gainedfrom a fixed cost base, while thescale increases.
Finally, driving growth whileensuring a company deliversbest-in-class experience andcost is no easy task. This will ne-ed companies to sharply identi-fy who their core user group is,across geographies, gender, so-cio-economic demographicsand then ensuring that they de-liver relevant and best-in-classexperiences to this audience. Intrying to be everything to every-one, companies will risk beingnothing to no one.
Indian digital commerce is aninteresting story in the making.Five years ago, not one amongus could have predicted the sca-le, the speed and the impact ofthis sector. Built on top of thelessons learnt thus far, the nextset of transformations will hap-pen at a much faster speed.
Across the world, ecommerceplatforms have taken over a de-cade to find their stride. In cont-rast, the Indian market is matu-ring much faster. While coursecorrections will indeed happen,make no mistake — we are justgetting started.
(The author is CEO of Snapdeal)
Ecomm: Time for changein focus, not convictionBy Invite
New Delhi: Fitness is the next ri-sing industry in the startup space,given the amount of investor inter-est they are seeing both from cele-brity cricketers and well-knownentrepreneurs. Cricketer ViratKohli on Tuesday kicked off a newfitness venture in a joint venturewith Stepathlon Lifestyle. The ven-ture, called Stepathlon Kids, seeksto tackle fitness issues affectingkids by taking them through to a 30-day pedometer-based virtual racethat will help increase awarenesson health issues.
The new venture looks to reach50,000 children in the first year ofoperations. “We will generate reve-
nues from a combination of spon-sorships, partnerships, licensingand merchandising for the mediumto long term,” said Ravi Krishnan,CEO, Stepathlon Lifestyle.
Last year, ViratKohli invested aro-und `̀90 crore inChisel Fitness, aBengaluru-basedfitness centrewhich recently an-nounced plans tointroduce techno-logy-enabled, ga-
mified workout routines and add100 more centres in the next two ye-ars. Former Myntra cofounder andHead of Flipkart Commerce plat-form Mukesh Bansal, who alongwith former colleague Ankit Nago-
ri, is reportedly planning to launchhis own startup in the fitness spacebacked Bengaluru-based fitnessstartup Cult.
A host of startups like Hobbyix,FlexiPass, Fitternity and Gympikhave sprung up in the fitness spacerecently and most of them are fo-cussed on moving away from thetraditional gymming equipment-based fitness centres.
They are making the industrymuch more efficient, both for con-sumers and trainers, by deployingtechnology to make services morepersonalised.
“There are two sets of startups inthis space, both catering to consu-mers in urban India — those whoare aggregating the growing num-ber of gyms and yoga clinics in citi-
es and those who are offering mobi-le-based fitness solutions to consu-mers who are not able to make it togyms because of time constraints,”said Rutvik Doshi, Director at In-
users to keep a track of their calori-es, set personal fitness goals andmeasure progress among myriadother lifestyle tracking parame-ters. The app syncs with leading we-arables including Fitbit, YuFit andMiBand along its own fitness band,RIST. Aggregators like Bangalore-based Gympik is currently focusedon tech enablement for gymmingcentres and are expanding their ba-se of offerings.
Gympik, which claims to have en-rolled about 20,000 fitness centresand 9,000 trainers on its platform,offers a cloud-based software and apersonalised application both fortrainers and consumers to trackperformance and fitness schedules,calculate calories burnt and provi-de basic health stats.
ventus Capital, who along with Blu-me Ventures and IDG Ventures in-vested $6 million in Series-A fun-ding into HealthifyMe. Healthify-Me’s mobile application enables
Kohli Takes Fresh Guard as Startups Ride Fitness Wave
I THOUGHT YOU SAID“EXTRA FRIES”
EXERCISE?
Data Says...
Source: Tracxn
159 Cos in Fitness and Wellness space in India
COMPANIES OFFERThe newventure looksto reach50,000children inthe first yearof operations
Hyderabad: French multinatio-nal Capgemini is looking to part-ner with startups in India from thefields of data analytics, artificialintelligence and Internet ofThings (IoT) and build a bridge forthese ventures to enter internatio-nal markets, a top executive said.
As part of Capgemini’s AppliedInnovation Exchange (AIE) pro-gramme, the company leveragesstartups across the globe that de-monstrate new thinking in retail,banking/insurance, telecommu-nications, among others.
After collaborating with startupsin the US and Europe, the companyis now scouting for some promi-sing startups in Delhi, Mumbaiand Bengaluru. “I think startupsrely too much on venture capita-lists to bring them to markets,” sa-id John Brahim, CEO-insights anddata at Capgemini.
“It’s difficult for startups to findenterprises across the ocean, andfor big corporations, it’s like see-king a needle in the haystack.”
This is the gap Capgemini is try-ing to bridge. There are many star-tups in India that are facing suchproblems — building products, butnot able to connect with overseasclients. One way to do so could beby connecting with their offices lo-cated in India, suggests Subrah-manya Rao, CEO of Discover Dol-lar, a Bengaluru-based startup pro-viding solutions to retailers.
Prior to being accelerated underTarget Accelerator Program in In-dia, Rao reached out to many inter-national retailers, whose officesare in India. British retailer Tescobeing one of them. “It worked forus, but being a part of Target Acce-lerator Program expedited the pro-cess,” said Rao. Capgemini’s AIEprogramme consists of nine inno-vation centres across the globe, in-cluding one in Mumbai.
From Pariswith LoveCapgemini is lookingto partner withstartups in India
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Now that the scaleand impact of ecom-merce has been clear-ly established, thefocus has turned to-wards achieving effi-ciency in operations
Steady on! StartupStory is Just Aboutto Begin Here
BENGALURU Online jewellerymarketplace VelvetCase.com hasraised $1.5 million in a secondround of funding led by UniqornVentures Fund, with participationfrom investors TV Mohandas Paiand S Somasegar through onlinedeal-making platform LetsVenture.
VelvetCase will use the money toexpand its technology, marketingand seller acquisition services, thecompany said. “The intersection ofjewellery domain knowledge withexperience of building cutting-edge
technology is very rare to find andbuild, and we have done it reaso-nably well at VelvetCase,” said KapilHetamsaria, CEO of VelvetCase.Over the last three months, the coreteam has been strengthened byhiring senior executives from thelikes of Amazon, MakeMyTrip &Pepperfry, he said. In 2014, the company had raised
$1million (`̀6 crore) in a fundinground led by Chennai Angels andother angel investors, includingJacob Kurian, partner at New Silkroute Advisors, Arihant Patni,cofounder of Nirvana VentureAdvisors, and Jerry Rao, formerCEO of software company MphasiS.
$1.5 m in VelvetCase in Round Two
Bengaluru: Five Star Business Cre-dits, which provides loans to microentrepreneurs, has raised fresh fun-ding of `̀114 crore from investmentfirm Morgan Stanley Private EquityAsia, which has now acquired a mi-nority stake in the Chennai-basedcompany.
The Matrix Partners-backed ventu-re, registered as a non-banking finan-ce company, plans to increase its loanportfolio by five-fold over the nextthree years to `̀1,000 crore. The dealcomes at a time when investors are se-eing rising potential in the small bu-siness lending market, which theyexpect will grow as large as the micro-finance industry.
Five Star’s typical clients includetea shop owners, vegetable vendors,small machine owners, provision sto-res, waste paper recycling units, tai-lors, and power looms. These custo-mers typically don’t have a credit pro-file and cannot raise debt from banks.Founded in 1984, Five Star started ex-panding its business by focusing onthe small business space only in 2010after the current managing directorD Lakshmipathy took charge of thebusiness. At that time, the companyhad a loan book of `̀18 crore which hasnow expanded to ̀̀ 200 crore primari-ly focused on Tamil Nadu. Five Starhad earlier raised ̀̀ 33 crore from Mat-rix Partners India in two rounds offunding in 2014 and 2015.
“Five Star has almost doubled itsnumber of branches in the last yearand is poised for growth in both smallbusiness loans and housing loans. Webelieve Five Star addresses a very lar-ge demand gap with great unit econo-mics,” said Vikram Vaidyanathan,
VIKRAM VAIDYANATHANMD, Matrix Partners
Five Star has almost do-ubled its number of bran-ches in the last year and ispoised for growth in bothsmall business loans andhousing loans
NOW PLAYING Entrepreneurs are now launching web series, podcastsand even online reality programme that backs new business ideas
ARUNABH KUMAR,founder, TVF Media Labs
Brands are slowly realising the value of spending on digital content creation instead of spending crores on television
ANIMIS
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For comprehensive and insightful stories about all things startups and technology, log on to www.ettech.com
Using four modifier key-board keys at the same time to run a meta-com-mand is called a quadru-ple bucky. The word takes from a double bucky, which defines the use of two modifier keys like Ctrl and Alt to run a command
Quadruple Bucky
Jargon Buster
Machine learning is real, but the way you’re using it in your pitches isn’t. :/
MAX NIEDERHOFER@maxniederhofer
Tweet OF THE DAY
Quick Byte ANIRBAN BORA
2 millionPC shipments in India in Q1, 2016,according to Gartner
Twitter Adds Stickers for Photos
Tech Buzz
Twitter has added a new feature called ‘Stickers’, which will al-low users to add stick-ers to photos before tweeting them. The so-cial networking site says there will be a ro-tating set of stickers to make photos more fun. The stickers will also be searchable.
Consumer-grade LED bulbs can, with some modifications, be used for connecting devices such as appliances, wearable devices, sen-sors, toys and utilities that could comprise the Internet of Things, says a study. “Visible light communication net-works conserve the ra-dio spectrum, while also making it difficult to eavesdrop for anyone out of line of sight of the network,” said Markus Gross from Disney Re-search lab at Swiss Fed-eral Institute of Technol-ogy Zurich. — IANS
LED Bulbs can Connect IoT Devices: Study