The Indian startup ecosystem, which is valued around $100-120 billion, is going through a paradigm shift, driven by better quality startup entrepreneurs, rapid scale and availability of funds, and is looking at opportunities beyond e-commerce.
“We are in a new phase of startups (journey) characterised by some major shifts,” said Rajan Anandan, Managing Director of Sequoia Capital India and the President of TiE Delhi-NCR.
One of the biggest shifts is in the quality of startup founders, which has dramatically improved over time. With some 20 odd unicorns, India’s many entrepreneurs have been through the startup journey. There are many more who have worked in Big Tech companies like Uber and Google.“They come with experience of how to scale fast, build teams and so on, and they have deep domain expertise,” Anandan said. “We are beginning to see a very different phase. We will be going from 20 unicorns to 100 unicorns by 2025. We are going to create many different kinds of companies.”
Also, companies are becoming a lot more broad-based. Earlier it was consumer internet and e-commerce. In the first phase, startups also followed US models. Anandan doesn’t like to call them replicas or copy cats. “Those are bad words,” he said, adding: “There is no other companies like Byju’s in the world, there is no one like Oyo.”
Over the years, the pace of scale has changed. From 10-12 years, it takes five-six years to become a unicorn, Anadan said, who is also responsible to scale Sequoia Surge, a startup scale up programme.
“If you have got traction, if you have got a strong team, and a business model that will pan out in the long term you can raise 50, 100, 200, 300 million dollars,” he said, but at the same time highlighted that startups need to have a lot more seed funding, too, which is not abundant in India.
He feels the India global story is playing out once again like it did for IT services. For context, Tata Consultancy Services (TCS) was the first company to emerge a $100 billion market capitalisation company from India. “FreshWorks was the first unicorn in the B2B space. What is different now with this wave is that consumer companies are going global. The No 1 digital payments companies in Japan is an Indian company: PePe is Paytm. Oyo is the number one hotel aggregator in China,” Anandan stated.
India’s strength lies in its tech talent and humongous population. “The US and India are the two countries which will build massive companies focussed on the domestic market. There are very few countries that can do both. Israel can do global, but can’t do local because they are a five million people country. China is the other one that can do that,” Rajan explained.