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<\/i>Alnoor\nPeermohamed, Business Standard<\/i><\/p>\n <\/i>Alnoor\nPeermohamed, Business Standard<\/i><\/p>\n
Bengaluru, 28 December 2016<\/i><\/p>\n
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The\nyear 2016 will go down in history as a tumultuous one for India’s new\neconomy companies that utilise the reach of the Internet to do\nbusiness. The year started off on a low in terms of funding and\nvaluations of start-ups, carrying over a sentiment of excessiveness\nfrom the previous six months.
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\nIt was a contrarian 12 months, with every expert under the sun saying\nthat the fundamentals of the market — growing Internet penetration,\nincreasing per capita income, a strong economy compared to a weak\nglobal market — remained extremely strong, yet companies riding on this\nwave were being punished.
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\nThis neglect from investors finally culminated when Sachin Bansal and\nBhavish Aggarwal, two of the biggest poster boys for India’s start-up\necosystem, passed on the blame to foreign competition which came into\nthe country with pockets full of cash. To their dismay, the red carpet\ntreatment for foreign firms isn’t going anywhere, with Chinese\nbig-daddy Alibaba planning to make an entry soon.
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\n“My concern would be that 2017 may be a resurgence of aggressive\npricing and discounting. It’s great for advertising and the media, but\nfrom the point of view of the sustainability of business, from the\npoint of view of having a healthy consumer business ecosystem, you need\na balanced approach,” said Devangshu Dutta, chief executive of Third\nEyesight. “Just purely from a capital availability point of view and\nability to spend point of view, Flipkart and Snapdeal would be at a\nbigger disadvantage.”<\/span>
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\nThe year began with Prime Minister Narendra Modi’s big push for\nStart-up India with announcements of a fund of funds, incubation\ncentres and promoting local start-ups across the country. But as the\nyear came to a close, Modi’s move to scrap large value currency hit\nstart-ups as business slowed across industries.
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\nHowever, one bright spot was digital payment companies such as Paytm,\nFreecharge and Mobikwik which benefitted immensely from the move, with\ntheir user bases and the number of transactions on their platform going\nup in instantly.
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\nGrowth in digital payments, considered the backbone of e-commerce\nglobally, could turbocharge the rest of India’s Internet ecosystem.\nExperts have dubbed 2017 the year of FinTech in India, with the\ngovernment’s digital push helping grow and giving rise to secondary\ndigital finance companies that deal in lending, helping consumers\ninvest in capital markets and those that offer services to small\nbusinesses for handling the day-to-day running digitally.
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\nGoing into 2017, it is to be seen if the confidence in India’s start-up\nspace returns. While angel investments have remained strong, the\ntransition to Series A and further rounds needs to pick up steam.\nConsolidation in sectors such as e-retail, grocery delivery and food\ntech could give investors more confidence to return.
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\nThe focus on the scale will continue, however. “VC’s today are looking\nat how quickly can you add your first customer, your millionth customer\nand your 200 millionth customer. India is a volume game, if you do not\nget your 10 million customers in 6 months time they feel you have lost\nthe game,” said K S Viswanathan, vice president, Industry Initiatives,\nNasscom. <\/p>\n