MUMBAI: Kunal Shah, who co-founded mobile wallet firm FreeCharge, posted on his Facebook timeline the significance of startup exits the day Walmart announced it used to be purchasing a 77% stake in India's most valuable internet company, Flipkart, for $16 billion. Shah said in India, selling one's company used to be met with disapproval because we as a country be afflicted by what he called a "tribal mindset", where a founder is predicted to build an organization like an empire and be a warrior king who'd rule over it.
Having sold FreeCharge to on-line market Snapdeal in 2015, Shah used to be reacting to the various voices on social media expressing displeasure on the result the 11-year-old internet venture and its founders Sachin Bansal and Binny Bansal had accomplished as they notched up a $21-billion valuation for the e-commerce firm. They said Flipkart selling majority keep an eye on to a US behemoth like Walmart would not augur well for the total startup ecosystem, which is looking for local inspiration and position models to build large, unbiased companies.
There's no denying Flipkart's remarkable affect on Indian startups. Having began lifestyles as an e-bookstore in 2007, the Bengaluru company went on to spawn a brand new technology of marketers even because it helped herald a never-seen-before slug of capital into the domestic market.
So what is next for younger, fledgling startups preventing tech giants like Google and Amazon? Would they all have to promote or merge with these global Goliaths? Does this mean India would possibly not have its personal model of a Baidu, Alibaba, Tencent (BAT) like China does?
Tarun Davda, MD at Matrix Partners, an early-stage venture capital fund, says, "The answer is a Yes and a No, because some of the largest Indian startups are now owned by the US and Chinese strategics. I think that ship sailed a few years ago when as a ecosystem we didn't do much to avoid this outcome. We were myopic and continue to be. No, because there are some Indian startups that are scaling independently and my hope is some of these will go for an IPO in the next 3-4 years."
Tech IPOs are few & a ways between
Exits within the type of an IPO, sale or a merger are crucial for startups as liquidity occasions lend a hand traders - who guess on these younger companies - return cash to their restricted companions (LPs) or sponsors of price range, which usually have a lifestyles cycle of 10-12 years. In India, where maximum venture capital price range have discovered it difficult going, a deal which brings in billions of dollars in beneficial properties is a welcome sight. Flipkart's big shareholders like Tiger Global, SoftBank, Naspers and Accel Partners have all exited with $1 billion or extra in money.
But the holy grail of departures is when startups move public, and India has had a measly proportion of that. Deep Kalra, cofounder of MakeMyTrip, which indexed on Nasdaq in 2010 valued at $480 million, says, "We have stayed independent and so have companies like InfoEdge (runs portals like Naukri.com), which went public locally. As for the Walmart-Flipkart deal, it's a great outcome for its founders who have weathered multiple storms, and for the company's investors."
Indian startup mkt needs long-term price range
While Flipkart can nonetheless discover an IPO, after 4 years, according to the deal terms with Walmart, it is not positive the web retailer will move that path.
'Indians will lose keep an eye on sans sovereign price range'
Anand Lunia, spouse at venture fund India Quotient, says, "The truth is startup founders prioritise disruption over perpetual control and rent-seeking. Disruption has to happen in a high-risk, binary outcome environment. Loss of control and independence is a fallout of that choice. Control will go out of Indian hands unless very big money is put in through sovereign funds. We cannot give it over to public markets which have no appreciation for the risks involved and the negative cash flows. Ultimately, we'd need increased purchasing power and hence profits - that's a long wait," he says.
Indian internet witnessed its first wave of giant investor cash are available after 2014, coinciding with Alibaba's much-ballyhooed IPO and Flipkart's $1-billion elevate thereafter. It is clear, India is a market that needs extremely long-term capital. This is why strategics who invest from their steadiness sheets are a greater guess. But with each strategic and financial capital being international, there is a lot desired from Indian businesses.
A founder who runs a client internet platform says at the situation of anonymity, "The fate of startups will depend on the willingness of the ecosystem - particularly established Indian players - to step up and fight for the Indian market. As things stand, the investment community will most likely be open to newer bets on smaller players as they see big exits possible. However, India Inc also needs to realise that the tech economy is here to stay so they can be willing participants or be on the outside looking in as a lot of these companies fight the battle against global companies."
Lunia of India Quotient adds that the massive issue is we shouldn't have top of the range cash in India. The LPs have the same rent-seeking mindset, which is mirrored in VC cash from domestic price range going into 'safe' companies. "We need to have money that is for a horizon of 10-12 years. We can't have public market value mindset in venture investing," he issues out.
Having sold FreeCharge to on-line market Snapdeal in 2015, Shah used to be reacting to the various voices on social media expressing displeasure on the result the 11-year-old internet venture and its founders Sachin Bansal and Binny Bansal had accomplished as they notched up a $21-billion valuation for the e-commerce firm. They said Flipkart selling majority keep an eye on to a US behemoth like Walmart would not augur well for the total startup ecosystem, which is looking for local inspiration and position models to build large, unbiased companies.
There's no denying Flipkart's remarkable affect on Indian startups. Having began lifestyles as an e-bookstore in 2007, the Bengaluru company went on to spawn a brand new technology of marketers even because it helped herald a never-seen-before slug of capital into the domestic market.
So what is next for younger, fledgling startups preventing tech giants like Google and Amazon? Would they all have to promote or merge with these global Goliaths? Does this mean India would possibly not have its personal model of a Baidu, Alibaba, Tencent (BAT) like China does?
Tarun Davda, MD at Matrix Partners, an early-stage venture capital fund, says, "The answer is a Yes and a No, because some of the largest Indian startups are now owned by the US and Chinese strategics. I think that ship sailed a few years ago when as a ecosystem we didn't do much to avoid this outcome. We were myopic and continue to be. No, because there are some Indian startups that are scaling independently and my hope is some of these will go for an IPO in the next 3-4 years."
Tech IPOs are few & a ways between
Exits within the type of an IPO, sale or a merger are crucial for startups as liquidity occasions lend a hand traders - who guess on these younger companies - return cash to their restricted companions (LPs) or sponsors of price range, which usually have a lifestyles cycle of 10-12 years. In India, where maximum venture capital price range have discovered it difficult going, a deal which brings in billions of dollars in beneficial properties is a welcome sight. Flipkart's big shareholders like Tiger Global, SoftBank, Naspers and Accel Partners have all exited with $1 billion or extra in money.
But the holy grail of departures is when startups move public, and India has had a measly proportion of that. Deep Kalra, cofounder of MakeMyTrip, which indexed on Nasdaq in 2010 valued at $480 million, says, "We have stayed independent and so have companies like InfoEdge (runs portals like Naukri.com), which went public locally. As for the Walmart-Flipkart deal, it's a great outcome for its founders who have weathered multiple storms, and for the company's investors."
Indian startup mkt needs long-term price range
While Flipkart can nonetheless discover an IPO, after 4 years, according to the deal terms with Walmart, it is not positive the web retailer will move that path.
'Indians will lose keep an eye on sans sovereign price range'
Anand Lunia, spouse at venture fund India Quotient, says, "The truth is startup founders prioritise disruption over perpetual control and rent-seeking. Disruption has to happen in a high-risk, binary outcome environment. Loss of control and independence is a fallout of that choice. Control will go out of Indian hands unless very big money is put in through sovereign funds. We cannot give it over to public markets which have no appreciation for the risks involved and the negative cash flows. Ultimately, we'd need increased purchasing power and hence profits - that's a long wait," he says.
Indian internet witnessed its first wave of giant investor cash are available after 2014, coinciding with Alibaba's much-ballyhooed IPO and Flipkart's $1-billion elevate thereafter. It is clear, India is a market that needs extremely long-term capital. This is why strategics who invest from their steadiness sheets are a greater guess. But with each strategic and financial capital being international, there is a lot desired from Indian businesses.
A founder who runs a client internet platform says at the situation of anonymity, "The fate of startups will depend on the willingness of the ecosystem - particularly established Indian players - to step up and fight for the Indian market. As things stand, the investment community will most likely be open to newer bets on smaller players as they see big exits possible. However, India Inc also needs to realise that the tech economy is here to stay so they can be willing participants or be on the outside looking in as a lot of these companies fight the battle against global companies."
Lunia of India Quotient adds that the massive issue is we shouldn't have top of the range cash in India. The LPs have the same rent-seeking mindset, which is mirrored in VC cash from domestic price range going into 'safe' companies. "We need to have money that is for a horizon of 10-12 years. We can't have public market value mindset in venture investing," he issues out.
How Flipmart deal hits home rule of startups
![How Flipmart deal hits home rule of startups]()
Reviewed by Kailash
on
May 15, 2018
Rating:
