These are turbulent times. Economic turmoil in Europe and sluggish growth in USA, make China and India (with growth rates of 8.1% p.a. and 7.8%[3 ]p.a.) look like oases in an economic desert. With notional GDPs of US$7.29 trillion and US$1.67 trillion, China and India are large, high-growth markets .The widespread use of English(125 million English speakers) and the presence of over 100-120 million internet users makes India an attractive market for technopreneurs.
The opportunity: Ecommerce, Social Media, Mobile and more
There has been a huge spurt in e-commerce in India where the market is estimated at US$9.2 billion p.a. The number has almost doubled between 2009 and 2010. Transactions involving a myriad of items ranging from air tickets to life insurance policies, from consumer durables to jewellery fueled the rapid ascent of several startups in this space; the most famous of which-Makemytrip listed on NASDAQ and attained a valuation of close to US$1 billion.
Social networking and the use of social media is exploding in India. Facebook has over 46 million users in India- that is nearly double the corresponding number in Germany and nine times the population of Singapore. LinkedIn is catching up too with over 10 million users in India. Companies are embracing this trend and are engaging their customers on social media platforms like Facebook and Twitter.
India is set to have close to 700 million mobile users by the end of the year.A survey by Google and Ipsos showed that 56% of smartphone users in India access the internet several times a day as opposed to 53% in USA. 5.2 million smartphones are expected to be shipped in 2012 in India. A study placed the number of 3G enabled phones in India at 26 million. This is 2.5 times the entire population of Sweden.
All this presents a tremendous opportunity for the smart technopreneur. The possibilities are limitless – e-commerce portals selling anything from tickets to shoes (Cleartrip, Jabong, Infibeam), social media applications that help companies engage users (Webfluenz, Beevolve), mobile applications (Abilita, Landmark Finder) and so on and so forth.
Innovation in India: An illustration
Have you heard of the term “cash on delivery”? You probably haven’t if you haven’t been to India in the last one year. E-commerce companies found that a large section of Indian shoppers either didn’t have a credit card or were wary of trusting an online retailer without “touching or feeling” the product that they were purchasing. This was preventing them from shopping online. So, companies like Flipkart introduced the concept of “cash on delivery” where the customer pays cash upon receiving his purchase. Problem solved! Now, over 60% of Flipkart’s business is done via “cash on delivery”.
Co-founders of Flipkart, Binny and Sachin Bansal. Image: Forbes
Venture Capital in India and burgeoning valuations
All this is not lost on the VC community and the Sand Hill Road bigwigs. From Sequoia Capital to Blue Run Ventures; from Draper Fisher Juvertson to Kleiner Perkins, everyone is in India and are investing big time. VCs and PE funds infused more than US$14.8 billion in Indian companies in 2011 alone. India’s Amazon equivalent – Flipkart was valued at approximately US$850 million when it raised US$150 million from Accel Partners and Tiger Global.
What’s in it for the Singaporean startup?
You might say – “Yeah! I get it. India is growing and is big. So what’s in it for me? ” The short answer – money, growth and lots of it! The basic idea that is being suggested here is for the Singaporean startup to use capital and expertise that is available in abundance in Singapore, build products and services that add value to the consumer in the Indian market and earn revenue from India.
Why the Singaporean startup is suited to the Indian market
The typical Singaporean technopreneur is uniquely positioned to thrive in a market such as India for the following reasons.
a) Access to seed capital and smart people– A lot of people have ideas but raising the required capital and finding a good team to help one execute the idea is not easy in cash-strapped and risk averse Asia. But thanks to the pro-enterprise nature of the Singaporean startup eco-system, seed capital is easily accessible along with a pool of smart and enterprising techies. Singapore, especially because of the investor-friendly business environment and special schemes of organizations such as NRF, MDA, & IDA, is probably the best place in Asia for a technopreneur to startup and raise seed capital .
b) Access to specialized expertise –There is no dearth of expertise in Singapore, whether it is technological expertise or business expertise. Mentors, former successful entrepreneurs, subject matter experts etc. are all easily accessible and are likely to agree to work with a startup for equity.
c) Proximity to India and favorable trade agreements- If India is to be an important market for a startup’s products/services, it is essential that the marketing and management team understand the India market and the culture well. This entails frequent travel to India for meetings/market research and so on. Singapore is a four hour flight away from India, thus making travel convenient and short. The Asean India Free Trade Agreement (AIFTA) and the Comprehensive Economic Cooperation Agreement (CECA) have given Singapore and India better access to each other’s markets.
It is the author’s personal opinion that there is scope for many more Singaporean startups to target the Indian market. He hopes that this article will ignite interest in some of the Singaporean startups to take a second look at the Indian market. The author feels that there is a lot of scope for Singaporean startups to do well in the following areas of the Indian market:
– Smartphone application space
– Social media space
– Niche areas of the ecommerce space
In the next article in this series, the author will talk about the potential difficulties of doing business in India and how the vigilant technopreneur can mitigate the associated risks.
About the author
Ashwini Anand (Ash), CFA is the founder of Investopresto, a startup headquartered in Singapore that targets the Indian financial services market. He is an alumnus of the National University of Singapore.