2015 : Predictions For The Indian Startup Ecosystem [Dabangg Year]

By June 2015, there will be atleast 10 funding platforms helping startups raise angel round.

Nobody can predict future – but hey! a lot of our predictions have come true (esp those infamous ones) in the past. So here is our shot at predicting 2015 for the Indian startup ecosystem.
Accelerators were the new ecommerce in 2011. 2015 = Funding platforms.
2011 was the year when accelerators were the new new ecommerce businesses. Everybody was busy launching his/her own accelerator.
The wave is over now.
The new new wave is funding platform!
By June 2015, there will be atleast 10 funding platforms helping startups raise angel round. That is, funding will get totally commoditized.
Amazing for the ecosystem, but hold on. Read the next point.

Crystal Ball Gazing
Crystal Ball Gazing

B C D ? Where Is Series A?
Only 22% of startups who raised angel round in 2013 managed to raise Series A. 2014 saw a massive uptake in angel round, but most of the startups aren’t yet Series A ready. Add more startups to the list (2014 and 2015 combined) and you know you are sitting with a long list of bachelors waiting for the perfect match, though 70% do not even qualify to be anywhere near the definition of MEB (Most Eligible Bachelor).
Talking about the fundig platforms, the winner in the funding platforms will be the one who takes a long term view – gives away the right set of advice to startups.
As an aside (with no data to share), all I can say is that many startups that raised angel round in 2014 didn’t really deserve that sort of money (>1cr). Easy money is fun, but unless you deploy it smartly, it will hit you badly. It already has for few startups.
Ecommerce bloodbath is over. Time for Enterprise.
The ecommerce bloodbath is over now. No Series A / B except for few niche categories. The smaller ones are being lapped up and 2015 will see the same happening in Enterprise space. And not among Indian startups, but between Indian companies and their global counterparts.
And unless Enterprise startups raise a lot more (get more $$s to play with), chances are that investors will force them into an acquisition (by US global players).
Companies like WebEngage / VWO etc. will go through a defining phase.
Ecommerce : Offline players will get on acquisition spree.
A lot many offline players started with their online roadmap in 2014. Most of them will fail. Masively. They will look for acquisition of tier-2/3 players who bring in a lot of insights and experience running online businesses.
Indian investors will do more of seed round, but…
They all need a strong pipeline and given the competition, a lot of institutional funds have been investing in seed rounds. But not in Series A !
Time for micr0-VC model to kick in. Expect smaller disruptions this year. Largely driven by one or two smartasses (who will not come from a VC background).
Rotating #StartupBabas
I believe there is a rotation of babas in the ecosystem (a baba on an average has 2 years lifeline). While I don’t see the new ones being born, the current ones will continue to enjoy Facebook likes and ‘sir-ccolades’.
Acqhires : The Actual Test Starts Now.
2013 paved the way for startup acqhires and while 2014 saw a good number of acqhires, the key data point to note is whether the acqhired founders decide to stay back after the golden handcuff? If not, companies will go back to DIY model and acquisitions will primarily be driven by business need, and NOT talent needs. This can potentially bring down the acqhire momentum.
Enterprise/SAAS startups will continue to raise funding from US funds
Actually, it makes no sense to raise funding for a (global) enterprise/saas startup from Indian investors. Freshdesk, Capillary and Druva have been on top of this trend and I am sure most of the other global startups (from India) will follow the path. #SkipIndia.
ConsumerTech : It’s HOT, But Really?
My sense is that ecommerce enablers* will end up raising more money than the front-end platforms (especially Series A) in 2015.
(1) Because most of the consumertech is funded heavily and there are not more than 15 Series-A players ready in the market (very little room for more institutional funding) and (2) Enablers have a low cash burn and importantly, the real world (a.ka. offline retailers/players) are looking for such platforms.
If I were a VC, I’d rather invest more in enablers who will grow massively big (sustainably) than invest in front-end startups who are playing on non-revenue metrics.
Enablers = PaymentTech, Logistics, Infra (mobile/saas) and similar such businesses. 
Read : 2015 : A Year For Startup Tigers And Unicorns
Randomly speaking:
Olacabs will raise one massive round. Ditto with Zomato.
Inmobi will most probably get acquired (?).
Flipkart will start IPO planning (@NASDAQ).
Bangalore will lose its charm
The rising salary levels will eventually force startups to move out of the city. Winner? NCR and Pune.
Think about it – companies are offering Harley Davidson if you stay for 3 years (yes! there are companies who are doing this). Talent is getting costlier and early stage startups will look elsewhere as candidates already have developed a sense of entitlement which is simply unreasonable.
Pune and NCR will benefit the most out of this.
Ecomm will drive AdTech growth
Flipkart will win here. Content sites haven’t really scaled up.
There is nothing called Indian Startups. There never was.
More than 50% of Series C+ startups have moved their HQ out of India. We have said this long time back (read : Indian Startup Braindrain to USA : A (disturbing) trend that’s for real) – there is hardly any honest and serious representation of startups in government and that’s a problem worth solving (babas, listening?).
*Kickstarted* Hardware startups will have to deliver. Or else get booted out.
30-40% of Indian companies who have succesfully raised funding from Kickstarter have not even delivered the product yet. There is a factory business of photoshopping that’s going around and it’s high time they deliver or get blacklisted.
Aside, if you are a hardware startup, you are better off raising money from anybody but Indian investors. Most of the Indian investors aren’t ‘into it’ and this is going to be a time kill.
And before you do that, please don’t upload photoshopped pics – get some real shit going.
Ditto with IoT startups. Corporate funds will take up a few investments in IoT space – but institutional funds will play it safe.
—-
The startup ecosystem has grown fairly well in 2014. 2015 will see massive exits, but for those who are bootstrapping/in early stage, this is the time to get back to work and stop being a part of startup echochamber.
2015 is going to be a big badass dabangg year for the ecosystem – a lot of hypothesis will be tested. A lot of new segments will be created. A lot of grounds will be broken!
And it’s going to be a whole lot of new new fun.
Wishing you all a great year ahead!
Ashish Sinha.
ashish@nextbigwhat.com
On behalf of NextBigWhat team.
PS : What’s BIG for NextBigWhat in 2015? We will share with you very soon !

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