Startup Street: Rapid Diversification The ‘New Normal’ For Tech Startups, Says Nasscom
Here’s what went on this week on Startup Street.
This week on Startup Street, we’re analysing the pulse of India’s technology startups on the back of Nasscom’s latest survey. Besides, Sequoia Capital India has selected 17 early-stage startups for its fourth cohort of Surge, and Madhya Pradesh-based agritech startup is planning to raise Rs 90 crore in Series A funding. Here’s what went on...
Road To Recovery
India’s technology startups, one of the worst hit segments by the pandemic, are now recovering. A rise in hiring, improved funding and a more optimistic outlook are a few signs highlighted by industry body Nasscom in its latest survey.
This recovery, however, comes with strategic changes and challenges.
Product diversification has become the "new normal" for tech startups in India, in their struggle to survive the disruption caused by the Covid-19 pandemic. Of all the startups surveyed by Nasscom, 49% said they are adding new products within their existing verticals, while 47% termed it as one of their biggest short-term priorities. This was second only to cost optimisation, a survival tool adopted by most businesses in India.
One of every two early-stage startups is also expanding its products portfolio to widen scope.
Over a quarter of the startups surveyed said they are already pivoting to new vericals such as education technology, health technology and financial technology. Sixty-nine percent startups said adding new verticals to their business was an important long-term priority.
Here are some other key data points from the Nasscom report:
Three-fourths of business-to-business startups are developing new products and verticals
Over two-thirds of low-revenue startups have resorted to marketing spend cuts, salary cuts and travel restrictions
Three-fourths of matured startups are artificial intelligence, internet of things and other technology-based solutions
Over 30% businesses are moving online
Besides, the survey found that 53% of these startups expect their revenues to reach pre-Covid levels in less than six months. This is in contrast with the first Startup Pulse Report released by the tech industry body in May, which showed two-thirds of surveyed startups had a runway of less than three months.
Since then, hiring has improved by 20%, and the industry has seen a 2X-4X growth in tech startups that are able to raise funds.
Sequoia Unveils Fourth Group Of Startups For Accelerator Programme
Sequoia Capital India has selected 17 early-stage startups for its fourth cohort of Surge, a programme to help entrepreneurs in Southeast Asia and India to expand their businesses.
The latest crop of startups, which have collectively raised $45.4 million, include the blogging platform Hashnode and online extracurricular academy Kyt. Three of the startups are in stealth mode so their identities are not disclosed.
Surge has gained prominence since its inception in March 2019 because of its approach to accelerating the development of promising seed-stage companies. Selected firms get between $1 million and $2 million in upfront seed capital, as well as a 16-week programme of intensive workshops and mentorship sessions with successful founders in the region.
Surge is the brainchild of Sequoia Managing Director Shailendra Singh. He believed that founders in their early days were forced to spend too much time raising capital, rather than developing their workforces and strategy. The programme is led by Singh and Rajan Anandan, who joined as managing director of Sequoia Capital India in 2019 after serving as Google’s head of India and Southeast Asia.
Farmkart To Raise Rs 90 Crore From Venture Capitalists
Madhya Pradesh-based Farmkart, which offers a wide range of agricultural products and services to farmers through its e-commerce platform, is planning to raise Rs 90 crore in series A funding from venture capitalists for expanding across the country.
"At present we are functioning at 1,240 locations in Madhya Pradesh. We plan to begin our immediate expansion to 8,000 locations in Maharashtra, Gujarat, southern region and reach one lakh (locations) by December 2021, across the country in next one year,” Farmkart Founder Atul Patidar told PTI. “Initially, we had invested Rs 15 crore in this venture and are looking to raise Rs 90 crore in Series A funding through venture capitalists.”
Recently in one of the episodes of 'Mann Ki Baat', Prime Minister Narendra Modi lauded the efforts of Patidar to digitally connect farmers and deliver farming items to their doorsteps.
Farmkart's tech solutions are designed for non-tech savvy farmers providing them with fertilisers, pesticides, fungicides, seeds, farm equipment, among others at their doorsteps with no delivery cost. Besides, farmers can also rent modern farm equipment from Farmkart's e-commerce platform.
"We have tied-up with almost all major international and domestic brands for seeds, fertilisers, fungicides and pesticides. We have tie-ups for farm equipment and are looking to add more in this category," he said.
This nationwide expansion will entail adding more manpower, for which the company is to recruit from business schools, Patidar said. Currently managing a workforce of 102, the startups expects it will need over 3,000 people to realise its ambitions.