‘Trump is a Blessing for Indian IT’

RIL chairman says Trump will make Indian talent focus on India and find solutions for issues here
Even as election of Donald Trump as the US President has raised the hackles of the Indian IT industry , Mukesh Ambani, the chairman of India’s largest private sector company Reliance Industries said that it may instead prove to be a blessing in disguise for the $155billion industry .”Trump will be a blessing in disguise. He will make Indian talent focus on India and find solutions for India,” said Ambani at the Nasscom India Leadership Forum. He added that the India market is huge and has the potential to become the largest software market in the world. He, however, cautioned the country against adopting any retaliatory protectionist policies.

“The world will try to build a wall.But, we should not be influenced by that. It is very important to be open and have partnerships,” he said.

Talking about the potential for technology use in the country , Ambani said that we are at an exciting time in human history and data is the new oil. “The fourth industrial revolution is all about convergence of physical, digital and biological sciences… At the foundation of the fourth industrial revolution is connectivity and data. Data is the new natural resource, this has to be processed to intelligence for it to be useful but I do believe that we are at the beginning of an era where data equals oil.” He added that India will have a competitive advantage here with its population of 1.3 billion people and huge amount of data generated by them.

Ambani’s latest venture Jio shook the telecom industry sparking a wave of consolidation. He said that Jio covers almost 95% of the people in the country and as the world digitises, the next step will be partnerships.

Ambani hailed out to Nandan Nilekani, the founder-chairman of the Unique Identification Authority of India (UIDAI) for building Aadhaar, which has enabled real-time customer authentication for registering new telecom connections.”Without Aadhaar, we wouldn’t have been able to enroll one million people a day ,” he said.

Ambani also spoke about how new technologies such as artificial intelligence and natural language process could empower millions of people. “What happens to millions of Indians when they can speak to their mobile phones in their languages and get answers. It will redefine the quality of information and services, that is an opportunity that was impossible before,” he said.

Addressing the country’s booming startup ecosystem, Ambani said that they should focus on solving real problems, which do good to people in some way and not focus on financial returns alone.

Source : The Economic Times (Delhi)

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Angels, VCs Analysed Data Rs 50 crore in Flutura

Flutura Business Solutions, an IoT (Internet of Things) focused data analytics firm, has raised $7.5 million, or Rs50.13 crore, in a fresh round of funding led by Vertex Ventures, the venture capital arm of Singapore Government’s investment company Temasek Holdings. One of the largest rounds recently raised in the IoT sector, it also saw participation from private investment fund Lumis Partners and the startup’s existing investor The Hive, a Palo Alto-based seed fund.Flutura specialises in decision analytics for the energy and engineering sector, leveraging the industrial IoT technology and counts Henkel, Siemens, and Philips Solar among its clients. The Bengaluru-based company will utilise the funds for global expansion.

This is Vertex Ventures’ second investment in India in the past six months, after it led a round of $6 million for customer analytics startup CloudCherry in September. Vertex Ventures’ investments in India are made out of its South Asia fund, which also looks at opportunities in Taiwan, Singapore, Malaysia and Indonesia.

What sets the company apart is the confluence of IoT and data analytics in a manner that it can change the way very large companies function globally, says Ben Mathias, managing director of Vertex Ventures, India. The startup’s data science solution offers assistance to large industrial manufacturers in the form of predictive maintenance to predict possible failure in machines and also to increase operational efficiency by monitoring various signals through sensors.

Flutura has also partnered with large machine manufacturers such as, Hitachi, Dell, Intel and SAP to deliver its analytics solution over cloud and on-premise. It specialises in providing edge intelligence and central intelligence to machines, meaning that large equipment can be trained to react in certain ways in given situations. An example of Flutura’s analytics is the intelligence it can provide to disengage a certain part of a machine that indicates likely failure, and to send an alert to replace the faulty part.

“The industrial IoT sector, that we are targeting, has a huge untapped opportunity and our existing solution of providing analytics to predict machine failure is only the beginning of what could be done,” says Flutura CEO Krishnan Raman.

With backing from Vertex Ventures, Flutura will expand geographically in the UK, and extend product offerings to its existing set of customers, Raman said. The startup has a strong presence in the US, India and Japan.

Source : The Economic Times (Delhi)

Flipkart still India’s top start-up

Flipkart accounted for 75% of revenues but only 46% of losses at India’s Internet start-ups in fiscal 2016

For all its well-documented troubles, Flipkart Ltd remains India’s outstanding Internet company. A Mint analysis of the financial statements of the country’s top 41 consumer Internet start-ups and companies highlights why Flipkart continues to be the torchbearer of India’s start-up ecosystem. The analysis also makes for a worrying read for start-up investors or anyone optimistic about the state of the consumer Internet business.

Flipkart accounted for 75% of the revenues but only 46% of the losses at these companies for the year ended March 2016, the latest for which numbers are available. The online retailer, which was valued at $15 billion in its last funding round in the middle of 2015, also accounted for nearly 40% of the valuation of the companies.

None of the 41 start-ups is an early stage company; all have raised at least two rounds of funds from institutional investors, or Series B rounds as they are called in start-up jargon. More than half of these start-ups have raised many more rounds of funds. The numbers exclude those at ANI Technologies Pvt. Ltd that runs cab hailing service Ola, which hasn’t yet reported its results for the financial year 2016. In the previous year, Ola had reported a loss of Rs755 crore on sales of Rs418 crore.

The analysis reveals why funding has slowed considerably for Internet start-ups over the past 15 months. There’s an unmistakable mismatch in the valuations and revenues of Internet companies. On a cumulative basis, the revenue-to-valuation multiple of these 41 start-ups was 11 times, which for older start-ups (especially inventory-based start-ups) is a relatively high ratio. The loss numbers are shocking. The companies together reported losses of nearly Rs16,000 crore to generate revenues of roughly Rs24,000 crore in the given period. Only one company, Bigtree Entertainment Pvt. Ltd, which runs ticket seller BookMyShow, showed a profit.

If Flipkart were to be removed from this list, the multiples would get considerably worse. Not that Flipkart numbers are flattering by themselves. The company’s various entities, which include its logistics unit as well as fashion retailer Myntra, reported a net loss of roughly Rs5,770 crore on revenues of nearly Rs18,000 crore.

To be sure, Internet businesses prefer to be valued on gross merchandise value (GMV), or the value of goods sold on the platform, rather than on revenues. Many of the start-ups in the list are set up as marketplaces, which take a cut on every transaction rather than sell goods directly to customers. Still, revenue is a more reliable number than GMV. And, most of the 41 start-ups including Flipkart, Snapdeal (run by Jasper Infotech Pvt. Ltd, Zomato Media Pvt. Ltd, Grofers India Pvt. Ltd and hotel aggregator Oyo have cut monthly losses since the beginning of 2016. These companies have become leaner, slashed spending on discounts and advertising, avoided thoughtless expansion and generally tried to find less unsustainable business models.

But given that the e-commerce market showed little growth in calendar 2016, the numbers reinforce the precarious state of India’s Internet start-ups and their venture capital (VC) backers. The unforeseen weakness in the consumer Internet means the revenue-to-valuation multiples are bound to look even more unsustainable as valuations are based partly on growth projections, which have taken a big hit. Downrounds and distress sales and look inevitable. Flipkart’s co-founders Sachin Bansal (in January 2016) and Binny Bansal (January this year) have both lost their CEO position in the past 13 months; Snapdeal is a shell of the company it once was; and Ola is facing a so-called down-round. VC firms have largely avoided punishment.

No wonder then that some of the best-known entrepreneurs and VCs are calling for government protection from companies (Amazon and Uber) that can still afford to operate in the freewheeling way Indian start-ups did in the go-go years of 2014 and 2015.

Source : Mint (Delhi)

HOW I GOT MY STARTUP IDEA

AT SCHOOL, WE OFTEN DON’T KNOW OUR REAL APTITUDE

The company:

Vidyartha The idea: An online platform to help build academic profiles of students through data-insights and aptitude tests

How it struck:

Indian School of Business alumnus Priya Mohan was a financial auditor. In her role, she interacted with entrepreneurs, helping many to raise funds. “Their train of thought excited me,“ she says. Inspired, she debated on a few ideas for herself and chose education. “I took science in school. But I felt if I had access to data about my skills, I would have tried something else.“

When it started:

March 2011

How it started:

In late 2010, Mohan teamed up with her husband’s friend Navin Balan to start Vidyartha. They spent six months chalking out a business plan. “We spent a lot of time in Domino’s and coffee shops.“ The big break came when a Hyderabad-based school decided to partner them in 2011.

Now:

Vidyartha partners with over 2,000 schools and has created profiles for over 2 lakh students. CBSE has asked it to develop online aptitude tests.

WE FOUND SCHOOLS WERE NOT FOCUSING ON CONCEPTS

The company:

3Dexter The idea: Experiential learning by integrating 3D printing tech with school curriculum

How it struck:

Raunak Singhi and his friends were sitting in a tuition centre when they noticed two students cramming definitions. “When we asked one for a definition, he gave us a thorough definition, but when we asked him the concept behind the definition, he couldn’t answer.“ Singhi started 3Dexter to enable students to understand concepts better.

When it started:

June 2015

How it started:

Singhi got together with six of his friends from school and they spent 6-7 months researching the idea. They did a threemonth trial in a Delhi school which ended in February 2016. In April, they went live.

Now:

3Dexter has tied up with several schools in Delhi, Gujarat and Mumbai and leading school boards. It recently received Rs 1 crore from Ica Edu Skills, a training organization.

The Times of India (Delhi)

After Funding Winter, VCs may Venture out in 2017

Tech world has high hopes that 2017 will prove to be brighter, as highfliers prepare to go public & VCs amass huge new war chests
Investors who once poured money into the nation’s start-ups with abandon began to tighten their belts this year.The amount of money that flowed into start-ups in the United States fell in 2016 for the first time in four years as the number of deals struck tumbled to their lowest levels since 2011.

But the technology world has high hopes that 2017 will prove to be brighter, as the parent company of Snapchat and other highfliers prepare to go public and venture capitalists amass huge new war chests.About $67.8 billion was invested in start-ups in 2016, according to data from PitchBook, down 15 percent from last year. And just 7,841 deals were struck, down 25% from the period a year ago.

Much of 2016 proved to be a less ebullient time for the once redhot start-up market.

In years past, investors and the industry press alike delighted in anointing new “unicorns,“ the once-ballyhooed term for a start-up valued at more than $1 billion.

This year instead brought a healthy skepticism -while the apocalypse hasn’t arrived, leaner times are ahead.Start-ups have tightened their belts, laying off staff and focusing more on reaching profitability rather than skyrocketing user growth.

Just 12 companies joined the unicorn club, according to the data provider CB Insights, a 70% drop from 2015.

And initial public offerings -one of the pri mary ways that investors in start-ups can harvest their gains -tumbled sharply during 2016 amid uncertainty and tumult in the stock market.

Just 105 offerings priced during the year, according to data from Renaissance Capital, down 38% from 2015.

Those deals raised $18.8 billion, also a 38% drop from the year-ago period. Both hedge funds and big mutual funds, which have been among the most enthusiastic new backers of new private companies, continued to largely show reluctance in venture investing, according to CB Insights.

Moreover, a few of Silicon Valley’s most prominent start-ups suffered signifi cant blows in the past year.

Theranos, the once highly lauded blood-testing company, laid off about 40% of its workers and closed its labora tory operations amid heightened skepticism about its technology.

Zenefits, a business software start-up, replaced its chief executive after BuzzFeed News reported on its use of unlicensed health insurance brokers. Zenefits has since settled investigations with a number of states, and the company has sought to turn itself around.

Of course, heavyweight start-ups had little trouble raising money. Uber alone raised $3.5 billion from the Kingdom of Saudi Arabia, putting its cash hoard from outside investors at more than $11 billion. Lyft, Palantir and Snap, the parent of Snapchat, all raised enormous sums as well, as did big non-American start-ups like the Chinese ride-hailing service Didi Chuxing.

And some startups sold out to bigger companies for multibillion-dollar valuations.Jet.com, an e-commerce company that began selling goods only within the last two years, sold itself to Walmart for $3.3 billion.

Investors are betting 2017 will be better. Re naissance Capital poin ted out that the average total return of IPOs in 2016 reached 23%, a sharp reversal from the nega tive 2.1% return of 2015 offerings and surpassing the 21% return of two years ago. ­

Source : The Economic Times (Delhi)

Ratan Tata’s Startup Bets

Ratan Tata invested in as many as 29 startups in the past two years through March 2016. He took minority stakes in 22 companies in fiscal 2016, three times more than the previous year when he chose seven to bet on, according to Tracxn Technologies, a data analytics company.Eight of the prominent companies in the portfolio, including Paytm, Zivame, FirstCry and CarDekho, have reported combined revenue of `1,401 crore in the year to March 2016, more than double from the previous year, but their losses jumped three-and-half times to `2,191 crore. The previous year, they had incurred a combined loss of `612 crore on sales of `625 crore. This increased burn comes from extensive marketing investments, hiring and spending to enhance technology. Here’s a look at the financial performance of the companies he invested in his personal capacity.

The Economic Times (Delhi)

TAXMAN COMES CALLING – Startups Brace for Legal War with I-T

33% tax demanded on elevated valuations that prevailed earlier
Startups that have been ordered to pay tax despite valuations being marked down in recent funding rounds are challenging the demands, complaining that the move runs counter to the government’s campaign to encourage entrepreneurial spirit.With startup fever having waned over the past year or so amid concerns over profitability and competition, valuations have declined sharply . Last month, the tax department challenged such reductions at about 100 startups and issued orders seeking 33% tax at the elevated levels that prevailed earlier.

Some startups have moved the income-tax tribunal against the notices while others have approached their advisers and could seek legal recourse in the coming days.

LetsRecycle, an Ahmedabadbased and Aavishkaar Ventures-backed waste management startup, was among those to get the tax demand and has challenged it at the Income-Tax Appellate Tribunal. “Entrepreneurs don’t understand I-T notices as they have to struggle daily to improvise business processes,“ said LetsRecycle founder Sandeep Patel. “When I-T (income tax) acts this way, investors will be sceptical to invest, entrepreneurship will never be born and startups will never become (large) enterprises.“ He said his startup directly or indirectly employs 1,650 waste pickers, among them 200 from the weaker sections of the society.

Prime Minister Narendra Modi launched the Startup India programme in January last year as part of a campaign to create a conducive ecosystem for such companies to boost job creation.

The tax demand has been made for the assessment years 2013-14 and 201415 under Section 56(2)(vii)(b) of the Income-Tax Act, 1961. Experts said the Section was actually introduced to curb money laundering and was being wrongly aimed at genuine investment in startups.

ET reported on June 2 that startups with marked-down valuations may face tax notices. The Central Board of Direct Taxes (CBDT) subsequently is sued a notification exempting government-registered startups on June 14.

“As feared, the tax officers have started challenging all investments prior to this amendment,“ said Amit Maheshwari, partner, Ashok Maheshwary and Associates LLP. “Tax officers have challenged the valuation methodology , assumptions and projections duly certified by merchant bankers or chartered accountants and this could be the ground on which this would be challenged by the startups.“

While some startups weren’t inclined to seek legal recourse, their investors are said to be nudging them to do so, said experts. According to people aware of the matter, SAIF Partners, a venture capital fund, is seeking legal opinion after some of the startups in which it has invested faced tax demands. An email sent to SAIF Partners and an SMS to CEO Ravi Adusu malli did not elicit any response.

Other investors are also likely to push companies to challenge the tax demands.

Those that have been sent notices will have to pay by March end or chal lenge the demand.

The tax department’s move appears to be antithetical to the govern ment’s encouragement for startups.

“The government had allowed three years’ tax break for startups and you are defying your own Prime Minister’s verdict on startups,“ said Sumit Mehrra, CEO, Green Umbrella Investment Advisory, and an angel investor. “The whole logic is defeated when you are taxing a startup on perceived valuation. Taxing actual profit or gain is practical; taxing on notional gain will be obviously challenged by the startups.“

In some cases, startups are looking to set off losses against the tax demand. However, this could trigger a new set of problems for the startups, experts said.

“Setting off of accumulated tax losses could lead to the tax demand on perceived overvaluation in many cases and the startups may still be penalised for concealment of income,“ said Maheshwari.

ET VIEW

Stop Harassment

The flip-flop in policy makes no sense having offered tax breaks to young companies. The tax department should rescind its move to levy the tax on startups whose valuations have fallen on the grounds that the first premium was higher than the firm’s fair value. The valuation rules must be simple and clear. Arbitrariness must be eschewed as investors need stability and certainty in tax policy. More so, when they take risks.

The Economic Times (Delhi)