2015 remained an incredible year in Indian Startup Eco – System. With young, talented and dynamic entrepreneurs entering into startup culture, people found the effective solutions for the daily life problems. Food, Clothing, Shelter and all the basic necessities like transportation, healthcare, education, communication etc were being addressed by entrepreneurs via their ventures. Cash burn tactics of biggies attracted large mass to become tech savvy rather than remaining dependent on conventional solutions. Total amount of $9 billion was invested in Indian startups over 1000+ treaties.

Success and failures of startups in 2015 developed a lot of lessons for entrepreneurs that should be taken care in 2016. For example – acquisition patterns of biggies revealed a guide map for entrepreneurs if they wish to get their startup acquired by them, failures/shutdown of small players revealed that the unplanned movement would bring not fruits.

All the major events and news being covered on startup news portals, FS brings an exclusive analysis of the learning from 2015 that are important for startups in 2016.

FS Labs Indian Startup Year 2015 - Major Events and Learnings 1

[A] Event – Acquisition Pattern was Fairly Strategic

Description – The year 2015 remained a remarkable year in startup eco system in terms of acquisition of startup. Flipkart acquired Adiquity and Appiterate to enhance its technical back end to ensure the better customer relationship management. Housing acquired Indian Real Estate Forum, Reality Business Intelligence, Home buy 360, Plat and BigBHK to enhance its relationship with its stakeholders – consumers, agents, owners, tenant. Snapdeal acquired Freecharge, Reduce Data, Letsgomo and MartMobi to enhance its business verticals. Ibibio group acquired a stake in Djubo to enhance its CRM. Ola acquired Taxi For Sure in March 2015.

Learning – Following are the key learning from “Startup Acquisition Pattern – 2015”, that need to be taken care in 2016 by entrepreneurs for their startup to get acquired by some big player –

  • Same Model with Same Product has very limited probability of acquisition as the big player can easily overtake the model with its name, trust and tactics.
  • Same Model with Different Product also has very limited probability of acquisition as biggies can easily incorporate that business vertical in their existing setup.
  • Different Model with Same Product can easily be replicated by biggies with their huge resources. So the probability of acquisition is very less.
  • Business Models that acts as further support for biggies in terms of traction, CRM, business verticals etc have more probability of getting it acquired.

[B] Event Unplanned Hiring by Startups caused Massive Firing

Description – Throughout the year startups remained in news for their massive firing of employees. Housing managed to remain in news more because of its founder and CEO – Rahul Yadav firing and then for massive firing of employees – 600 employees in August and 200 in November, rather than its new features and market capturing strategies. In September, TinyOwl came in news for firing its 160 manpower. PepperTap laid off its 40 employees in 2015. Grabhouse also entered into this gradient by firing more than 150 employees in year end.

Learning – Following are the key learning from “Startup Hiring and Firing – 2015” that needs to be taken care by entrepreneurs in 2016 –

  • At initial stage, when entrepreneurs have limited funds, the selection of cofounders should be done on the basis of skillsets required, personal relationship etc so that the friction on startup progress trajectory could be reduced beforehand.
  • At the funding and expansion stage, the manpower should be planned more strategically – combination of contract employees, permanent employees and inters. Interns should be included to meet the targets in short run, contract employees should be recruited aligned with the expansion plan and permanent employees should be recruited aligned with the long run targets of the startup.
  • For stability stage, the manpower planning should be aligned in a way so that the contract employees get reduced by their terms of contract period and the required permanent manpower remains there to run the smooth operations.

[C] EventSimilar Business Models were not able to stand against Big Players

Description – The big players became aggressive enough to adapt their business model as per market need or to introduce new verticals to kick the small players out of the market. Trevo, who tried to become Ola/Uber of Intra-City Bus Travel, was shut down within couple of month of its operations as Ola and Shuttl were strong enough to be given any competition. Taxi For Sure was not able to stand against big giants like Ola and Uber so it was sold to Ola.

Learning – Following are the key learning from “Big Players Strategies – 2015” to be taken care in 2016 –

  • Biggies are strong and aggressive enough to introduce new verticals into their business model. Apart from this there cash burn market capturing tricks are sufficient enough to beat small players. So if the direct competition is of some big player, it is advised to move ahead in a strategic way to make your presence remarkable against biggies.
  • Small players or recently funded players can easily be trampled by achieving better operational excellence and customer relationship management.

[D] Event – Unplanned Movements of Startups caused Organizational Issues

Description – Every activity of startup should be aligned with its long term vision, so the movement in each of the business vertical should be pre planned and aligned with the resources availability and long term vision. RoadRunnr remained in news because of its sudden changes in policies that caused organizational issues. Ola Shuttle and Shuttl were suspended because of not following the government rules and regulations guidelines.

Learning – Following are the leanings from “Unplanned Movements of Startup – 2015” that are important for 2016 –

  • Planning on each of the verticals should be done before hand – scope of work that needs to be done, schedule for each of the activities, cost associated or assigned to each activity, quality parameters, resource management, risk and opportunities, communication flow, integration of all the verticals etc.
  • Revenue Model and Scalability Model shall be planned beforehand as it helps in funds and other resources tracking – availability vs requirements.
  • Legal Requirement and other verticals – shall also be pre planned to avoid issues in long run.

FS Labs Indian Startup Year 2015 - Major Events and Learnings 2

[E] Event – Market Based Models became Centre Point of Attraction than Inventory/ Self Models

Description – Taxi, Bus aggregators like Ola, Uber, Shuttl were successful business models of year 2015. Grofers, Peppertap also proved their acceptance by mass in Grocery aggregators. FoodPanda, TinyOwl, Swiggy etc were the common name of food delivery aggregators. Urbanclap, Housejoy brought home service providers on one single platform.

Learning – Following are the key learning for entrepreneurs –

  • Aggregators platforms have high rate of scalability in terms of geo graphical presence, more business verticals etc.
  • Inventory/ Self platforms have limitation on scalability depending on funds availability but profitable as the number of stake holders reduces in it.

So, entrepreneurs should carefully plan their business models so that stake holders, profitability and scalability could produce the best results combined.

[F] Event – “Housing Spectacle – Rahul Yadav Saga” Companies don’t run by single person

Description – Housing remained in news since the start of 2015 because of its founder and VC drama. Eventually after reciprocals of a lot of events, Rahul yadav was fired from Housing. VCs as well as Rahul Yadav both tried to prove their point correct, but ultimate result was both suffered in absence of each other. Housing lost its evaluation while Rahul Yadav made his image as bad boy of Indian startup.

Learning – Following are the key learning for entrepreneurs –

  • Companies need to take care of all the concerned stake holders, so founders should remain open enough to listen to other people and maintain the balance between ego and brain.
  • Founders might be technically sound but it doesn’t make them good business expert. So they should also be ready to seek advice from the experts.
  • Investors should also understand the point of view of young entrepreneurs and support them in marking employee friendly work culture.

[G] Event – Sector consolidation started

Description – Sector consolidation started by biggies. Snapdeal acquired Freecharge to consolidate the user base of e-commerce and mobile platform addicts. Ola acquired Taxi For Sure to consolidate the market volume of Cab Aggregator. Paytm tried to consolidate the market volume of Mobile Recharge Transactions of E-commerce with the funds of Alibaba.

Learning – Following are the key learning for entrepreneurs –

  • Sector consolidation target of biggies shows that more acquisitions of same or similar domain are going to take place in 2016.
  • Small models addressing the further verticals/ services of biggies will get acquired soon.

[H] Event – App only phenomenon remained in highlights

Description“App –Only” phenomenon was introduced by biggies like Flipkart, Amazon, Mynta by giving offers only on App to drive traffic to enhance App based market volume. Myntra take the biggest move by going “App-Only” by shutting down its web portal in May. Flipkart, Snapdeal also focused on their light version of website. Makkhichoose came in picture when it tried to beat myntra App Only strategy by fetching data from App and offering it on Myntrality, though it was shut down within couple of days.

Learning – Following are the key learning for entrepreneurs –

  • Web as well as App should be developed in parallel to target the large market base.
  • As the data of biggies revealed that the mobile based transactions are more than 80%, App consolidation may be a good focus area for entrepreneurs.

These were the major learning from Indian Startup Year 2015 that FS believes would be helpful for entrepreneurs. Wish you luck. Stay tuned to know more.

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