“Always be yourself, unless you can be a unicorn. Then always be a unicorn.”
2016 saw new entries to India’s prestigious unicorn club – startup companies valued at over a billion dollars. That number now stands at 11. These 11 companies are a beacon of hope and aspiration to many others in the list. They are revered, followed, and critiqued by almost everyone in the ecosystem.
Their killer moves, damp squibs, goof-ups, strategies, acquisitions, and write-offs, give food for thought and action to countless others. The valuation upheavals they are subjected to, sends shivers down the ecosystem. As this year comes to an end and we close the books on it, it’s time to reflect back on the moments of excellence and not so much greatness that our unicorns went through in 2016.
It has been a busy year for the poster boy of Indian ecommerce – from defending its turf against rival Amazon to appealing the government to design policies which will favour homegrown companies and help battle the foreign players. The year started with the ecommerce giant undergoing a structural change, with founder Sachin Bansal (CEO & co-founder) becoming the Executive Chairman in the company, and Binny Bansal (COO and co-founder) the new Chief Executive Officer of Flipkart.
What followed in February was the exit of Mukesh Bansal, founder of Myntra, who had been recently appointed as Head of Commerce Platform for Flipkart’s core business. With the first devaluation by Morgan Stanley in February, three more markdowns followed .
Meanwhile, it continued its efforts to rein in losses, by letting go of underperforming employees, shutting down its grocery delivery division ‘Nearby,’ launching its mobile site on UCWeb’s flagship product UC Browser to help consumers to access the platform even on a slow 2G network, especially in non-metro cities. The company also rolled back its image search option and in-app peer-to-peer chat service Ping and intensified its efforts to launch a digital wallet to build an independent digital payments business. Along the way, it picked up Rocket Internet-backed Jabong in July, to consolidate its presence as far as the fashion category is concerned, something which rival Amazon is still not getting right.
Reports are also doing the rounds that it is planning to form an alliance with Walmart Stores Inc to ante up against Amazon. For the moment, it’s struggling to raise funds and demonetisation has further added to its woes, with the ecommerce giant restricting the popular COD option for orders above INR 1,000. Last heard, Sachin Bansal wants to create a lobby group for local consumer Internet startups, with an aim to form a trade association that will solely fight for local companies such as Flipkart and Ola with the government for favourable laws.
Delhi-based ecommerce marketplace, Snapdeal started the year on a high note by raising about $200 Mn in a funding round led by Canada-based pension fund – Ontario Teachers’ Pension Plan. But much of the year was spent defending its turf against rivals Flipkart and Amazon. The year saw it launching the new version of Snapdeal Ads platform to enable sellers to target the right customers and also saw it shutting down its marketplace for premium branded fashion and lifestyle products, Exclusively.
Snapdeal was reported to be the frontrunner in talks to acquire Jabong and also intended to buy out GoJavas completely, but the deal fell through as the logistics company walked out of negotiations, on account of differences over valuations. The year also saw Snapdeal’s Chief Product Officer Anand Chandrasekaran quitting the company to join Facebook Messenger.
In September, the company went for a rebranding exercise, launching its new brand identity “Unbox Zindagi” and a new logo. The year closes on Snapdeal with Softbank Group marking down its investment and finding itself in the news of being a possible acquisition target by Chinese ecommerce giant Alibaba.
In January this year, Gurugram-based online managed marketplace ShopClues, reportedly raised $100 Mn in funding from Tiger Global, GIC, and Nexus Venture Partners at a valuation of more than $1.1 Bn, thus catapulting it into the billion-dollar club.
To add muscle to its payment network for merchants in July, it acquired Bengaluru-based mobile payments startup Momoe Technologies. After demonetisation hit the Indian economy, ShopClues took a step towards helping offline merchants opt for cashless transactions by announcing ‘Reach’ in December– a payment gateway to help brick-and-mortar stores across India process hassle-free cashless transactions for customers who prefer making payments digitally.
Online classifieds portal Quikr was probably the one unicorn which got a 13% hike in its valuation, in a year that has been otherwise tough on unicorn valuations. In October, one of its investors, Kinnevik AB, the Swedish investment firm valued its 18% stake in Quikr at $265 Mn, increasing the total valuation to $1.47 Bn.
As per Kinnevik, “The company made a number of bolt-on acquisitions during the quarter (Jul-Sep 2016) that enhance its strategic positioning and product offering.”
One of these moves was the acquisition of Bengaluru-based online recruitment firm Hiree, focussed on white collar jobs, for an undisclosed amount in July. With Hiree merging into its jobs vertical QuikrJobs, the combined entity is expected to create a leading recruitment platform that connects over 4 Mn active candidates with recruiters across the country.
Another shot in the arm was the acquisition of online realty portal CommonFloor in a stock-and-cash deal for $200 Mn in early January. This was Quikr’s fourth acquisition and the biggest strategic move in the real estate category. Other acquisitions it made, include in-home beauty service provider, Salosa in May, on-demand beauty, wellness, and fitness app ZapLuk in August, mobile marketplace for beauty services, StayGlad in September as well as Stepni, a platform that connects vehicle owners with the service providers nearest to them in September, and Bengaluru-based home rental marketplace Grabhouse in November.
If there is one unicorn which had a really busy 2016, it was mobile payment and commerce platform Paytm. Ever since the demonetisation bug hit the Indian economy, Paytm has had a busy two months, as the platform saw an overwhelming 435% increase in overall traffic in less than 24 hours after the demonetisation announcement on November 8, 2016. From grocery peddlers to toll highways, Paytm has become ubiquitous.
While it was riding high on the demonetisation wave, Airtel beat it to pilot launch the first payments bank. Nevertheless, Paytm is close and, this month, it issued a public notice that it would be transferring its wallet business, after necessary approvals, to the newly-incorporated Payment Bank entity.
Earlier in the year, it also announced the decision to separate its ecommerce business as its key investor, Alibaba plans to enter India either independently or through an acquisition (the aforementioned Snapdeal being a frontrunner). From strategic acquisitions such as that of Delhi-based consumer behaviour prediction platform, Shifu in January and app-based, hyperlocal, fashion commerce startup Shopsity in November, to stepping into cross border commerce by helping sellers on its platform source more than 5 Mn products from China, to launching payments option for non-internet users, Paytm has been ruling the headlines all through.
While the withdrawal of its in-app POS (point of sale) feature just a day after its launch, citing security concerns and the tussle with PayPal over trademark registration could be seen as aberrations in an otherwise upward curve, it seems there is no stopping it from having a blast as we enter 2017.
Mobile ad-tech startup InMobi too had a not-so-great 2016. In April, it too succumbed to the layoffs mania plaguing the Indian ecosystem with close to 100 employees being laid off. This was followed by CFO Manish Dugar leaving in May to join Practo.
But real trouble ensued in June, when the startup found itself in a legal soup and was fined $950,000 in civil penalties on charges of deceptively tracking the locations of hundreds of millions of consumers, including children, without their knowledge or consent to serve them geo-targeted advertising.
The year began with a low note for restaurant discovery and food-ordering portal Zomato which had to shut down its online ordering service in Lucknow, Kochi, Indore, and Coimbatore in January on account of a still-nascent market in these cities. In March, it partnered with Snapdeal to enable customers to order food online through the Snapdeal app. April saw the launch of its cloud-based point of sale product for restaurants Zomato Base – an Android-based PoS system that helps a restaurateur manage their day-to-day operations from a single platform.
But a shocker came in the month of May, when HSBC’s brokerage arm slashed down the paper valuation of restaurant-discovery platform Zomato by 50% to $500 Mn from the earlier valued $1 Bn. News soon followed that it was rolling back its operations from nine countries out of 23 in the overseas market, to reduce its operating costs.
In order to up the ante on its delivery service, it acquired tech-based logistics company Sparse Labs in September. Last month, it was reported that the maybe-unicorn had roped in Morgan Stanley to raise fresh funds for aggressive investments in food delivery and new businesses such as cloud kitchens.
Can hailing app Ola’s year was majorly spent in fighting competition from rival Uber on all fronts – from service to new offerings to even attacking Uber’s foreign roots. In this direction, in January Ola launched ‘Ola Corporate’, to offer seamless mobility experience to corporate travellers across all major Indian metros. In March, it shut down its food-delivery service ‘Ola Cafe’ and Ola Store as it strengthened its focus on mobility.
Things hit a new low in June, when it was Ola’s turn to accuse Uber of being a foreign firm with no regard for Indian laws and doing business in India only for profit. This cry for nationalism continued until the end of the year, with Ola’s Bhavish Agrawal beseeching the Indian government to design policies which will favour homegrown companies and help battle foreign players.
Fighting a tight battle against cash-laden Uber, Ola has been trying to raise fresh funds but nothing has materialised so far. On the contrary, one of its investors Softbank marked down its investment in the firm in November.
Data analytics company, Mu Sigma, the first B2B company to make the list, made the right kind of news in February this year, when it appointed co-founder Ambiga Dhiraj as its new CEO, making her the first woman CEO of an Indian unicorn.
However post that, the firm made the news for all the wrong reasons the rest of the year. In March, the firm and founder, Dhiraj Rajaram, were accused in a lawsuit of “grossly misleading” its investors, in order to buy back their shares at a lower price.
In May, following the divorce between Dhiraj and Ambiga, the firm faced uncertainty over future ownership and management. Finally, after months of speculation, Dhiraj acquired a majority stake of 51.6% in the data analytics firm by buying out his estranged wife’s holdings in October, and took over as the CEO. Ambiga will continue to serve on the board in a non-executive capacity and refuted speculations that she is planning to launch her own venture and that she refused to include a non-compete clause in the agreement.
The Chennai-based cloud services firm founded by Sridhar Vembu in 1996, which is the second B2B company on the list, was on a major launch spree this year. In its bid to sign up 1 Mn enterprises in the next three years, Zoho launched a host of services as it gears up to take up on global rivals Salesforce and Microsoft.
Towards this end, in August, it launched the Zoho Developer programme, which provides independent software vendors (ISVs) and application developers the tools and resources to create extensions and build custom applications. Also launched was Zoho Marketplace, where users can buy extensions and custom-built applications and developers can sell them commission-free. Additionally, it launched Zoho CRM – the industry’s first multi-channel CRM – which supports email, social media, live chat, and phone communications, enabling salespeople to engage their customers and prospects across all channels in real time, with SalesSignals.
But the real page-turner came in November, when Zoho rolled out its sixth product – Zoho Desk – the industry’s first context–rich help desk software built right out of rural India from Tenkasi, a small town of around 70K inhabitants in Tamil Nadu’s Tirunelveli district.
This launch not only put Tenkasi on the world map but also exemplified Vembu’s beliefs that “In an industry where companies have come to believe that the only location that matters in the cloud is a few square miles of downtown San Francisco, we are proving that a determined and sincere group of people can build path-breaking products anywhere.”
Internet-based cross-platform instant messaging service Hike Messenger rolled out three new features, Stories, Camera, and Live Filters in November. The Timeline format on Hike was replaced by the Snapchat-like ‘Stories’ feature which allows users to share their lives and real moments with their friends through photos. These updates would vanish 48 hours after being posted.
But these features were hardly the most exciting thing that happened to Hike this year. In the beginning of this year, it raised an undisclosed amount of funding from Silicon Valley tech veterans including Adam D’Angelo (founder & CEO at Quora), Aditya Agarwal (Dropbox Vice President), Matt Mullenweg (WordPress co-founder) and Ruchi Sanghvi (former Vice President, Operations, Dropbox).
Further down the year, in August, Hike raised $175 Mn in a Series D round of funding, at a valuation of $1.4 Bn. The investment was led by Tencent Holdings and Foxconn Technology Group. Interestingly, Tencent had introduced its popular chat app WeChat in the Indian market in 2013. But the messenger did not get the desired traction.
Co-founder Kavin Mittal, however, refused the possibilities of any synergies with the investor in the future. What he clearly intends to do is take a cue from Tencent’s QQ instant messaging software service in China (800 Mn users) which is more youth-focussed. Kavin believes that he could replicate the same success in India with Hike.
A billion dollars is just a number on a piece of paper. Sure, it means a company gets more press attention, and there is a certain reverence and healthy envy attached to the brand, but at the end of the day, all that matters for a growing business is sticking around and going on.
The Indian unicorns have had an interesting, oftentimes, troubling twelve months, but what is heartening and admirable to see is the way they are carrying on with the business of making – making products, making changes, making valuations mean less than what they are. They stood tall and carried on and we hope to see them carrying on this legacy of ‘Make In India’ in 2017 too.
Which of these will still rule the roost in 2017? We can’t wait to know!
This is part of our special series, In Focus: 2016 In Review, in which we showcase the highlights of 2016 and what’s to come next year in the Indian Tech Ecosystem. Stay tuned for more.
[Graphics by Satya Yadav.]