This article is part of Inc42’s special year-end series — 2019 In Review — in which we will refresh your memory on the major developments in the Indian startup ecosystem such as funding deals and acquisitions, and their impact on various stakeholders — from entrepreneurs to investors. Find more stories from this series here.
When it comes to role models and influential figures, India has no dearth of business leaders that help inspire startups to innovate and keep up with the pace of technology.
Even corporate leaders are taking notice of the potential of startups and international investors have proven to be very influential in backing the right businesses in the Indian tech ecosystem. From the likes of Mukesh Ambani to Softbank’s Masayoshi Son, startups in India have become hot property among the wheelers and dealers of the world.
But with attention come controversies and India had a fair share of them in 2019 in the context of startups with mega scams to nationwide protests as technology continues to permeate every aspect of our lives.
So here’s a look at who made the headlines in the Indian startup ecosystem this year:
Mukesh Ambani: India Inc’s Flagbearer
With acquisitions and investments, India’s richest man Mukesh Ambani continued to be startup India’s godfather. On one hand, Reliance Industries Ltd (RIL) acquired tech startup C-Square, edtech startup Embibe, retail startup Fynd, on-demand services startup Grab and VR hardware startup Tesseract in 2019, and at the same time Reliance Jio’s data boom continued to trigger adoption of smartphones across segments in 2019.
The Telecom Regulatory Authority of India (TRAI) in November 2019 said that Reliance Jio’s market share for telecom subscribers stood at 30.26%.
India’s richest person also continued to empower many small retailers and shopkeepers across the country, who run business by leveraging WhatsApp and other social media platforms by offering many cheap data plans. In October 2019, the telecom operator launched Jio ‘All-In-One’ plans which gives 2GB data everyday alongwith 1,000 minutes of free talktime to non-Jio mobile numbers.
Mukesh Ambani also remained the richest Indian as Jio added $4.1 Bn to his net worth this year.
In September, the company launched its much-awaited Jio Fiber plan with revolutionary prices. The plan, launched across 1,600 cities in India, offers a speed starting from 100 Mbps and goes all the way up to 1 Gbps. The plan also comes with access to free domestic voice calling, conferencing and international calling; TV video calling and conferencing, entertainment OTT apps, gaming, home networking, device security, VR experience etc.
Prior to that, the company had also announced the launch of ecommerce platform with categories which have a good consumption rate among users, which includes daily staples, grocery, household items and hygiene products. A key part of this equation would be tying up with kirana stores as distribution points, which would enable hyperlocal deliveries and quick service time.
Sachin Bansal: Ecommerce To Fintech!
Sachin Bansal raised many eyebrows in 2019 when he started his third stint as CEO and entered into financial services. In September, Bansal acquired Chaitanya Rural Intermediation Development Services Private Limited (CRIDS), a non-banking finance company (NBFC) and took over as the CEO of the company. The acquisition saw an investment of INR 739 Cr ($104 Mn) by Bansal.
Talking about his higher goals of achieving financial inclusion, he said, “There is huge under-penetration in the sector, whether it’s a credit-to-GDP ratio or insurance penetration. We can give access to a lot more people in financial services. That’s not happening by existing players and technology can be applied to solve this,” he added.
Bansal has also been with dabbling with investments in startups and lending institutions through BAC Acquisitions Pvt. Ltd, a holding company he had started in December 2018. He invested INR 250 Cr through debt in non-banking financial companies Altico Capital India Ltd and IndoStar Capital Finance Ltd.
His biggest crapshoot was committing to invest $100 Mn in Ola in January this year. He also invested close to $35 Mn in EV startup Ather Energy.
Ritesh Agarwal: Courting Controversies And Funding
The blue-eyed boy of the Indian startup ecosystem, who started OYO right out of his high school, had a roller coaster ride this year. Ritesh Agarwal, in one of India’s record-breaking deals this year, opted to buy back shares worth $1.5 Bn from venture capital investors Sequoia Capital and Lightspeed Venture Partners.
Agarwal also successful marked his territory in 10 countries— India, China, Malaysia, Nepal, UK, UAE, Indonesia, the Philippines, Japan and Saudi Arabia and achieved control over 13K hotels and 3,000 homes listed on its platform. The Indian hospitality chain OYO Hotels and Homes also partnered with SoftBank to begin its hotel operations in Japan. OYO Hotels Japan G.K was formed through a joint venture with Tokyo-based SoftBank Corp. and SoftBank Vision Fund.
OYO also raised INR 50 Cr ($6.9 Mn) in debt from MyPreferred Transformation, which is a joint venture between the hotel chain, Japan-based conglomerate SoftBank and non-banking finance company (NBFC) Avendus Finance.
“I am only 25 now and have a long way to go personally but I am considering a few ideas that will help me make a meaningful contribution. You will soon hear about this,” he said.
Not only did Agarwal help shape the company’s vision and the Indian market’s perception of budget travel, but he also took OYO into new territories such as coworking spaces, cloud kitchens, premium hotels and global expansion. In June 2019, OYO Hotels and Homes announced its expansion in the US with over 50 OYO hotels in 35 cities across 10 states including the cities of Dallas, Houston, Augusta, Atlanta and Miami.
On the flip side, OYO founder also experienced his worst nightmares when he along with two company representatives—Anand Reddy and Prathik Singh— were named in multiple FIRs in Bengaluru in September and November 2019.
Agarwal was named by complainants as OYO’s troubles with hotel partners raged on throughout the year. As hotels across the country protested, some took the step of involving the police, though OYO claims these are isolated incidents and not a collective protest.
It wasn’t just in India either; the founder and company faced flak from hotel owners in the US who were unhappy about poor software, loss of revenue as well as criminal activities within rooms that are managed by OYO.
The founder has been facing pressure from SoftBank as well to achieve profitability. We have to wait and watch as to how OYO handles cash burn, losses and achieves profitability without overspending as it pivots to an asset-heavy model by acquiring properties.
Deepinder Goyal: Tweets Spoke Louder Than Profits
Deepinder Goyal’s Zomato turned 11 this year, and as with any 11-year-old, Zomato had its moments of adjustment to the changing world around it.
The cofounder and CEO revealed that Zomato saw a spike of 308% in the average monthly active delivery partners in the first half of FY20 with an association of more than 200K delivery partners. Members of Zomato Gold, the aggregator’s flagship product, increased to 1.4 Mn. Zomato had a million active subscribers of Zomato Gold globally, in the month ended March 2019, according to the company’s FY19 report.
However, the twist in the success story came when restaurants started the Logout movement on August 14. 300 restaurants under The National Restaurant Association of India (NRAI) started a Twitter campaign with the hashtag #Logout and announced that they were delisting themselves from food aggregator platforms. The restaurants claimed that frequent deep discounting is not good for businesses that are already struggling with increasing raw material and higher real estate costs.
Even before the logout campaign, Zomato found itself in a religious controversy when a Hindu customer refused to accept delivery from a Muslim delivery partner. Goyal tweeted that the company does not mind losing out on such business, but the tweet attracted a lot of ire from many users.
Even as the anger around the religious controversy calmed down, Zomato continued to suffer from protests from restaurants. It forced the company to make changes in its contentious Zomato Gold loyalty programme. In September, Zomato diluted the programme but introduced the Gold offering on delivery as well, which led to further discontent among NRAI members.
However, Goyal’s series of tweets have been sending out strong messages. “On a democratised platform like Zomato, large restaurants have to compete with independent restaurants on a hyperlocal basis, and are not able to leverage their large presence to pull more distribution/profits,” said Goyal in his tweet.
Even as the campaign gained a national momentum with more than 2000 restaurants joining the campaign, Goyal has been holding the fort rather strongly. He sent in strong messaging saying large restaurants were using the logout campaign to “sabotage aggregators and benefit themselves”.
Binny Bansal: Second-Time Lucky As CEO?
Binny Bansal completed his first year as CEO with his new venture and continued to be an active investor in India’s startups. In fact, his investments garnered a lot of headlines as Bansal the startup founder turned angel investor.
After allegations of “serious personal misconduct’, Binny resigned as the CEO of the Flipkart Group in November 2018. However, within a year he bounced back with a new venture Xto10X, which offers technology tools, learning and consulting services to growth-stage startups, in December 2018.
Binny Bansal hit the headlines when he sold $76.4 Mn worth of Flipkart shares to the US retail giant Walmart post its Flipkart acquisition. Binny has sold 539,912 of his equity shares to a Luxembourg-based Walmart entity for $76.4 Mn. The deal brought down his stake in Flipkart to 3.52% from the earlier 4.2% in November 2018.
Bansal was also on an investment spree with infusing capital into healthtech startup SigTuple, digital insurance company Acko, supply chain management startup Increff and legaltech company Spotdraft.
His strong belief in the startup ecosystem came through when he started backing an early-stage investment firm 021 Capital and also when he invested in Singapore-based venture fund Tanglin Venture Partners, which is focussed on investing in India and Southeast Asia-based technology startups.
In April, Bansal also invested in an India-focussed fund — The Collective, which was launched by the US-based curated closed marketplace for startups and investors AngelList and aims to invest about INR 1 Cr each in 60-80 startups annually.
Amit Bhardwaj: Architect Of A Bitcoin Scam
Amit Bhardwaj, the man who introduced Bitcoin to many novice Indian investors as a foolproof method to multiply their investments through GainBitcoin, was selling a story too good to be true.
After promising 10% monthly returns on Bitcoin investments for 18 months under multi-level marketing (MLM) schemes such as Bitcoin Growth Fund, Bhardwaj went missing. The alleged Bitcoin ponzi scheme, which is still being heard in courts, is worth $300 Mn by some estimates.
After 12 FIRs — four in Delhi NCR, one in Chandigarh, two in Pune, one in Mumbai, Thane, Nanded, Bengaluru and Kolkata each — were registered by investors against him, the founder and CEO of GainBitcoin was finally arrested on March 30, 2018 in Bangkok. Multiple chargesheets were filed against him across the country — Pune, Chandigarh, Mumbai, and Delhi after the arrest.
Bhardwaj was out on interim bail after the Supreme Court granted it on April 3. He then filed a separate application in the Supreme Court of India, seeking to deposit INR 2 Cr in lieu of Supreme Court’s order dated April 3, 2019. Others accused in the case, including Bhardwaj’s two brothers Vivek and Ajay Bhardwaj and his father Mahinder Bhardwaj, Darwin Labs founders Nikunj Jain and Sahil Baghla, were also been granted bail by Indian courts on various grounds.
Bhardwaj reportedly got bail on medical ground citing his deteriorating health condition. He was also admitted in Apollo Hospital for regular dialysis treatment for non-functioning kidneys.
The Supreme Court in September extended three months grace period to Amit Bhardwaj, his father and brothers, after the accused expressed their inability to deposit the money ordered by SC.
On November 19, 2019, the Enforcement Directorate argued for the cancellation of bail that SC had granted Amit Bhardwaj on health backgrounds. The Supreme Court has now directed to list the case on January 20 next year.
Masayoshi Son: Startup India’s Most Treasured Investor?
Billionaire founder and CEO of Japanese conglomerate SoftBank came under scanner for his investments through the Vision Fund this year. While Uber went public, it didn’t perform as per expectations. Meanwhile, WeWork postponed IPO plans and plummeted in valuation as investors saw through many holes in the company’s business model. It also involved the ouster of founder and CEO, Adam Neumann, as Softbank took control of WeWork.
“I used to envy the scale of the markets in the US and China, but now you see red-hot growth companies coming out of small markets like in Southeast Asia. There is just no excuse for entrepreneurs in Japan, myself included,” he said
His billion dollar investments changed the way investors looked at Indian startups globally. However, 2019 was not a promising year for the second-richest man in Japan. He even went on to say that he is unhappy with how far short his accomplishments to date have fallen off his goals. “The results still have a long way to go and that makes me embarrassed and impatient,” Son said.
Son has invested more than $80 Bn across startups including OYO, Ola, Uber, Paytm, Slack, etc. “It only just began and I feel there is tremendous potential there,” he said.
However, getting investors for his Vision Fund II has become challenging for Son because of WeWork and Uber’s mishaps. Towards the end of the year, Son told Jack Ma in a candid conversation when asked about his instinct and courage: “Too much guts, sometimes I lose a lot of money.”
Byju Raveendran: India’s First Billionaire Teacher
2019 saw Byju’s founder and CEO Byju Raveendran enter the billionaire club. The founder today holds a 21% stake in the edtech company and has, on paper, become a billionaire.
In Byju’s latest funding round, Raveendran bought shares to maintain his equity level. Raveendran and his family now hold a total stake of about 35%. “While profitability is an important milestone for us, as a company our main focus continues to be on creating engaging learning experiences that will empower students to learn better,” Byju said.
What led to Byju’s was the realisation that “offline education has its limits,” Raveendran said in an interview with Inc42.
Founded in 2008 by Divya Gokulnath and Byju Raveendran, Byju’s today has 35 Mn registered users with 2.4 Mn paid subscribers. In April 2019, Byju’s crossed INR 200 Cr ($28.61 Mn) in monthly revenue.
However, the company was caught in a storm in the middle of the year after many parents who had enrolled kids in Byju’s complained that the company had not been up front about that the monthly subscription fees were actually monthly instal ments to loans they had taken from Byju’s. This led to a lot of furore and the company’s sales practices came under the scanner too.
And, 11 years later, the app is leaving digital footprints beyond demographics. It also reached the jerseys of the Indian cricket team in September as Byju’s became the official shirt sponsor.
This year, Byju’s also issued a fresh set of warrants worth INR 3.9 Cr to Bennett, Coleman and Co. Ltd (BCCL).
The company has been working on grabbing the Middle East, the US, the UK, South Africa, and other African and Commonwealth markets. With tie-up with Disney to launch Byju’s Early Learn app for young children aged between 6 to 8 years old.