Talwar says there are more avenues for liquidity in today’s startup ecosystem
The use of technology, the way of doing business are evolving
Even traditional companies are now acquiring startups
“If the plan doesn’t work, change the plan, never the goal” – Anonymous
Evolution and change are mandatory and basic requirement to move on to the next step. As proposed by the British naturalist Charles Darwin, the theory of evolution or Darwinism, believes that an organism changes their physical or behavioural traits with time to adapt to the surrounding environment and ensure better survival.
While Darwin’s theory concerned itself with the biological development of organisms, it might be safe to say that the theory is also applicable for other situations in life such as running a business. In the changing ecosystem, one needs to continuously update their knowledge, churn out unique ideas and explore ways to solve problems. In a word, evolve.
While speaking with Inc42, during The Ecosystem Summit, Sid Talwar, partner at Lightbox Ventures said that the investors can now see how the entrepreneurs have been changing their ways of doing business.
Talwar explained that it is interesting to note how entrepreneurs were doing away with the traditional form of business, and how they were using technology to solve problems. With time, the models and technologies changed as may be the problem could not be solved or were not innovative.
In line with the changing business trends, managing director of Ideaspring Capital, Arihant Patni, said that the startup ecosystem would have not reached this stage if entrepreneurs and investors would have not believed the prospects in this space. “Entrepreneurs are brave, they are gutsy, I have a lot of respect for them. I think it is amazing to see what the kids of today are going out and achieving,” said Patni.
While startup entrepreneurs are continuing to change their plans, strategies and business model to stay ahead in the game, Talwar also highlighted the growing rate of acquisitions and investments in India leading to exits of the founders.
According to Inc42 DataLabs’ latest annual Indian Tech Startup Funding Report, 637 unique startups were funded in 2018 and over $11 Bn was invested across 743 deals. With billion-dollar fundings, the Indian startup ecosystem also witnessed a lot of reshuffling and exits as part of the evolution.
Sid Talwar who comes with nearly two decades of experience in both investing and entrepreneurship, said, “There are so many avenues for liquidity today, and that’s gonna only get more and more as we go along”.
Why More Exits Opportunities Are A Good Thing
More exit opportunities for founders can be an indicator of a healthy startup ecosystem. Talwar highlighted three major incidents leading to increasing exits in India:
1) Foreign companies acquiring Indian startups
2) Indian technology companies which have got cash and are able to buy companies
3) traditional companies who were not acquiring startups earlier but are doing so now.
Talwar had also expressed his positivity in the exit potential of the Indian startup ecosystem while speaking to Inc42 during Ask Me Anything.
Talwar’s points are very well fitting with the situation in the current startup scenario in India. One of the classic deals of a foreign company buying organisations in India is the Walmart-Flipkart deal. The US-based retail giant Walmart had acquired 77% of stake in homegrown ecommerce unicorn Flipkart for $16 Bn resulting in the exit of its cofounder Sachin Bansal.
Following the controversial exit of Flipkart’s other cofounder Binny Bansal, the retail chain has expanded its stake to 81.3% in the company.
Traditional companies such as Reliance Industries are also focusing on startup acquisitions. This year, the company has made five acquisitions within two weeks with – logistics startup Grab, software firm C-Square, vernacular language-as-a-service platform, Reverie Language Technologies, Indian government schemes aggregator, EasyGov, and a multiphysics simulation service, SankhyaSutra Labs.
As the startup community continues to grow, more investors are looking to pour into the high potential startups causing an increasing race among the companies to enter the unicorn goal. As of December 2018, there are 28 unicorns in India.
Recently, it was reported that BigBasket which is closing a $150 Mn (INR 1,049 Cr) funding round may join the unicorn club this year. Meanwhile, Delhivery with its $350 Mn (INR 2,449 Cr) fundraise at a valuation of $1.6 Bn from Japanese conglomerate SoftBank, has officially marked its place in the unicorn club.