This article is part of Inc42’s special year-end series — 2018 In Review — in which we will refresh your memory on the major developments in the Indian startup ecosystem and their impact on various stakeholders — from entrepreneurs to investors. Find more stories from this series here.
It’s that time of the year again when we look back and think to ourselves how quickly the year went by. Time does seem to fly faster with each passing year, doesn’t it? Or maybe it’s just our increasingly busy lives. Well, whatever be the case, here we are, staring in the face of another year.
Inc42, which has its finger on the pulse that reverberates across the Indian startup ecosystem, has been bringing to you all the developments from the space. We feel year endings are a good time to be reflective about key milestones that were achieved and to celebrate the passion, ambition, and persistence of startups in India.
It is important to celebrate startups and their successes, given the cutthroat world they operate in. Reportedly, 90% of startups in India fail within the first five years of inception. So, the ones that make an impact must be put in the spotlight, celebrated, and presented as an inspiration for new startups in the making.
This year, too, like many past, has brought with it some shooting stars in the startup world — companies that shot to fame by some feat or the other. Inc42’s ‘The Outliers: Four Indian Startups That Were A Cut Above The Rest’ is an effort to compile a list of startups that had a phenomenal year and who surpassed the expectations of industry watchers and maybe even the founders themselves.
The startups that make the cut are Udaan, a B2B ecommerce platform that became the fastest unicorn in India; Dream11, which combined fantasy gaming with India’s favourite sport, cricket, and is seeing tremendous results; Cure.Fit, which is trying to be the Amazon of on-demand health and fitness services; and ShareChat, which is taking local languages and making them mainstream through its social media platform.
Each startup/company on this list has one trait in common — that of creating a niche for itself and also successfully creating scale, in a very short time. The transformation from niche to scale is music to the ears of any investor and these startups have certainly attracted their fair share of investors from India and abroad.
Without further ado, here are the startups that were outliers through their success story in 2018:
Udaan: The New High-Flying Unicorn On The Block
What happens when you get more money than you had asked for? Well, it happened to one of the newest entrants in the unicorn club — Udaan — a B2B ecommerce platform for SMEs founded in 2016 by ex Flipkartians Sujeet Kumar, Vaibhav Gupta, and Amod Malviya.
The cofounders of Udaan, three ex-Flipsters (yes, again), wanted to reportedly raise $150 Mn earlier this year with the intention of getting at least a few new investors onboard along with the existing ones, but ended up raising $225 Mn in September, valuing the company at $1 Bn.
Udaan, which connects manufacturers and wholesalers with retailers online, is a true-blue outlier, not only for achieving this feat but also for achieving it within 26 months of its launch, becoming the fastest Indian company to reach the unicorn status.
In an earlier interaction with Inc42, Sujeet Kumar, one of the cofounders, had said, “The market opportunity is huge. We also account for more than 15%-20% of the business of many of the sellers on the platform. And our average repeat transactions are seven times a month. These metrics are big validation that there’s a massive demand for our kind of end-to-end marketplace.”
According to estimates, Udaan has about 180K sellers and buyers on the platform and works with manufacturers in about 130 cities, delivering to buyers across 1,000 cities.
The B2B market in India is expected to be around $700 Bn by 2020, according to an April 2016 report by the Confederation of Indian Industry and Deloitte. Udaan wants to take advantage of this opportunity by pitching itself as an easy to use platform to help traders reach buyers and sellers across India.
But this golden opportunity and growth has also invited predators, the biggest among them Alibaba-backed Paytm Mall, which too has launched a B2B buying app for merchants.
As competition escalates in the India ecommerce sector, it is bound to trickle down into services that support this ecosystem — the B2B players. But the rewards, as Udaan has demonstrated, are lucrative, to say the least.
Here’s hoping Udaan flies even higher in the year ahead.
Dream11: Making Fantasy Gaming A Reality
‘A game of mere skill’ is what the Punjab high court and Haryana described Dream11 as in April last year, much to the relief of Harsh Jain and Bhavit Sheth, cofounders of the Mumbai-based fantasy sports gaming service. Dream11 had been accused by a petitioner of promoting gambling, a activity that is banned in India.
The petition was dismissed by the high court and subsequently by the Supreme Court, clearing the way ahead for Dream11. Since then, and even before it, Dream11, which was founded in 2012, has seen hardly any stops its meteoric rise, but this year was a particularly good one. Not trying to attempt a lazy pun here but Dream11 did have an absolute dream of a 2018.
To begin with, the startup, which has Indian cricket legend Mahendra Singh Dhoni as its brand ambassador, was named among the top 10 biggest and most popular trends of 2018 in India, according to a report by Google which saw gaming app PUBG Mobile take the number one spot.
To find yourself on the same list as that of PUBG, undoubtedly one of the biggest mobile gaming rages since PokemonGo, at the end of the year means you’ve probably done something right.
Dream11’s business works by charging a small percentage on the bets made on the performance of players selected as part of the fantasy team which a user creates on the platform. It claims to have more than 4 Cr users playing fantasy cricket, football, kabaddi, and NBA and has set itself a target to grow to 10 Cr users by 2019 and be India’s biggest sports gaming platform.
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In September, Dream11 raised $100 Mn in a Series D funding round led by Chinese internet conglomerate Tencent, a recognition of its arrival on the big players’ table. The move came after reports surfaced in April speculating that Dream11 may raise funds from Tencent at a valuation of $400-450 Mn.
Tencent was in the news recently when its “spin-out”, Tencent Music, China’s largest streaming company, raised $1.1 Bn in a US IPO, making it one of the largest tech listings of the year.
Oh, and PUBG was released in China in partnership with Tencent; the latter owns roughly 10% in Bluehole, the parent company of PUBG.
For Dream11, that’s a good backer to have.
Indian Gaming Levelling Up
According to Manish Agarwal, CEO of Nazara Games, the oldest gaming company in India, there will be 30 Cr Indian sports fans watching sports online by 2020. Agarwal estimates that 33% (10 Cr) of them will play fantasy sports, compared to the US where 65% of sports fans play fantasy sports.
India’s ‘games of skill’ market constitutes yet another digital sector that has been enabled and accelerated by the rapid adoption of the internet, led by cheap smartphones and cheaper data costs, thanks to Reliance Jio.
According to Deloitte, Fantasy Sports in India has grown by 199.69%, generating a total revenue of about INR 67 Cr in 2016-17. This growth can be attributed to annual T20 cricket summer when the Indian Premier League (IPL) dominates all sports in India. Dream11 was the associate sponsor of IPL 2018.
With growing familiarity and acceptability of platforms like Dream11, the gaming space in India (both online and offline) is expected to undergo a major overhaul in terms of the number of people participating and revenue as well. Dream11 is one of those companies that is a catalyst for making that happen.
2019 will be the year when the Cricket World Cup takes place in England just after the IPL and Dream11 has a five-year exclusive partnership with the International Cricket Council that gives it the right to run fantasy games for all official ICC global events.
Looks like the “dream run” is likely to continue in 2019.
Cure.Fit: Leading The Charge For On-Demand Fitness & Health
We Indians love our food. In with the puris and ghee-laden sweets, out with the diet. Or maybe not. Here’s a startup that’s bringing you butter chicken without butter and flaky Kerala parotas made in low oil. It is also bringing you salads, world cuisine, and more through its Eat.fit app. And that’s just one of it’s offerings.
We’re talking about Cure.fit, one of the biggest disruptors the Indian startup ecosystem has seen in recent times.
Cure.fit, established two years ago (2016) by former Flipkart executives Mukesh Bansal and Ankit Nagori is fast emerging as a new-age health services provider that offers everything — from Quick Service Restaurants (QSR) that serve healthy food to mental health care to physical workout centres, where you can choose from an interesting mix of martial arts, yoga, strength and conditioning, boxing, running, and outdoor sports.
And this is one startup that’s not being low-key or secretive about its ambitions. It doesn’t just want a part of the health-fitness pie. It wants the entire pie for itself.
Which is why Cure.fit has four verticals — Cult.fit, it’s chain of hyperlocal fitness centres offering a variety of workouts; Eat.fit, it’s healthy-yet-tasty food offering based on goals and needs; Mind.fit, it’s mental wellness centres; and Care.fit, a chain of diagnostic centres which also provide doctor consultations. It is also launching QSRs under Eat.fit.
In July, Cure.Fit raised $120 Mn in a Series C funding round led by IDG Ventures, Accel Partners, and Kalaari Capital, bringing its total funding to $170 Mn in just two years. It’s got actor Hrithik Roshan as a brand ambassador and has partnered with the likes of Milind Soman and actor Tiger Shroff.
Since its inception in 2016, Cure.Fit has been aggressive in its acquisition strategy. In its very first year, it acquired Cult, the non-equipment fitness chain, for $3 Mn. Since then, it has acquired startups such as Tribe Fitness, Seraniti, Kristys Kitchen, and a1000yoga.
The newly raised funds are sure to feed Curefit’s plan of being part of every step in an Indian consumer’s journey towards a healthier lifestyle.
By 2022, Cult is expected to have 500 centres with the rest being Eat.fit, Mind.fit and Care.fit. The company also has plans to expand to Southwest Asian countries.
Eat.fit, Curefit’s healthy meals service, is currently servicing over 10K meals per day now and doubling every three months.
Expansion is the way ahead for Curefit as it consolidates its brand and tries to make itself synonymous with fitness in India.
Health Is Wealth
With increased awareness about health risks associated with unhealthy lifestyles comes the new-age Indian consumer who is increasingly becoming health conscious.
From billboards with ads telling you to workout “For the love of fit” to workout videos that autoplay when you switch on your TV to people posting their workouts, salads, and flat abs on Instagram, people are increasingly being targeted to pay and spend more money to look good.
However, according to a survey by the Indian Ministry of Health, over half of all Indians, especially women, eat an unbalanced diet.
This represents a demand vertical that needs servicing. The Indian healthcare market is huge, valued at about $140 Bn in 2016 and growing rapidly at an 11% CAGR since 2011. It is, most importantly, a profitable proposition with a industry EBITDA of 15% .
And there is space to grow for more than one startup here. Cure.fit’s competitor (of sorts) HealthifyMe, founded in 2012, raised $12 Mn in Series B earlier this year. HealthifyMe, which is also Bengaluru-based, grew 3.5 times in 2017 to 4 Mn users, with operations in 200+ cities. However, it lags much behind in scale when compared to its younger rival.
ShareChat: Giving Regional Voices A Social Platform
When the Facebook-Cambridge Analytica scandal broke in March, wherein the data of 50 Mn Facebook users was stolen globally, it shook the confidence of many on the world’s most quintessential social media platform. In India, the impact was not immediate, but anger erupted when it later emerged that user data of 5.62 Mn Indians was compromised in the data compromise.
One interesting result of this development was the call from Mahindra Group’s Anand Mahindra to have India’s own social media platform and that too based on blockchain. Media outlets were quick to pick up on this news and so did Inc42, which spoke to Jaspreet Bindra, the man tasked with getting the platform up and running.
But many overlooked that India already had its very own social media platform — Sharechat, a place where online users can share videos, pictures and messages in languages such as Malayalam, Gujarati, Marathi, Punjabi, Telugu, Tamil, Bengali, Odia and Kannada,
In the months following news of the Cambridge Analytica scandal, Sharechat, a Bengaluru-based regional language social platform, saw its daily active users increase from 5 Mn in April-May to over 8 Mn today. Sharechat was founded in 2015 by by IIT-Kanpur alumni Farid Ahsan, Bhanu Singh, and Ankush Sachdeva.
However, it’s unlikely that Facebook’s misfortune had a big role to play in Sharechat’s rise. What’s more likely is that Indians in general are gravitating towards and appreciating vernacular content platforms and that trend has had a great impact on the growth of Sharechat. In effect, it has established itself as one of the premier social media platforms for regional content.
In September, ShareChat raised close to $100 Mn (INR 720 Cr) in a funding round that boosted its valuation to $460 Mn (INR 3,332 Cr).
This was a 7X increase in Sharechat’s valuation during its previous funding. Sharechat was valued at $67 Mn (INR 431 Cr) in January 2018 after its $18.2 Mn Series B funding from Xiaomi Singapore and its sister company Shunwei Capital.
Sharechat: Scripting Success In Indian Languages
“In 2017, Ankush Sachdeva, cofounder and CEO of Sharechat, took a trip to the hinterlands of the Rajasthan-Haryana border, where he observed a rapidly growing internet user base, with at least 1 smartphone in every home. The most astonishing bit was that none of these users were completely comfortable with Hindi, leave alone English and its modern avatar. This handicap ultimately leads them to use only vocabulary agnostic and language agnostic platforms for almost everything, case in point: Whatsapp,” wrote Shashank Shekhar, Head Of Content at ShareChat, in a Medium post, which is indicative of how vernacular platforms view the growth of digital content in India.
Shekhar added that the excitement and curiosity of a new internet user are always so large that it is almost impossible to envisage again for experienced users, despite going through the same user cycle.
According to a KPMG-Google study, by 2021, an expected 201 Mn Hindi users — 38% of the Indian internet user base — will be online. The same report said that the growth momentum of Indian languages is likely to continue with the vernacular internet user base growing at a CAGR of 18% to reach 536 Mn by 2021. In comparison, the English internet user base is growing at just 3% and will reach 199 Mn by 2021.
Apps such as content aggregator NewsDog, news and ebooks mobile app DailyHunt, and P2P knowledge-sharing platform Vokal are examples of how Indian companies are fast accepting the power of vernacular content and doing it well.
With the vernacular content user base in India set to rise exponentially, Sharechat’s winning streak is likely to continue in the coming year.
By the way, Facebook just reported its third major data breach affecting 6.8 Mn users globally just last week.
Before We Say Goodbye
According to the State Of The Indian Startup Ecosystem 2018 report, there are 39,000 startups that are currently operational in India and yet we have only 26 unicorns, a number that given the size and scale of the Indian market, should be poised to grow and grow fast.
2018 was a landmark year not just in terms of outliers, but also in terms of the number of unicorns India got — 11 — in one year.
Between the outliers and unicorns, we expect the Indian startup ecosystem to party its way into another blockbuster year.
Wish you a Merry Christmas and a Happy New Year!
Dream11, ShareChat and Cure.Fit were part of the 2018 edition of the most coveted list of India’s most innovative startups — 42Next by Inc42.
[Edited by Prakriti Singhania]