Your browser is currently blocking notification.
Please follow this instruction to subscribe:
X
Notifications are already enabled.
X

[The Outline By Inc42 Plus] Inc42’s 2021 Predictions

[The Outline By Inc42 Plus] Inc42’s 2021 Predictions

Inc42 decodes the trends which will shape India’s tech and startup economy this year

Good morning and welcome to 2021, 

When we started Inc42 in 2014, we believed that India’s sprouting startup ecosystem was at the cusp of transforming the Indian economy. Six years later, as we enter 2021, this belief stands validated. As of now, India is home to over 55K startups, which have created more than $170 Bn in value.

The country now has 700 Mn+ internet users, shaping a digital nation’s future and bringing together unconnected communities. Products are being tailor-made for the underserved Bharat population. Nearly 42.5 Mn small businesses are stepping into the digital era. And thousands of D2C brands are being created in the backyards of first-generation entrepreneurs ready to jump on the internet bandwagon. 

Over the past five years, we have told every intriguing and important story with a critical lens and helped business leaders and innovators navigate through the ripening startup economy through our intelligent, insightful and data-backed reportage. Going into the new year, we believe that 2021 will be a watershed moment for India’s tech ecosystem as it emerges from the clutches of Covid-19 and begins its long ascent out of last year’s economic slowdown and recession.

As we embark on another trip around the sun, our newsroom has zeroed in on the top trends which will shape India’s tech ecosystem in 2021 and help us stay ahead.

Inc42’s 2021 Predictions

Edtech’s Moment Of Truth

One of the key sectors that rose to the occasion and delivered as we went into lockdown was edtech. The year that went by saw 101 edtech startups raise $1.43 Bn. Undoubtedly an impressive achievement, but the question is: Can they retain the momentum as schools and colleges reopen this year?

Our bet is: Yes. Kids who have grown used to remote learning for the past nine months will surely lean towards virtual lessons, given the hassle-free availability of quality education online. Consequently, edtech players will have to focus more on the quality of content and how it is taught, besides building more lasting tie-ups with offline educational institutions.

It is not surprising that the edtech space was buzzing with deals in 2020 as investors lined up to make early-stage bets. Now that the first flush of growth is over, the funding rounds may decline, and several startups may have to shutter their businesses. On the other hand, those with distinct value propositions in coding, virtual reality or extracurriculars will queue up to get acquired by bigger companies as they try to consolidate their market position.

As the year progresses, we will not be surprised if a couple of unicorns emerge from the edtech space — with decade-old Vedantu, having more than 25 Mn students, and Chan Zuckerberg Initiative-backed Eruditus being the strongest contenders.

As edtech scales up beyond Tier 1 and top Tier 2 cities to the Bharat demography, the need to moderate the high price points of the courses will be imperative. Consequently, we are likely to see more trends emerging this year, from ‘basic’ courses with smaller price tags to attract a customer base with low purchasing power (across tiers) to large-scale tie-ups with lenders to enable educational credit.

Inc42’s 2021 Predictions

The Fintech Super-App Race To Get Hotter

The scope to provide small credit to millions of students across the country is an opportunity waiting to be tapped by the fintech sector. As the year progresses, we can expect edtech loan advertisements to pop up frequently on our screens as edtech financing shoots up. 

The lending space is already teeming with dozens of apps which offer credit in various formats. But this narrative may change soon as deep-pocketed players like Amazon Pay, Google Pay and Flipkart engineer more credit offerings by partnering with traditional banks and NBFCs. This may force many small players to shut down as they cannot compete with tech giants. Given this scenario, the central bank may take a closer look at the credit disbursal models of digital lenders who have already been cautioned against harassment for recoveries. 

Of course, the UPI has already sealed its position as the de facto winner of the digital payments space and the volume of transactions has shot up significantly. But the zero MDR rule has zipped the money-making for fintech apps, forcing them to build products on top. That is precisely what Facebook-owned WhatsApp – the newest entrant in the space – is also trying to do. It is now putting digital lending, insurance and micro-pension services within the app apart from an ecommerce shopping cart. 

We also expect top incumbents such as Google Pay, Amazon Pay, Paytm and PhonePe to ramp their financial services offerings before WhatsApp ups its game. In the end, every major fintech app in India may join the fray to become a super-app. 

More disruptions are on the cards, though. With the rise in contactless and digital-only solutions, neobanks will be another focus area for fintech companies to diversify with niche solutions. But they will also invest a lot more to ramp up their technology backend so that they do not end up as the book-keeping back offices of fintech companies. However, this will call for more stringent regulatory scrutiny. In fact, more legacy banks will partner with fintech startups to enter this space. 

This also means a second-order impact on enterprisetech as companies in this space offer tailored solutions to banks and businesses alike. As businesses, both big and small, continue to work virtually and ramp up their online presence, enterprisetech and SaaS segments are expected to lead the funding charts in 2021 and fintech may lose its pole position as the biggest crowd-puller for investments.

[The Outline By Inc42 Plus] Inc42’s 2021 Predictions

The Swadeshi Lobby Is Set To Take On Big Tech

If one sector has benefited disproportionately from the growth of digital payments, it is ecommerce. But as one is bound to notice, this space is dominated by foreign players, and hence, the high-octane battle between ‘swadeshi’ and ‘videshi’ brands is likely to go on. This game of thrones started when the likes of small-traders’ body CAIT (Confederation of All India Traders) took on Jeff Bezos-owned Amazon and Walmart-acquired Flipkart. And it gained the status of a battle royal when India’s richest business tycoon, Mukesh Ambani, entered the space. Understandably, the clarion call to become ‘atmanirbhar’ by buying ‘desi’ products will not go away anytime soon. 

After squabbling over platform commissions on Google Play Store (app developers have to pay it for in-app purchases), dozens of Indian entrepreneurs have increased their lobbying and engineered a front that can fight the dollar power of American tech giants like Google and Facebook on the policy front. 

The year 2021 will see the amplified impact of this initiative. The intense lobbying will compel the government to take a closer look at the alleged anti-competitive practices, tax-evasion strategies and vague privacy policies of the Big Tech companies.

IPO Ships To Sail To Foreign Shores 

The swadeshi-versus-videshi debate also touched the policy around startup listing. Stakeholders pointed out that the West might hijack the wealth created by Indian tech startups when companies ripe for IPOs venturing abroad, alienated by the difficulties of doing business in India.

Launched in 2018, the BSE’s startups-listing platform has so far managed to IPO just five companies. Even the NSE’s Innovators Growth Platform, another listing channel for startups, has failed to excite founders and investors. This underlines the need to provide concessions regarding the profitability clause when it comes to a direct listing, making things attractive enough for tech startups to go public in India.

SEBI, the capital market regulator in India, may have to resort to an iron-fisted approach to ensure that startups list domestically. This may include mandatory norms requiring them to go public in India within a specific period after listing abroad. Whatever be the procedure, India’s six biggest tech companies, including Flipkart, BYJU’S, Zomato, Policybazaar, Grofers, Delhivery and Droom, are preparing for IPOs this year and not all of them are keen on an India listing.

The listing of these torchbearers of the Indian startup ecosystem will further set the tone for the country’s burgeoning venture capital investments. Even in the pandemic year, domestic and global VCs have kept their faith in the country’s startup story by investing $11.5 Bn across 924 deals. 

However, a change in India’s FDI policy in April (to keep out Chinese investors) came as a major blow, and startups have started looking elsewhere for cash. Singapore-based funds seem to be emerging as viable alternatives in 2021, and we can expect several Japanese investors to put more money into Indian startups. This time, SoftBank is going to take a backseat.

Inc42’s 2021 Predictions

The Shifting Sands Of Tech

What else is on the cards for the Indian startup landscape this year? For starters, the year will see Indian retail brands as well D2C brands grab a greater share of customers’ wallet and eat into the user base of ecommerce marketplaces. Moreover, all these retailers and D2C brands will make a foray into global markets. The fact that the RBI is encouraging the fintech sector to come up with simpler and more efficient cross-border payments will be a force multiplier for the digital-age consumer brands. 

Smaller retailers catering to Tier 2 and Tier 3 geographies will also find an ally in dukaantech apps. On the flip side, dukaantech apps 2021 will face a litmus test. With the Covid-19 vaccine about to hit Indian markets, people will be flocking back to brick-and-mortar stores. Will these apps be able to retain local shopkeepers and retailers when businesses are back to normal? But what will surely benefit the apps in this space is their partnership with JioMart and WhatsApp, leading to better awareness of the advantages they offer. 

The same goes for OTT content companies. Covid-19 lockdowns saw the number of their subscribers grow at a fast clip. But they are bound to feel the heat when people start crowding the theatres again and subscription fatigue kicks in. Users will be more selective about what they buy and watch as options will abound. Besides, Jio’s entry in this space will be a significant challenge. What will happen to OTT giants’ Tier 2 ambitions if a Jiophone user gets free Indian content on a Jio OTT app?

Incidentally, the launch of Jio’s entry-level Android phone in the first half of 2021 is imminent. And its reception will determine the strength of Mukesh Ambani’s digital flywheel. The second-generation JioPhone, priced below INR 1,000, will effectively wipe out small players like Itel and IKALin the under-INR 5,000 category.

As we set our sights on new beginnings and higher goals this year, one key proposition will remain unchanged. The holistic merger of technology, startups and traditional businesses will continue, and consumers will have more choices. 

But this can only be achieved with the help of a new breed of talent who has the penchant to tackle problems which look insurmountable. They are the folks who dare to dream, who dare to disrupt and who dare to build a better India and a brighter tomorrow. India needs Talent 3.0, aka The Makers.

These are the people across functions — product, design and marketing — who are passionately solving the nuttiest problems with technology. The entire ecosystem needs to facilitate them so that India becomes a true product nation. 

Attuned to the needs of the makers, Inc42 will be hosting The Makers Summit 2021 on March 12-14, which will help you learn the tools and frameworks to build, launch and scale world-class product companies for Bharat. So, block your calendars and get ready to get into a huddle with your maker peers!

Until next time,

Team Inc42

Join 1,000+ Attendees & A Star-Studded Lineup Of 50+ Expert Speakers At India's Largest D2C Conference! Claim 50% + 30% OFF Today!