Leveraging India’s tech start-ups for growth strategyindia.nri.com/pdf/Reports-English-3.pdf · · 2017-09-07Leveraging India’s tech start-ups for growth strategy Draft

Leveraging India’s tech start-ups for growth strategy

Draft Proposal

July, 2017

Business Strategy Consulting Department

Nomura Research Institute India Pvt. Ltd.

Copyright（C） Nomura Research Institute, Ltd. All rights reserved. 1

Global start-up ecosystems

India’s Tech cities are rated among top global start-up ecosystems

Source: 2017 Global Start-up Ecosystem report by Start-up Genome LLC

Global Start-up Ecosystems

Delhi (rank 22) and Mumbai (rank 27) are among other leading ecosystems too

Shanghai

New York

Mexico-City

Seoul

Mumbai

São Paulo

Los Angeles

Gurugram

MoscowLondon Frankfurt

Chicago

Silicon Valley

TorontoParis

BeijingBarcelona

Helsinki

Vienna

SydneyCape Town

Lagos

Seattle

San José

SantiagoMelbourne

Wellington

Atlanta

Houston

Quebec-City

Boston

St. Louis

Ottawa

Jerusalem

Lisbon

Malta

Tallinn

Kuala Lumpur

Colombo

Bengaluru

Montreal

Tel Aviv

Berlin

Singapore

Austin

Stockholm

Vancouver

Amsterdam

Global Top 20


India’s unique value proposition

Indian cities No. 1 position on HR cost makes it best frugal innovation hubs

Source: 2017 Global Start-up Ecosystem report by Start-up Genome LLC

Position of Indian start-up eco-system

Start-up Performance Funding Market Reach Talent Business Expertise

Exit Value Output Start-up Value Access Quality Global Local Access Cost External Internal

1 Silicon Valley Silicon Valley Silicon Valley Silicon Valley Silicon Valley Vancouver Silicon Valley Silicon Valley Bengaluru Silicon Valley Vancouver

2 Beijing New York Beijing New York New York Stockholm New York Seattle Shanghai London Silicon Valley

3 London Beijing New York Shanghai London Tel Aviv Boston Singapore Beijing New York Beijing

4 New York London London Beijing Boston Toronto Los Angeles Boston Singapore Boston Austin

5 Berlin Los Angeles Shanghai London Paris Berlin Seattle Berlin Amsterdam Beijing Boston

6 Boston Boston Berlin Los Angeles Shanghai Paris Austin Austin Paris Chicago Shanghai

7 Sydney Amsterdam Boston Boston Beijing London Chicago New York London Tel Aviv Paris

8 Amsterdam Tel Aviv Los Angeles Tel Aviv Tel Aviv Shanghai Beijing Beijing Berlin Los Angeles Stockholm

9 Stockholm Chicago Tel Aviv Berlin Stockholm Silicon Valley Shanghai London Vancouver Seattle Seattle

10 Tel Aviv Paris Bengaluru Austin Seattle Amsterdam Berlin Shanghai Stockholm Amsterdam Berlin

11 Chicago Berlin Stockholm Sydney Singapore Singapore London Tel Aviv Toronto Paris New York

12 Los Angeles Shanghai Amsterdam Toronto Los Angeles Bengaluru Paris Sydney Tel Aviv Berlin Singapore

13 Seattle Seattle Seattle Seattle Toronto New York Bengaluru Chicago Sydney Austin Bengaluru

14 Austin Singapore Austin Chicago Chicago Boston Vancouver Los Angeles Chicago Sydney Sydney

15 Toronto Bengaluru Chicago Paris Amsterdam Sydney Toronto Vancouver Austin Stockholm Tel Aviv

16 Paris Toronto Paris Singapore Sydney Seattle Sydney Stockholm Los Angeles Shanghai London

17 Shanghai Austin Singapore Bengaluru Vancouver Los Angeles Amsterdam Paris Boston Toronto Los Angeles

18 Vancouver Sydney Vancouver Amsterdam Bengaluru Austin Stockholm Bengaluru New York Bengaluru Toronto

19 Bengaluru Stockholm Toronto Vancouver Austin Chicago Tel Aviv Amsterdam Seattle Vancouver Amsterdam

20 Singapore Vancouver Sydney Stockholm Berlin Beijing Singapore Toronto Silicon Valley Singapore Chicago

Rank


India’s unique value proposition

Abundant quality of tech talent contributes to highest level of serviceability

Source: Nasscom, Global Service Location Index

People Skills Index* (2016)

No. of IT professionals (‘000s)

Global Service Location Index (2016)

130140153

1,300

2,205

3,700

Czech

Republic

PhilippinesChinaIndia RomaniaSingapore

4.675.595.886.056.496.95

SingaporeRomaniaPhilippinesMalaysiaChinaIndia

1.161.421.431.48

2.552.71

RomaniaMalaysiaPhilippinesSingaporeIndiaChina

1Rank 2 3 7 13 50

`

`

* Includes Language skills, interpersonal skills, etc.

Quality of Human Resources

Amount of tech talent

Comprehensive strength

`


India IT Industry Growth Story

India’s $200bn IT exports are a live example of its Tech strength

Source: Nasscom, Expert Interviews

1970-80 1980-91 1991-2001 2001-2008 2008-15 2015-2025

Stage of IT

Industry in India

Off-Shoring to

India Started

Revenue/ Risk

Co-ownership

Off-Shoring

Expansion

Upgrade to

COEs

On-Shore

Projects

Birth of Indian

IT Firms

India Economic Reforms Y2K Resolution Financial Crisis

100 1,000 2,000

11,000

16,000

2 60 340

1,800

3,700

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

-

1,000

2,000

3,000

4,000

5,000

1970-80 1980-91 1991-01 2001-08 2008-15

IT Firms in India # Employees (in '000s)

Top IT Firms

-$ 75 bn

(26%)

$ 143 bn(45%)

$ 400 bn(>60%)

$ 1 bn(5%)

$ 8 bn(10.5%)

Setup of IT R&D Centres

Revenue

(Export share)

GDP Share

15%

24%

- 6% 9.3%1% 2% >12%

Growth of IT firms

Growth of IT ResourcesGrowth of IT

Industry in India


India’s position in MNCs Tech setups (R&D)

Being No. #1 overseas tech setup of top MNCs portrays India’s credibility

4%

9%

9%

12%

14%

14%

35%

% Sector Split

~$12Bn Global Engineering

Spends in India

Technology,

Internet &

Software

ICT &

Networking

Industrial

Machinery

Semiconductor

Computer

Peripherals

AutoAeroEnergyOthers

1

1

2

3

2 3

Top Global R&D centres by size

1,770

Germany

425

370

250

3,500

India

Austria

USA

China

12,500

7,000

6,000

500

USA

India

China

Ireland

Croatia

400

40,000USA

3,800

3,000

800

India

China

Germany

Canada

750

HQ

Ove

rsea

s

#1

# - R&D centre headcount

#2

#3

#4


Indian Start-up Ecosystem Overview

India has 3rd largest start-up ecosystem with $4bn annual funding; shows speed

Source: NASSCOM

Indian Start-up ecosystem 2016


Startup Name Business TypeAmount

(mil. $)

Flipkart.com Online Marketplace 700

Paytm E-Commerce & M-Commerce platform 680

Snapdeal Ecommerce Marketplace 500

Ola Car Aggregator & Retail Mobile App 500

Quikr Online Classifieds 150

Ecom Express Logistics Solution Provider 137

Foodpanda Online Food Delivery 110

Saavn Music Streaming App 100

Oyo Rooms Budget Hotel Accommodation 100

Pepperfry Online home décor marketplace 100

Inmobi Mobile Advertising platform 100

12,000

4,2003,000

2,200

India Start-up Ecosystem Overview

India’s start-up momentum is expected to continue with good funding support

Top funded companies (2015)

Source: NRI based on public information

January 16, 2016: Presentation of Startup India, Action Plan

Indian Govt. has made policy to greatly support startups

Industry expects investment in India startup will continue in future

2,100

1,200

800700

2020201520142013 ・・・

No of Start-ups

Forecast

4.9Bn

2.2Bn- Bn

- Bn : Funding (US$)

World No 3(after US, UK)



Government and academia have also been key drivers of this momentum

Source: NASSCOM

Support Drivers of Indian Start-up ecosystem


Impact of startups - Electric 2-wheelers segment in India

Start-ups are making significant impact. EV startups are challenging OEMs

Emerging LiB Electric 2W Start Ups

Source: Various articles, NRI analysis

Company Product Funding

Ather Energy

(2013, Bengaluru)

Smart Electric

Scooter S340$13M

(2 rounds)

Tork Motorcycles

(2010, Pune)

Electric Racing

Motorcycle T6X Undisclosed

Twenty Two motors

(2016, Gurgaon)

Affordable Smart Electric

scooters

(Product being developed)

$1.6M

(1 round)

• Many Start Ups are emerging in Electric 2W space with High quality

& Technology enabled LiB based products

• These products are much better than past Hero Electric line up

− Higher range (60-100 km)

− Higher Battery life

− Quicker charging etc.

Bosch - Hero Electric Partnership

• In 2016, HERO Electric introduced 7 (out of 18) Li-on based

Electric 2W. They plan to roll out at least 2 new products every year.

• In upcoming years, HERO Electric will transfer all its products &

existing range to LiB based.

• To compete with high tech upcoming start up products, HERO

Electric has forged a Powertrain partnership with Bosch for

better technology and higher speed in its product lineup.

Powertrain


With cab aggregator start-ups, additional family car need is fast vanishing

• With insufficient public

transportation such as metro &

buses, there is a huge demand for

taxi services

• Uber/OLA are catching up fast

and giving new choices to users

• 2nd family car was very prevalent

in the affluent families in India

which is not becoming a passe

owing to the emergence of these

services

CommentOLAUber

• OLA is the third most valuable start-up

company in India, after online retailer Flipkart ·

Snapdeal

• Over the past year, Ola has achieved a 30-

fold increase in sales, and now have achieved

over 1 million bookings daily.

• The number of vehicles registered in the

company's platform is 350,000.

• Expanding service in 18 major cities. Uber

plans to invest $ 1 billion into India's business

in the next nine months.

• The goal is to make the number of times of

riding per day 1 million in the country.

• For Uber; India is the company 's largest

market (except for the United States, home

base) and is focused on as the fastest

growing market.

Penetration of Taxi Apps changing demand scenario

Impact of startups – Passenger cars segment in India




Startups in operations support and hi-tech areas are gaining momentum

Source: NASSCOM, NRI analysis

2010 2011 2012 2013

100

300

200

400

1500

600

2200

E-commerce

(traditional)

E-commerce

(niche)

Aggregators

Hyper local

commerce

Consumer

services

Ecommerce

enablers

Analytics

Enterprise

software

Fin Tech

IoT Health Tech

Mature Verticals

Growing Verticals

(operations support areas)

Emerging

Verticals(hi-tech areas)

Incorporation year

Sta

rt-u

p F

un

din

g a

mo

un

t (U

S$

bn)


- Grey Orange

- Delhivery

- Ecom Express

- (Major distributor)

Operations Support – Case of eCommerce Enabler startups

Operations support start-ups are creating a support ecosystem for platforms

e-Commerce business environment in India

eC

om

merc

eV

alu

e C

hain

Source: HP, various articles, NRI analysis

eCommerce

Platform

eCommerce

Enablers(Warehouse

&Logistics)

After-market

Main functions

- Promotion

- Order Management

- Online Settlement

Key players

As a directory / classifieds service

After-service (i.e. Justdial, Housejoy), CtoC (i.e. Quikr, Droom)

- Flipkart

- paytm

- Snapdeal

- (Amazon India)

- Inventory Control

- Pack & ship instructions

- Last mile Shipping

Category / Setup year / Recent funding

- Platform / 2007 / $700 mil.

- Platform / 2010 / $680 mil.

- Plarform / 2010 / $500 mil.

- (Amazon India)

- Robotics / 2014 / $30 mil.

- Logistics / 2011 / $85 mil.

- Hyper-local / 2013 / &137 mil.

- (－)


Grey Orange, an operations support startup makes innovative equipment

Basic info

Supporting info

Products

Liner Sorter• High-speed robotic sortation system for order

consolidation and routing

• Sorter system is the solution to reducing the outbound

sortation window at your distribution and fulfilment

centres. Scan your packets with 1D or 2D barcodes.

Throw in a Dimensioning and Weighing module to

capture your packets’ data

Butler• AI based bi-directionally scalable material handling

system for goods-to-man

• The automated storage and goods-to-man order

picking system is designed to reduce the time it takes

to get orders to homes and inventory to stores, with

the flexibility to increase system storage or order

fulfilment throughput - on-demand, as-needed.• Grey Orange has 90% market share in Indian logistics

automation market. (Their product sorter has the 90%

market share in logistics sorting in India)

• They have expanded their business in countries like

Japan, Singapore and so on.

• In 2015, they had raised $30 million in its 2nd round of

funding led by existing investors(Tiger Global Management

and so on).

Case of operations support start-up

Customers:



Trends of hi-tech start-ups in India

Indian start-ups are emerging in hi-tech areas like cloud, IOT and ML/AI

Source: NASSCOMML – Machine Learning | AI – Artificial Intelligence

Hi-tech start-ups in 2016


Cases of Hi-tech startups in IOT area

Start-ups in IOT area are increasingly focus on productivity improvements

IoT start-ups in India

With the increase of Indian startup companies backed by high technology and good funding, major MNCs have started

considering to use them for increasing efficiencies

IoT

Platform

Deep

Learning

(R&D)

Robotics

Sastra Robotics (2012)※

Robotics arm

Testing robot arm

Service robot

Alitizon (2014)※

“Datonis” platform

Usage by Auto supplier

Issue

Solution

Benefit

Measuring productivity of each line

Monitoring & data collection

Management Dashboard

2 weeks implementation

(Installation in 1 day & remaining

for data collection & analysis)

20% productivity improvement

Issues and priority of each line and

future investment considerations

1. Platform Utilization 2. Functional Service Utilization

InvenZone (2013)

Deep learning algorithm platform for

researchers and scientists

Analytics

Fractal Analytics (2000)

Big-data analysis

(marketing effectiveness, pricing analysis..)



Altizon systems has developed IOT platform to support manufacturing sector

Basic info

Supporting info

Services

• Company provide flexible connectivity software development kits (SDKs) called

Aliots that run on any hardware platform and lets your hardware appliance

‘connect’

• Their flagship product, the Datonis IoT Platform, helps you build your IoT

product in weeks by providing device connectivity kits, a device management

layer, a highly-scalable, real-time, big-data analytics engine and alerting and

monitoring services.

• Datonis easily integrates with your existing IT systems to provide a seamless

transition between IoT devices and IT infrastructure management tools. Datonis

is available both in a SaaS as well as in a Hosted mode

• Altizon is headquartered in Pune, India and has a

presence in Palo Alto, CA

• In Feb. 2016, they had raised $4 million in series A funding

led by some investors (Wipro Ventures and so on).

• DATONIS is their flagship IOT platform

Gartner, Inc. in its report -“The Gartner 2015 cool vendor report”- identified

Altizon as one of cool vendors in Embedded Software and Systems segment.

Case of Hi-tech startup in IOT area



Cases of Hi-tech startups in ML/AI area

ML/AI start-ups are focusing on edu-tech, health-tech, retail, finance & SCM

Machine Learning / Artificial Intelligence start-ups in India

Source: Mint newspaper

• Investment – USD 16 million

• Investor – Reliance Industries

• Key Product feature -

Powerful camera that analyses

driving patterns, can determine

the cause of an accident


• Investor – Kalaari Capital and

Lightbox

• Key Product feature - Their AI

enabled product can train

students to maximize marks


• Investor – Inventus Capital

Partners, Blume Ventures

• Key Product feature - Their

product helps to make instant

diagnoses of heart attacks

• Investment – N.A

• Investor – YourNest Angel Fund

and VentureNursery


enabled health-tech product

becomes more intelligent with

usage.

• Investment – >USD 2.75 million

• Investor – Exfinity Venture

Partners, Blume Ventures,

BeeNext

• Key Product feature - They

have route-planning algorithms

so companies can chart the best

possible route to deliver an order

• Investment – >USD 1.5 million

• Investor – Exfinity Ventures,

growX Ventures & Sequoia


offers visual search technology,

product recommendations, and

personalized home pages to

make retail experience better


• Investor – Unilazer Ventures,

Ratan Tata, True North

• Key Product feature - It is used

for over 20 services, including

hotel, cab, movie ticket bookings,

ordering food and paying bills

• Investment – ~USD 1.7 million

• Investor – Blume Ventures,

Trifecta Capital, Snapdeal etc:

• Key Product feature - It helps

businesses save energy and cut

down their electricity bills.

• Investment – USD 3.5 million


IDG Ventures


enabled product can train

students to maximize marks



Lightbox

• Key Product feature -

Intelligent interface that allows

banks and consumers to

connect over chat.


Cases of Hi-tech startups in VR area

VR start-ups are developing 3D content & gear for improve user experience

Virtual Reality start-ups in India

Source: Indianweb2


• Investor – Indian Angel Network

(IAN), Stanford Angels and

Entrepreneurs India


build ‘immersive technology’

solutions using VR for real estate

and other industries


• Investor – N.A


have been able to create

Stereoscopic/Interactive Virtual

reality content


• Investor – Tata Elxsi incub@TE

• Key Product feature - With

RED anyone who has a 3D

model can import it into this

platform and in one click, can get

virtual reality (VR) out of it.




solutions are known to cater to

the needs as it paves the way for

enhanced communication and

innovation




product is a consumer grade

360 Virtual Reality Camera –

ViCAM, which is being termed as

the world’s smallest 360 Virtual

Reality Camera.




are into 360 video production &

VR for training simulations and

AR for machine maintenance


• Investor –N.A

• Key Product feature - Virtual

Reality content production studio

for consumers as well as

businesses



• Key Product feature - Its

technology can be used to

provide customised VR and AR

solutions to those in retail,

healthcare, defence, education

and entertainment segmentS..




voice caller app, “THE CALLER”

can help user teleport himself

when they are on call with friend


• Investor – Exfinity


product wishes to provide users

an incremental experience in the

3-D virtual reality.


Investment

DestinationRedsun Consultancy

Business

Contents

• Development of connected

car by IOT technology

• Operate e-commerce site

“JazzMyRide.com” for auto

parts

• Provide digital marketing

services

Investment

Content

• Complete acquisition • Acquire majority

shareholding

• Established “AutoSense” to

provide digital marketing

service as a joint venture

TVS-ASL invested in 3 digital tech. start-ups to boost aftermarket sales

Companies invested by TVS-ASL

• TVS-Automobile Solutions (TVS-ASL) announced on June 9 that it has decided to invest about INR 750 million in three new

start-up companies related to digital technology in the local area.

• TVS-ASL expect sales of INR 2.5 billion from the three companies invested in the next three years.

TVS-ASL is a subsidiary of TVS Group, a

conglomerate company. It is one of the

largest auto after-sales service companies

in India. They offer auto repair and

maintenance service "My TVS"

Industry alliance with start-ups


Redsun



Power sector player ACME diversified to auto EVs by alliance with start-up

Source : News article, ACME, Ola websites, Interviews

India’s first battery swapping & electric vehicles (EV) charging station

Project Location Typical Stations photo

Swapping station

for 2W / 3W EVsCharging stations

for 4W EVs

Mahindra E20

EV car

Nagpur

3 operational

1 under construction

Project Details

Equipment

&

StafF

Kiosk

Pack

LiB Cell

Swapping

Station

Charging

Station

EV

Provider

Fleet

Operator

Station

Staff

Produced in-house

Imported

State-of-the-art Mfg. Factory

@ Rudrapur, India

ARAI approved

ICAT approved

Produced

partly in-house,

sourced locally

100 4W EVs

3W / 4W taxi

aggregator

Contract Manpower

managed by Ola

EV

Fleet

Project Owner, Financer, Operator Ola

100 3W EVs

• ACME Corp. is an Indian solar park developer and battery pack manufacturer for power applications in electricity value chain

• It entered into partnership with a leading cab aggregator start-up Ola, to develop India’s first pilot project in electric vehicles battery swapping and charging station

• Through this project, ACME could successfully diversify into auto EV segment by supplying its battery packs for Ola’s EV fleet


In these rapidly changing times, start-up support is needed to keep up pace


Source: EFMA-Infosys Finacle Innovation Survey 2015

Industry view on alliance with start-ups

69%

57%

40%

39%

More innovative solutions

Faster to market with innovations

Lower cost of innovations

More significant impact on business

High Neutral Low

“They come up with some really

fascinating ideas”- Mr. Gerd Hofner, Head Corporate R&D

“We use startups as a vehicle to give

innovative offerings faster to end clients”

- Mr. Karthik P, Head Ecosystem Development

“Many of the game-changing frugal

innovations of GE Healthcare in the

future to come from Bangalore”

- Mr. John Dineen, CEO GE Healthcare

MNCs have been sourcing tech

talent engaged from start-ups, and

integrating skills to diversify business- Mr. Adam Pitman, DGM, JCB


NRI Solution Offerings

NRI can support your company in keeping pace with rapidly changing times

by supporting alliance with most suitable start-up

Description

Output

Input

• Case analysis of alliance with

start-up by firm of your country

• Case analysis of alliance with

start-up in your industry

• Grasp competence of start-ups

in specific industry / function

• In-depth analysis of alliance

cases with start-ups in areas

deeply related to your company

• We narrow down the areas that

you can address and build a

collaborative hypothesis

• Based on consideration of Task

2, we provide networking

support with specific start-ups

and their venture capital

• Consider the business model

based on the meetings

• Based on outcome of Task 3,

support practical affairs in real

partnership negotiations

• Collect alliance cases

• Make start-up list in specific

industry / function vertical

• Make start-up competence

analysis

• In-depth case studies of alliance

with startups

• Collaboration hypothesis for

your company

• Potential partner list

• Appointment with start-ups

• Discussion materials

• Discussion facilitation

• Draft of collaboration scheme /

biz model after discussion

• Review of alliance scheme

• Design negotiation strategy

• Prepare materials for

negotiation

• Support negotiation discussion

• Public information

• NRI insight

• Public information

• Discussion with your company

• Interviews

• NRI insight

• Discussion with your company

• Discussion contents with

startup

• NRI Insight

• NRI Insight

Alliance case analysis Identify areas for alliance Examine suitability

Task Task Task1 2 3 Task 4

Alliance execution support

Phase1 Phase2

2-3W 3W 3W


NRI has diverse project experience in enterprise’s innovation domain

NRI understanding in innovation area

Region Theme Period

Electric Machine Business creation through open innovation 2016

Automobile Support for business innovation project (BIP) plan formulation 2016

Service Innovative human resources discovery, training and utilization support 2016

Aviation New innovation theme search 2016

MICE ICT innovation creation challenge program support work 2015

METI Survey on Innovation Creation in Japanese Companies 2015

Finance Open innovation support 2015

IT Vision concept of the next generation content business 2014

Electric machine Innovation Headquarters New Business Review 2014

Real estate Creating new business areas in housing and services business 2014

IT Creation of an unprecedented voice communication service 2013

Electric machine Development of vision for elderly x robot project 2013

Electric machine Future social design of 2020 2013

Finance Car x Finance x Big Data Service Idea Creation 2013

Documents

Leveraging India’s tech start-ups for growth strategyindia.nri.com/pdf/Reports-English-3.pdf · · 2017-09-07Leveraging India’s tech start-ups for growth strategy Draft