What’s getting funded by Indian seed investors? Winter 2012 edition

I am going to write some quick posts each quarter (let me know in the comments if it needs to be more frequent) on the patterns I am noticing on companies / ideas getting funded in the seed stage. These are particular to India, and are based on a) interactions with entrepreneurs b) discussions with investors (angels, angel networks and seed stage investors) and c) database of investments from all types of companies.

How can you use it? My first reaction is ignore it.

Businesses are built not with financing alone, but with passionate entrepreneurs and eager customers.

Then why am I writing it you ask?

This might help you position your company differently with investors if you are seeking funding. The same company focused on a B2B market vs. B2C market comes out looking dramatically different even though the core “idea” might be the same. If you are a company that’s in the “not getting funded right now” list, take heart, sometimes it may be good to swim against the tide.

So here’s what getting funded or moved along in the funding stages with investors.

1. SaaS companies focused on marketing & targeting the US market. The mega trend is Marketing automation is going to be a large market.

2. Payments & payment enablers that help reduce costs for eCommerce companies in India. The mega trend is reducing costs for over 60+ eCommerce companies that have been funded over the last 3 years.

3. Software companies that build apps to help consumers take control of their health. The mega trend is the slow ageing population the world over and especially the unhealthy lifestyles creeping into India as well.

So whats taking longer to get funding or getting passed quickly?

1. eCommerce companies for physical delivery of products or niche eCommerce companies. Most (or all) are running into strong headwinds in trying to raise their Series B.

2. Consumer Internet companies focused on the India market with limited downloads or traction.

3. All kinds of education software companies – there’s a general pause I hear from investors since they are trying to figure out where in the value chain of education will there be money made.

P.S. I would love to name companies as examples for each, but I get so much hate mail from company founders I have funded myself on why they dont want the “unwanted” attention to their companies or their fund raising efforts.

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3 thoughts on “What’s getting funded by Indian seed investors? Winter 2012 edition

  1. Kanchan

    Mukund, I too noticed a trend in ‘Marketing Automation’, generally. What is your take on this? The Business Model, suitability to Indian mkt. with reference to various price packages, etc.(The few that I’ve observed had inflated prices that start ups would not consider them even if they wanted to try)? Can you shed some light on this? Maybe here, maybe in a separate post. Thanks.

    Reply
  2. Niraj Sheth (@nsheth17)

    Interesting that education is still not taking off, though it also has mega demographic trends going for it (at least in India). Why are the health investors not concerned about the value chain question like the education ones?

    On a side note, someone should look more closely at Indian SaaS startups targeting the US market- every other company getting funded seems to be a “made in India, sold in US” model but I think there’s important questions to ask. How effectively can a company build a product when they’re not nearly as much in touch with their customers? And how do they do this while their (American) competitors are on the ground over there where the customers are? Sure, there are products that can tap global markets, but there’s a reason that most of those products so far have been from US startups- the US market is usually the first and most important market to penetrate, and sets other markets to follow. And penetrating the US market seems to be easier for a US startup vs Indian startup if they go head to head right?

    Reply
  3. Apurv Agrawal

    The big issue with education is that it comes down to making the schools pay for your product which seems to be a pain. We are seriously considering a company doing something unique in this space though.

    The problem with ecommerce is that there are so many of them with almost no barriers to entry. Vertical e-commerce companies can go multichannel to increase their market.

    Reply

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