2017. It was the best of times, it was the worst of times. The Indian startup ecosystem grew to become one of the biggest ecosystems of the world. Major international venture capital firms invested skyrocketing capital in multiple startup firms. Many new startups were acquired, some acquisitions failed at the finish line. But, overall, it was a very eventful year for startups in India. In no particular order, let’s take a look at some of the biggest startup moments of 2017.
Flipkart – Snapdeal Acquisition
One of the most talked about mergers that continued for more than 6 months, ecommerce giant Flipkart’s acquisition of Snapdeal would have marked the dawn of a new ecommerce era. With SoftBank’s interest in investing in Flipkart, this was supposed to be one of the biggest deals in the ecommerce ecosystem. But, minority investors such as Wipro founder Azim Premji’s investment arm PremjiInvest and others opposed the acquisition due to various issues. Ultimately, despite multiple attempts, the Flipkart and Snapdeal acquisition was called off.
Axis Bank Acquires Digital Payments Startup FreeCharge
Axis Bank, one of the biggest lending firms in India, acquired Snapdeal owned digital payments platform FreeCharge in the middle the Flipkart and Snapdeal merger talks. Launched in 2010, FreeCharge competes against other digital wallets like Paytm and Mobikwik. In accordance with the deal, Axis Bank got access to about 50 million FreeCharge consumers and the 200 member FreeCharge team joined Axis Bank.
Zomato Acquires Runnr
Zomato, India’s leading restaurant discovery and food delivery firm acquired Runnr for about $ 20 million. This acquisition helped Zomato shore up its food delivery business, amid intense competition from rapidly growing rivals such as Swiggy. The deal also gave Runnr a second life which was struggling to raise funds facing tough competition from other food delivery startups like Swiggy and Foodpanda.
Ola Acquires Foodpanda
It clearly was a year for acquisitions in the food tech industry. After the launch of UberEATS, the global taxi hailing firm Uber’s food delivery arm, the homegrown taxi hailing startup Ola acquired the online food ordering and delivery startup, Foodpanda to enter the foodtech industry. Ola invested $ 200 million in the company while Foodpanda’s parent company Delivery Hero received a percentage of Ola’s stock. It will be interesting to see how this new partnership will benefit both the companies and how it will affect Swiggy and Zomato’s domination of the food delivery industry in the coming year.
While 2017 was a great year for a few startups, not many were so lucky. Here is a list of those startups who have seen better days.
Stayzilla, homestay platform was shut down and the founder was arrested
Early this year, one of the biggest online homestay networks shut down its operations. Over a period of seven years, Stayzilla offered more than 55000 stay options across 4000 towns in India catering to both travelers as well as homeowners who are looking for unique and differentiated stay experiences. A month after the company closed up shop, its founder Yogendra Vasupal was arrested and sent to jail by the Chennai Police Commissioner after a case was filed against him by Jigsaw Advertising, accusing him of fraud. In a dramatic plot twist, Stayzilla’s co founder Sachit Singh received a box from an anonymous source containing a voodoo doll and his son’s photo inside. The package had an added message that said, “The most special way to say you care.” Not the best way to start the year. 30 days later Vasupal was granted bail by the Madras High Court and the HC Judge termed this case as “purely a dispute between two businessmen” while granting bail.
The Snapdeal Fallout
Following a failed merger and the exit of its largest investor SoftBank, which went ahead and invested in Snapdeal’s biggest rival Flipkart, to say 2017 was a bad year for this ecommerce firm would be an understatement. In addition to investment problems, the company also faced multiple expensive legal battles with Paytm Mall and GoJavas. While Axis Bank’s acquisition of FreeCharge gave the company some breathing room, Snapdeal still had to let go of most of its employees. However, the ecommerce firm is still fighting and is focused on its growth path towards building Snapdeal 2.0.
Karnataka, Kerala, Telangana, Uttar Pradesh, Andhra Pradesh join the Startup India Initiative
The Indian Government refused to be left behind in this Indian startup frenzy. In an attempt to help more such startups grow, both Central and State Governments launched multiple programmes, schemes and initiatives. Here are the programmes launched by the various governments in 2017. In line with Prime Minister Narendra Modi’s Startup India Initiative, the State Governments of Andhra Pradesh, Kerala, Karnataka, Telangana and Uttar Pradesh launched several initiatives to boost startups.
The Uttar Pradesh Government established the biggest incubator in India to provide assistance and funding to new businesses and startups. Chief Minister of UP, set up a Rs. 1000 crores startup fund to encourage startup schemes in the State.
Similarly, the Kerala Government allotted 12 new projects under the State Poverty Eradication Mission’s Kudumbashree program. These projects were a part of the Startup Village Entrepreneurship Program (SVEP) set up by the Union Ministry for Rural Development.
Never one to be left behind, the Karnataka Government also launched the “Elevate Program” to identify 100 of the most innovative startups in Karnataka. The selected startups received funding and mentorship to turn their ideas into successful businesses. The Government also invested close to Rs. 40 crores in the construction of a state of the art artificial intelligence (AI) and data science capabilities center in collaboration with NASSCOM. Named as the Centre of Excellence for Data Science and Artificial Intelligence, the tech hub aims to accelerate the development of artificial intelligence and data science related technologies.
The Hyderabad based startup engine T Hub also launched the Smart City/Smart Building NanoAccelerate Programme in association with United Technologies Corporation (UTC.) Five startups were selected under this program and were given an opportunity to collaborate with UTC, prioritize their solution and develop a proof of concept (POC) on the prioritized solution.
The Andhra Pradesh Government not only launched the one of its kind Blockchain Business Conference in Vizag but also signed a memorandum of understanding (MoU) with the US based company, Hyperloop Transportation Technologies (HTT.) HTT, under the agreement, will introduce the futuristic “Hyperloop” transportation system in the State Capital region, Amravati. Further, Google’s parent company Alphabet Inc., has also made an agreement with the AP Government to sell their newly developed technology in order to provide internet for millions of people without laying any cables. 2,000 boxes will be installed as far as 20 kilometers apart, on posts and rooftops to bring fast internet to connect populated areas, using laser beaming boxes which rely on Free Space Optical Communications (FSOC) tech.
2017 was a roller coaster ride filled with highs, lows and loopholes. We hope 2018 will bring more good news, greater technology and inspiring innovations that will make this world a happier and easier place to live in. Startup Stories wishes all of its readers a very happy and prosperous New Year 2018!
Marissa Mayer Creates Tech Startup Incubator
Marissa Mayer, the former chief executive officer (CEO) of Yahoo, is starting a brand new business incubator called Lumi Labs in partnership with long time colleague, Enrique Munoz Torres. According to reports, the new business incubator will aim to focus on consumer media and artificial intelligence.
While the incubator in itself is extremely intriguing, what makes the idea all the more exciting is the fact that Mayers is going back to the roots of her work. It is a homecoming of sorts for her as Mayer has rented out Google’s original office in Palo Alto, California, where she had started her career as a 24 year old Stanford University graduate.
Thinking about what’s next, I returned to my roots, rented the original Google office where I started my career, and founded a lab with my longtime friend and teammate @eamunozt. A bit of info: https://t.co/6A058GJUvp
— marissamayer (@marissamayer) April 18, 2018
This particular Google office has a lot of special things attached to its name. The office was home to online payments company, PayPal, which was started by a host of co founders including Tesla founder, Elon Musk. Marrisa was selected as the 20th employee of Google in the year 1999 and was in fact, the first female engineer to get a job at the largest search engine!
Mayer left the Google office after 13 long years and joined Yahoo in the year 2012 for five long years! Despite being regarded as the Geek Goddess at Google, she failed to revive Yahoo’s stalled business even after trying her best. While not a lot has been revealed about the new business incubator Mayer’s and Torres are working on, the premise in itself looks extremely exciting. With more and more people venturing into the field of artificial intelligence, the fact that Mayer’s business will be combined with consumer media is what will eventually make all the difference!
Amazon Prime Service Crosses 100 Million Subscribers
Amazon CEO Jeff Bezos, revealed in his annual share holders letter Yesterday that Amazon Prime has now crossed 100 million Prime Members. Amazon revealed its Prime numbers for the first time in the 13 years since its inception!
The number of Prime subscribers for years has been a closely held secret and the focus of much speculation. The figure also confirms that Prime is one of the World’s largest Internet subscriptions and a strong force among online retailers. By revealing the number of subscribers, Amazon has given us a hint at the steep and steady increase of revenue over the years.
The letter from CEO Jeff Bezos is meant to celebrate the eighth year in a row that Amazon ranked number 1 on The American Customer Satisfaction Index. It might also be interesting to note that there has been recent criticism, claiming Amazon employees are being subjected to awful working conditions. According to Bezos, Amazon Prime also saw its best year ever in 2017, with the company shipping over five billion products with Prime and by signing up more new members than in any previous year.
Amazon Prime was launched at a price of Rs. 499, which was later increased to Rs. 999 a year later. The Prime membership in India includes features like access to free one day and two days deliveries, Amazon Prime Video access and Prime Music for free. Prime members also get discounted “Same Day and Morning Delivery” to pin codes in select cities around the Country, including places like Hyderabad, Delhi, Mumbai and Pune.
Looking at the massive success of Amazon Prime in India, the company expanded its services to Mexico, Singapore, the Netherlands, and Luxembourg. Furthermore, in an attempt to increase its customer base, Amazon has also introduced Business Prime Shipping in the US and Germany.
Flipkart – Walmart Deal: All The Latest Information
Three months ago reports surfaced the international retail giant Walmart was looking to invest in homegrown ecommerce startup Flipkart. While sources suggested the deal may close as soon as March, but new reports hinted Seattle based ecommerce giant Amazon.com was also looking to make a bid for a potential investment in the company. Since then, there has been a continuous back and forth between Walmart and Amazon to finalize a record breaking deal.
Recently, a number of key Flipkart shareholders agreed to sell their stakes in the company to Walmart. However, sources close to the development said SoftBank, which is the largest shareholder in Flipkart, is holding out for a better price. In order to become the largest investor in the Bengaluru based company, Walmart Inc., has already reached an agreement with the New York based investment firm Tiger Global Management, the South African media conglomerate Naspers, the venture capital firm Accel and China’s Tencent Holdings. According to The Economic Times, Sachin Bansal and Binny Bansal may sell a part of their stake in the company as well. However, a new hurdle in the form of the ecommerce firm eBay, may hamper the deal.
Recode reported, Walmart may have to first work out a deal with eBay, a Flipkart investor and partner, in order to buy a majority stake in India’s online shopping site. eBay, which invested close to $ 500 million in Flipkart last year, has a 5% stake in the business and handed over its eBay India operation as a part of the deal. Along with the investment, the San Jose based firm also signed a four year exclusive commercial arrangement to partner with Flipkart. The four year exclusive commercial arrangement gave the merchants who sell on Flipkart access to more than 150 million new customers from eBay, while eBay sellers outside of India got access to a new group of consumers inside the country. In accordance with this agreement, Walmart may not be able to seal merchandise based deals with Flipkart, unless Walmart and eBay come to some agreement. Recode further added, according to one person familiar with the arrangement eBay can also take back control of the eBay India brand name if Flipkart is acquired.
On the other hand, SoftBank has reportedly remained relatively cold to overtures made by Walmart. The Japan based venture firm invested close to $ 2.5 billion in Flipkart last year after the failed merger deal between Flipkart and Snapdeal. According to a report by The Economic Times, SoftBank was offered a $ 10-12 billion valuation to purchase its shares in Flipkart. One of the sources also said, “Discussions with SoftBank are still ongoing. Most of the others have come aboard. In a deal like this, there are always ebbs and flows, but there is a time factor to consider as well.”
Flipkart has slowly grown to become one of the most valued company in the Indian startup ecosystem. With close to 8,000 permanent employees, the company has made at least 10 acquisitions in the 10 years of its existence. The firm managed to establish itself in the ecommerce industry by introducing the “cash on delivery” payment method, one of the biggest factors for its success.
Note: This article will be updated as and when we get further information.
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