Flipkart, Ola, PepperTap, UrbanClap, Paytm... they're startups that picked an idea that clicked in the US and tweaked it to suit the Indian market. But they're far from copycats -most are now giving the pioneer from abroad a run for their money, having plugged holes they spotted in the original
Good artists copy , great artists steal, said Pablo Picasso, one of the 20th century's most in fluential artists, implying that a good artist merely repro duces a subject while a great one takes possession of it and turns it into something new. It's a maxim that many Indian startups, who have adapted ideas for services from the US and other countries, seem to live by .
In 2007, Flipkart came as the Indian answer to US e-commerce giant Amazon, and three years later Bhavish Agarwal's Ola took on US taxi aggregator Uber. Both have managed to keep the pioneer on its toes in the Indian market. And they're not alone. For every startup that was heavily funded in the US, around 50 me-too startups came up in India in the past year, vying for investors' attention, according to data from Tracxn!, an analytics firms that tracks startups.
“Ideas have always travelled around the world and anything which can be leveraged in the local market as a nature of business should not be stopped,“ says Ravi Kiran, co-founder of Mumbai startup accelerator Venture Nursery . “When Kishore Biyani started Future group, didn't Walmart exist?“ About 100 of the 400 applications he gets for his accelerator programme talk of being “the Flipkart for XYZ market.“
Kiran says no one can copy; one needs to look at market conditions and innovate.He gives the example of Ritesh Agarwal of Oyo Rooms. “Ritesh wanted to start the Airbnb of India with Oravel Stays. But, he realized the bigger opportunity lay in aggregating hotels rather than concentrating on homestays,“ Kiran recollects.
Agarwal agrees that his idea of creating the Indian Airbnb did not work. “With Oravel, we wanted to make a platform to enable discovery ,“ he says. After staying in 150 guest houses and dealing with rude staff, dirty linen and bad washrooms, he realized the problem was not discovery but the lack of predictability of experience in a lower category hotel. So he turned the focus to standardizing the hotel experience, a model that is almost unique to India.
Thirukumaran Nagarajan and Sharath Loganathan's grocery delivery app Ninjacart, which they launched in January, seems, on the surface, similar to US-based Instacart. But Nagarajan says no one can just copy the US model. “You might think everyone is copying but the business models operate differently .“ He says each of the major players approaches grocery delivery differently . “PepperTap delivers groceries from supermarkets, Grofers has its own storage. We are tying up with local kiranas.“ Close to 40 startups are competing in grocery delivery , and new players are look for innovative methods to differentiate and attract customers.
In the mobile payments space, Abhijit Bose, a Harvard alumnus who worked with Oracle and Siebel Systems, started Ezetap in 2011. The Bengaluru-based payment device maker's solution appears to be along the lines of US-based mobile payment company Square. But, Bose says the only thing Ezetap has in common with Square is the core concept. “We are not Square. Everything from the distribution to the business model is different,“ he says. Square focuses on small and medium enterprises, while Ezetap is a solution that any merchantretailer can use. Ezetap is more than a cardswiping machine. It has tied up with banks, and acts like a mini ATM, a software service for banks, a move that Bose and team thought was necessary in India.
Following the phenomenal success of China's WeChat, chat-based services have caught on in India, with over 30 emerging over the past year. But are they copycats? Far from it, says Pratyush Prasanna, co-founder of the two-month-old MagicTiger. “Copycat startups are not fuelling the Indian startup boom. People call us the WeChat of India, but we are not. The copycat model doesn't work. We provide last-mile delivery and it's only through fulfilment that you touch the customer,“ he says. Unlike WeChat, which is a communication and discovery platform, chat-based services in India enable delivery of products and services to customers. Some allow customers to chat in local languages.
Some even believe that “copying“ is not a bad word. “It is fantastic if entrepreneurs are copying. If one is alone, there is no one to educate the market about your product or give you a market opportunity . Com petition is great,“ says Arpit Agarwal, principal at early stage venture fund Blume Ventures. He is quick to add that Indian entrepreneurs are not fools to just be influenced by a trend.
He classifies entrepreneurs into three types. One is where the entrepreneur finds an opportunity to solve a problem and starts work without being swayed by trends. “The best entrepreneurs don't copy . They are driven by their own inspiration and that is validated by VC funding,“ he says. Second, is when VCs start funding and a number of young people start ventures in the same space. These early movers have the best chance of success. Third, are the likes of Ola and Flipkart, who scaled and executed their business model after recognizing the problems peculiar to India.
VC pressure is often the reason why entrepreneurs take the tried-and-tested route. Many investors are not open to the idea of funding a company in a new space. When Amit Kumar Agarwal went to pitch his startup idea to investors for early stage funding, he was greeted by the same questions: ` Are there any examples of this model in the West? Why hasn't it worked there?' He faced around 30 rejections before he raised $3 million from Saif Partners for NoBroker. “It's strange. Investors who are supposed to be risk takers are now risk averse,“ he says. His experience is echoed by many entrepreneurs who think investors are just investing in models that have worked somewhere else.
“All investors dealing with startups owe it to themselves to help entrepreneurs.Many VCs have fallen into the trap of putting the idea above the problem.
When they take a risky decision, they look for assurance where they should not,“ says Kiran of Venture Nursery .
Rajesh Sawhney , founder of tech accelerator GSF India, says the re luctance of investors is justifiable.
“Indian markets are new and Indian angels are new to this. They don't want to invest in something that hasn't worked somewhere else. But, I also know many angel investors who look at the entrepreneur more than the idea.“
Sawhney sees a transition phase coming.“You cannot copy without localization. Indian consumers are different, and entrepreneurs should be able to understand consumers. That is the nature of business. As the number of startups increase, a lot more will be successful. Till then, we should welcome startups and not worry about them copying or shutting down. We should celebrate it.“
Investors swayed by glamour of startups are writing cheques
Bhavna Uchil & Reeba Zachariah
TNN
After a few failed experiments, Anupam Mittal, 43, hit the bull's eye with Shaadi.com. He is also a successful angel investor, having 70-odd firms, including taxi aggregator Ola, in his portfolio
How did your journey as an entrepreneur begin?
I grew up seeing dad constantly trying to build businesses. The baniya community I come from, we have this innate in us. I experimented with a few businesses but those failed. I then moved to the US thinking that the environment in India was the problem. There too I didn't succeed. I turned to studies thinking I still have a lot to learn and later joined Micro Strategy . It was there that I got fascinated with consumer internet and saw the company's valuation rise from $100 million to $40 billion. On the sidelines, I started toying with different consumer internet applications. Tajonline was one among those. Somewhere along the way the idea of Shaadi.com came about.When Shaadi.com started demonstrating interesting dynamics, I moved to India. It was the start of my 2.0 entrepreneurial journey . Subsequently , Mauj Mobile and Makaan.com were born.
What attracted you to angel investing?
Around 2008-09, I funded some professionals who wanted to start their own digital agency (Interactive Avenues was sold to global advertising giant IPG in a blockbuster valuation in 2013). At that time I didn't know it was called angel investing. Later, I formally started making such investments. I have put in $3-4 million, about Rs 20 crore, in 70 odd companies so far. Many of them have gone to do great things. Some have failed, some more will. I think 20 out of the 70 will never make it.
How do you make these investment choices?
You become a top angel investor by the number of investments you make, not by the returns. That's what I see everywhere, this one's made so much investment. You don't have to be smart, you just have to spend a lot of money (Laughs). Jokes apart, timing is everything. Being early in the digital startup game, a lot of things have become intuitive. They come from experience and observation.One gets a sense of what works, what technologies are ripe and how the market is tilting. If you are not betting on ideas that have a high chance of failure, you are playing it safe and are not going to make disproportionately high returns. From a hundred companies I look at, 85% I swipe left and of those I swipe right, I invest in only two or three.
How do you deal with failure?
You have to accept that some companies will fail. This is part and parcel of the game. If the investment has gone sour, it has. I don't expect anything from the entrepreneur. In one instance, an entrepreneur said, “Look, the company is not working out. I am taking up a job in another company . I will return all your money over the next 12 months from my salary.“ I asked him why he wanted to do so. He said, some of the other investors had been asking for the capital. This surprised me.We are not giving a loan but doing venture funding.
If making investments is all about timing, exiting too is. How do you ensure the right time?
ensure the right time? The ideal exit is when the company has taken off and is worth a billion or is going public. As an angel investor I can stay invested forever. I don't have the obligation of returning money to limited partners. The other exit will happen through mergers and acquisitions, which we are starting to see in the Indian startup space.If you have a good relationship with the entrepreneur, you can see the writing on the wall. I have a portfolio approach and the exits take care of themselves. I don't chase exits.
What would your advice be to someone who wants to be an angel investor?
(Laughs!) I would advise them not to get into it. Right now, the market is overvalued. Everyone thinks that they have invested in companies that will disrupt the market. You can't come on the scene and expect to see the best deals. It is important to know which ones to pick. You must be prepared to lose a lot of money . I suggest that they join a network like the Indian Angel Network initially and do their first few investments through these networks. The other day I met someone, who gave me a business card, which read `angel investor'. He said that he had made about 24 investments in the last six months. That is scary . It is the glamour that is attracting people. If you get caught in the wave, it is easy to write a lot of cheques and not make returns.
How do you see the entrepreneurial space changing?
This is the decade of `democratization of entrepreneurship' in India.Today , there is believability and there are role models like Bansals and Agarwals. Fathers don't think twice to have their daughters married to an entrepreneur. Once, a founder of one of the companies I invested in told me, that his girlfriend's father would not allow her to marry him because he was an entrepreneur. This has changed.
