#NAMAiot: Connected Devices & Internet of Things was supported by content delivery network and cloud computing services provider Akamai Technologies.
Indian IoT companies looking to build the best service delivery network or a value-add on top of hardware are more likely to attract VC funding. Vishal Gondal, founder & CEO of fitness tracking solution GOQii, said at the #NAMA “Connected Devices & Internet of Things” event that what Indian IoT companies should really think of is building the best service delivery network, the best value addition, which can sit on top of the hardware. He added that that’s what they did at GOQii for example. They were not looking to build the best hardware, and were open to working with every hardware company. They were looking to build the most reliable and the highest quality coaching network on top of the hardware.
Focus on India specific applications rather than copying western concepts
“There are many (potential) applications (that can be built) in health, there is opportunity in security as well. In fact, I tell jokingly that mapping is not the solution for India – the solution is ‘where is my driver taking my car?’ That is what everybody wants to know. So, applications need to be thought from an Indian context, because US is a self driving market and you know the entire system is very different. So, a lot of times people who just bring these copycat solutions and say we’re doing what ‘X’ is doing in India, are making a mistake because it would not work because it is built for a very different consumer requirement. It’s not the Indian consumer’s requirement. And VCs will be definitely funding these companies, right, left and center, but not a company that launches another copycat hardware or copycat device, which is not the value really.”
IoT at a nascent stage in India, investments will pick up
Answering a question about whether hardware players in the IoT space stand a chance to attract funding in India, Padmaja Ruparel, president of the Indian Angel Network said that it’s not that they don’t invest in hardware, but they do look at things like how much capital is required. She added that there are challenges with funding Indian hardware companies in the IoT space, and it greatly depends on how much (funding) is required, but they don’t shy away from it completely.
Sanjay Nath, managing partner at Blume Ventures, said “I’ll just bring in a broader analogy and answer this question. If you come back to e-commerce and see the Flipkarts and Snapdeals of the world, and the inventory models of the world. And then you see things like Delhivery, etc, which we call enablers of the ecosystem. I think this is a question about services around the IoT systems. Let’s say Wearables as an example; you’ve got GOQii, the one part is the IoT itself which is the device, but what they really help is subsidizing health and have personal trainers that come on board. I think the analogy of building blocks is also interesting. I don’t know how many of you have heard of this thing called Maker Fair in Silicon Valley. It’s a competition for high-school students who are 15-17 years old, that get circuit boards and try to build a robot out of it. So I think if you look at the building blocks and break up the hardware, the services, and its software. I think you also have to think about the customers and what truly should you do versus what you should outsource. Because there are so many moving parts that you might not want to deal with.”
“One of the reasons IoT is just picking up is that, it’s not happened before. In China there’s so much capital available for hardware. So if you would look at Kickstarter: what I would do is break up the capital flow or the funding lifecycle into parts and say what is it going to take to get 5 pilots out, and then 50 pilots out. But anything that gets you traction, whether it’s a group of angels or Kickstarter. I think the hump is to get to those pilots and once you get there the Series A becomes much easier. And I also think that in a sense, the best VCs think ahead of the curve. So, this is a very interesting time because this is the time that we need to come up with innovation when not everybody is doing it.”
VCs need to take bigger risks
Countering an audience member’s argument that VCs don’t take big enough risks and always chase the lowest hanging fruits first, Nath said that “I think it’s fine to go after low hanging fruit. If there are a lot of trees, then it’s fine right? Then we can all add up. If you look at IoT, as a VC you look at it as pure learning. On the flipside, it’s become a bit of a fad with e-commerce. It again goes back to domain expertise. When you go back to e-commerce, every second or third alum of IIT Delhi, because the Bansals came from there, are starting an e-commerce company. I know I’m trivializing it, but I think it’s become a fad and from our end we really have to think ‘is there a good business case?’ Why are they getting into this space? Is it because it’s just fundable.”
“I think Indian IoT entrepreneurs are better suited to go after the lower hanging fruit and solve large local problems. To give you an example, if you look at the fact we’re a tropical country, and you look at Southeast Asia, Malaysia, Indonesia etc, we see an idea for a NEST-like device, that would look at all the wastage coming from ACs being switched on all day across multiple offices. If it works here, then it will also work with the rest of Southeast Asia. That’s a lot of low hanging fruit and can multiply across many trees. It’s not one large one but many many different markets, and I think those are more likely to succeed than ‘I’m going to send the next spaceship to the moon’ or ‘I’m going to compete with Google for the next driverless cars’ sort of idea. So low hanging fruit is fine, if it adds up.”
Nath also mentioned that Blume Ventures is currently looking at the company in Delhi, which is “sort of in the green clean tech space, somewhere in the NEST-like application space, but we haven’t closed yet.” He didn’t reveal the name of the company.
Look beyond India, right at the start
Answering a question about the opportunity for Indian IoT companies outside India, Nath said that it is difficult to sell IoT products to Indian enterprises. So, it’s best to “make in India take global.” He added that Indian robotics companies are headed to Hong Kong, which is the right market for it to sell. I think IoT entrepreneurs should look for India plus other countries and not just India. IoT is capital intensive. Even if somebody finds it a value-add, the enterprise says it doesn’t, and you all say “pay”, but you can’t recover and you’re out of business. That’s the reason you have to start thinking global from the day one, not to India but to Southeast Asia. These markets recognizes value.”