by Pankaj Jain, 500 Startups
The trouble that some Indian startups are facing is being touted as the harbinger of a coming apocalypse. What happened at TinyOwl in Pune with employees holding the founders hostage was an embarrassment to all of us. Dazo shutting down. Zomato laying off employees. Foodpanda, well, just Foodpanda. These are normal occurrences at startups. Most of them are, in any case. Some things are hard to comment on without knowing details.
6 months ago, almost all of the bloggers and reporters were writing about how foodtech is the second coming of the Indian startup economy and how VCs are falling over themselves trying to get into as many deals as possible. Today, those same folks are pontificating on “the bubble” and the coming apocalypse.
I recently read a post on Quartz about how the demise of food delivery will result in the end of the Indian startups. It’s difficult to comprehend the reasoning behind a small sector setting off a domino effect of collapses across startups.
One small, and I mean TINY, sub-sector does not a bubble make. Contrary to what people would like to think, food/grocery delivery is a very very small part of the much larger Indian startup world. PayTM is going after everything from m-commerce to taxi booking payments on Uber to hotel bookings to hyperlocal to movie tickets. Flipkart, Snapdeal (though far from startups any longer) have changed the way Indians fundamentally think about purchasing products. Freshdesk, FusionCharts, Wingify and many others are going after global markets and are seen as serious threats to incumbents.
Even some of our Indian companies are changing the way people think about hiring, education, commerce, gaming and finance. Companies like CultureAlley and OnlineTyari are taking language learning and test preparation to the masses at affordable prices thru the only device they need – a smartphone. Consider how Kraftly is giving cottage industries where men, women, and even children are making baked goods or clothing or art at home and able to easily reach and transact with customers not only across India but overseas as well or how SwitchMe is making refinancing your home loan quick, painless and cost effective.
My point is that the Indian startup scene is far broader and diverse than this one small sector. The food and grocery delivery vertical has been overfunded. Some of the companies closing rounds forced me to scratch my head and ask, “what am I not getting?” That’s Ok. You know why? There are amazing entrepreneurs and developers, and designers and financial wizards building solid businesses. And guess what, it’s not going to stop. What else isn’t going to stop? The funding of great companies but also of companies that aren’t run very well.
Would I invest in Zomato today? Definitely. Deepinder and the team don’t give up. They will make the hard decisions when required and they will continue to push the limits of what’s expected from them and at the same time, force the rest of us to compete better.
Would I invest in a pure food or grocery delivery business that picks up veggies from the local mandi or from the 3 restaurants in my neighborhood and deliver it to me? Not likely, though, I have invested in ChalDal in Dhaka. I would definitely consider investing in entrepreneurs that understand warehousing, logistics and supply chain to provide grocery delivery via distributed warehouses in a city. Or a food company that understands how to manage large centralized kitchens, and has an expertise in logistics. Oh wait. Didn’t the Harvard Business Review write about a cooperative that does this? In India.
So all of you talking about the rot in startupland, keep doing what you’re doing. You will get your clicks and likes and shares and eyeballs with sensationalist headlines but all you’re really doing is scaring a young dreamer’s parents into not letting them work at a startup or start a business or get married because they aren’t working at Microsoft, Infosys or TCS. Once the cycle completes, you can begin again. This time writing about how those parents are unfair and ruining their child’s chances of starting a multi-billion dollar startup. Please, just ask yourselves, how any of this helps anyone.
One has to let loose a lot of arrows before learning to shoot and hitting the target. Even after learning to shoot, we will still miss. Often.
At 500 Startups, we’re not going to slow down our investing in India. In fact, I love all this talk of doom and gloom. Why? It’s going to send wannabe founders, angels (who figured they can make more money investing in startups than real-estate) and the glory seekers running for the hills. This means less noise, serious founders pushing the limits of creative destruction because they will have to do more with less, and investors, in it for the long haul, getting access to great founders building real companies.