In 2016, companies in sectors such as food-tech and hyperlocal logistics who were sustaining operations on external money shut shops when investors pulled the plug.
However, 2017 is likely to be seen as one with a lot of big ticket mergers, shutdowns and announcements. Chinese e-commerce giant Alibaba is likely to enter the Indian market next year.
Here’s a forecast of what the startup sector will look like during the coming year:
Flipkart vs Amazon battle: The firm fought a fierce battle with US-based rival Amazon during the festive season sale. The data for the five-day long festive season sales, showed that Flipkart outsold Amazon by order numbers. The fight is far from over.
The Flipkart vs Amazon war is expected to further intensify in 2017, especially when the latter’s chief executive Jeff Bezos has pledged an investment of an additional USD 3 billion just for the Indian market, after its previous fund of USD 2 billion exhausted. Flipkart which is reeling with many devaluations will also look to raise fresh capital to build a war chest. Flipkart, which this year brought back Tiger Global’s Kalyan Krishnamurthy to the firm, is up for a tighter control from the investor’s end.
Paytm Payments Bank: Paytm’s much awaited payments bank has so far seen multiple delays on its launch deadlines. It is likely to be launched early next year. The company has announced that its wallet business will soon move to a new company – Paytm Payments Bank Ltd. However, one can expect more regulatory play as the company will be regulated by RBI.
Mobikwik’s rise: Founded in 2009, Mobikwik is almost a year older to rival Paytm, but in terms of popularity it comes as distant second. It will be interesting to see the fight between these two firms over a larger pie of the market share, especially during the aftermath of demonetisation when the government itself it pushing the country towards a cashless economy. Expect a new round of funding for Mobikwik.
Uber vs Ola wars: This month, Uber’ CEO Travis Kalanick went on to the extent of saying (jokingly) he is ready for an Indian citizenship, if that was required for doing business in India. This happened at a time when rival Ola’s founder Bhavish Aggarwal was crying foul, urging the government to set up favourable policies for domestic firms. The exercise turned out to be pretty costly for Agarwal with criticisms pouring in from all corners including the media.
The irony being, Ola itself is majorly funded foreign investors, the likes of Japan’s Softbank. Ola is also reported to be in the market to raise USD 600 million in the next round of funding. It will be important to see when Ola will be able to raise this money and at what valuation. The money will be critical to Ola’s survival amidst cut throat competition coming from USD 60 billion Uber.
Alibaba’s entry in India: The Indian e-commerce sector awaits the announcement of Alibaba’s entry with bated breath. It will give a new dimension to the Amazon-Flipkart war in the space by bringing in hoards of cash and disrupting the e-commerce market all over again. Many smaller players are likely to shut down in the melee. It is yet to be seen, if it would mean going two years back when massive discounting was the face of e-commerce sector.
Impact of MakeMyTrip-GoIbibo merger: MakeMyTrip and rival Goibibo’s merger means that the online travel agency (OTA) segment is up for a huge monopoly even as the distant competitor and now Nasdaq-listed Yatra remains in the fray. The combined entity will also result into exodus of discounts from the hotel booking segment. Unless Oyo Rooms raises another round of funding to offer cash discounts. Expect a reduction in discounts offered to customers by OTAs.
A Jabong fade out by Myntra: The fashion e-tailer acquired rival Jabong in a USD 70 billion deal, earlier this year. But will it make sense for it to keep a parallel brand alive? The merger of the two and team restructuring is on the cards. Expect the Jabong brand to fade away.
Zomato – Foodpanda: Where are the much talked about food-tech companies of 2015 now? The year 2016 saw the food-delivery segment becoming a graveyard with dozens of companies shutting down or getting sold in a fire sale. The year 2017 will see further rationalization and closure of companies in this space. With bad unit economics and zero vision to profitability, it will be interesting to see if the companies are able to survive the next winter. Whether a Zomato-Foodpanda reported merger is on the cards in 2017, only time will tell.
InMobi’s struggle: India’s first unicorn (startup with a valuation of USD 1 billion) has an uncertain future. The ad-tech company last announced raising USD 100 million in 2015. The much celebrated firm of 2015 is far from an IPO, which it so diligently announced, earlier in 2016. The company needs fresh funding to stay afloat. There are multiple reports citing China’s Youzu Interactive being a potential investor or acquirer of InMobi. However, YouZu’s offer to invest in InMobi at a valuation of USD 800 million will detach the firm from its Unicorn status.
Ather scooter launch: The country is likely to witness the launch of a home grown smart scooter brand as the year 2017 will draw to a close. It will be India’s first smart electric scooter, something on the lines of what US-Based Tesla has done for cars. The scooter features a lithium ion battery pack with a top speed of 72 kmph. Ather raised funding from Hero Motor Corp recently.
An One97 marketplace of Snapdeal & Freecharge: The reports of Snapdeal’s acquisition by Alibaba, created a buzz on social media towards the end of 2016. But Snapdeal co-founder Kunal Bahl took to Twitter to criticise the trolls for such gossip. The company was further scrutinized when Japan’s SoftBank Group wrote down around USD 555 million across both Snapdeal and Ola. Amidst such developments, it remains to be seen is if the company will get acquired along with its payments entity Freecharge by Alibaba funded One97. Don’t be surprised if that happens.
Source: Money Control