Lessons for Indian start-ups from CB Insights listing of 186 unicorns
In August last year India got its tenth unicorn when Hike Ltd, which runs the messaging app Hike Messenger, raised $175 million, largely from Chinese Internet giant Tencent Holdings Ltd and Taiwan’s Foxconn Technology Group, at a valuation of $1.4 billion.
A Unicorn is a start-up valued at $1 billion or more.
Some 186 companies across the world have won the tag, with India accounting for 4% of them, according to research firm CB Insights. Indian unicorns still have a long road ahead of them though. Here are four key things that Indian unicorns, and so-called soonicorns (companies that could cross the $1 billion valuation mark soon) can learn from their global peers.
1)Consolidate your position in the home market:
Unicorns such as Uber, GrabTaxi, Didi Chuxing have held on to the leadership position in their home markets despite competition from global and local rivals. For instance, Uber is ahead of Lyft in the US, while Didi and Grab Taxi have held fort against Uber in China and Singapore respectively. In India, home-grown unicorns have ceded significant marketshare to global rivals. For instance, Amazon in India has come within sniffing distance of Flipkart and already displaced Snapdeal as the second largest online marketplace in the country. Even the gap between Ola and Uber has shrunk over the last 12 months.
2)Invent, don’t borrow:
The stellar success of Snapchat in the social space, as it readies itself to go public six years since it started, can be traced to its product innovation and how it pushed barriers of traditional thinking around what a social app was meant to be, and the social experience itself. Indian unicorns, especially Hike, should think about what would make their products work for India, and not rely on copy-paste models and features borrowed from successful companies that are based elsewhere.
3) Keep your customers:
In the software-as-a-service world, customer success, or making sure that your customer uses your product well and gets the desired results from it, is key. Customer success is how many enterprise software companies, including Salesforce, which pioneered the model, got to where they are. This focus would be crucial Indian unicorns such as Mu Sigma and InMobi which have large enterprise clients that they need to retain to generate revenue.
4) B2B can be big:
Consumer Internet start-ups have been the focus of investors, mopping up a lion’s share of the billions of dollars that have been poured into Indian start-ups in the last three years. Enterprise start-ups have raised $1 billion so far, compared to the $10 billion that went to consumer start-ups, according to a report from software products think-tank iSpirt and Signal Hill. Globally though, the list of unicorns has tens of companies that are in the B2B space, as they generate far more returns per dollar invested for investors, compared to consumer companies. So far in India, product and services start-ups such as Freshdesk, Zoho, InMobi or MuSigma are few and far between.
However, newer Indian companies are primed to take advantage of the SaaS (software as a service) model by selling their products over the Internet, with the benefits of the low-overhead costs that come with being based in India.