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As a Silicon Valley-based venture capitalist, I first invested in India 17 years ago. The company was developing a low-cost computer that it planned to sell to the Indian public. The founding team was smart, motivated, and advised by some of the best scientists in the country. As a naive young investor, I thought the Indian market would settle for lower-end computers since the prices were so attractive. We completely lost our investment in the company.
A lot has changed since my first misfortune. India's technology landscape is evolving by leaps and bounds, and low prices are no longer an advantage for software and products built in India. India's founders have cultivated courage and belief that they can build world-beating companies from here. As a result, the domestic venture capital ecosystem has grown to more than 1,500 VC firms supporting more than 16,000 startups.
As we invest in the Southeast Asian and Indian markets, we meet entrepreneurs full of new ideas every day. What trends are we most excited about?
Consumer brands: being digital is key
Traditionally, launching a new consumer brand was limited to large companies like Hindustan Unilever and Godrej. It required distribution infrastructure, marketing muscle and an investment of at least Rs 100 crore. Now, a new brand can be launched for a fraction of this amount. Distribution is through online marketplaces and marketing is on social media. The result is new-age brands that appeal to millennial consumers. Leveraging digital channels for distribution and marketing allows you to respond quickly to the evolving demands of digital customers.
Will artificial intelligence replace BPO?we don't think so
Much has been said about how AI will replace BPO. We believe that AI will create new opportunities to leverage India's vast English-speaking workforce. AI is becoming ubiquitous, but most applications still require a human to be in that last 10%. Therefore, we believe there is a tremendous investment opportunity in building new AI-powered technology services for large enterprises seeking cost-effective automation solutions.
Made in India: From toys to semiconductors
The 'Make in India' drive started a few years ago with products like toys and auto parts. At the new Toys R Us store in Bandra, 70% of the products are likely to be made in India. But changes are underway that will have a far greater impact. Geopolitics is forcing countries to look for alternative supply chains for semiconductor chips, which are key components in all smart devices and machines, from cars to cameras. Indian engineers have been designing semiconductors ever since Texas Instruments opened its Bangalore factory in 1985. We strongly believe that the time for homegrown semiconductor companies has come.
Also read – Can India really become a global semiconductor hub?
EV: Electric vehicles are just part of the ecosystem
EV penetration is expected to reach 40% in India by 2030, and an entire ecosystem is being designed and built to make that possible. Electric scooters require charging points that are compatible with all types of bicycles. EV companies should integrate with mobile apps that leverage his UPI to seamlessly manage billing. Local distribution companies must ensure that their systems are properly load balanced. These will require innovation and will require other countries with similar characteristics to ours: densely populated cities with overloaded energy grids.
Software of all variations
Spas, landscapers, auto repair shops, dentists, guesthouses, construction companies, and more all require their own software to run their business. This is “Vertical SaaS,” which refers to software applications built to address the needs of a specific industry. These startups have gone global from day one, and thanks to video conferencing, founders in Noida can sell software to customers in Nebraska.
Also read – From electric vehicles to electric vehicle batteries: a key shift in policy makers’ focus
Could this technology ecosystem be worth more than $100 billion by 2025? This number will be achieved by only about 100 “unicorns,” privately held companies valued at $1 billion or more. be done. But let's assume that some unicorns fail to maintain their high valuations. The question then is whether there can be at least 1,000 Indian startups with valuations of $100 million or more. We at Vertex Ventures SEA and India believe there is an answer.
The author is Managing Partner at Vertex Ventures SEA & India, which invests in early-stage startups across the region. The firm has backed over 40 startups in India over the last decade.
The thoughts and opinions shared here are those of the author.
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