The India Startup Market Map

Starting point of a startup is an idea and it goes through a journey of product releases and pivots to reach its product-market fit and further scale. Typically, the source of this idea is a brainstorming session or hot flavor of the season - FoodTech, Fintech, and so on. Sometimes it comes from past work experience of the founder. In rare cases it is rooted in an unsolved customer pain point.

Most founders try for India first and then pivot to SEA and then to US. if they directly choose to build for US then they save the time they spent in India.

For Indian software product startups, when looked at through the lens of market segments, a pattern seems to emerge.

A 2x3 matrix

Decoding the Market Map:

India consumer market

Before 2009, India consumer was not an open digital market. There were few online ticketing sites and many attempts made in the e-commerce space did not grow in a big way. Telecom VAS (value added service), a closed market, existed only because of the regulation gap around strong consumer privacy laws.

In 2009 something happened with the birth of Flipkart where consumer behavior changed. Consumers started believing that they could trust online transactions and swiped their cards. It would be hard to attribute this to one factor - whether it was Cash-on- Delivery, critical mass of people on the Internet or a myriad of other reasons. Suffice to say that market behavior changed since. Today, countless new ideas are being tried out in the space because this market has opened up.

India SMB market

I have been a close observer on two industry attempts (read multiple organizations collaborating) to wrench open this space and in my last role I was closely involved in leading multiple experiments in creating this market.

While I am very bullish about this market, the fact of the matter is that this market is yet to open up.

Just like we witnessed a mindset shift in the consumer space, small businesses need to change their buying ‘tailored shirt’ mindset to buying ‘branded shirt’ mindset for this market to explode. Open API based GST system in India may cause to be a major reason of change here.

India Enterprise market

If India consumer has already exploded and India SMB is around the corner, India Enterprise is yet to germinate. There are handful few startups that have been able to sell to Indian CIO; they are exceptions than the rule.

Global consumer market

In the Global consumer market there is hardly any precedence of a startup from India i.e. equal to a Facebook or Snapchat. Not that this may not happen, the odds are low. This is because it is very hard to understand global culture nuance when based in India. Risk capital available to try out radical business models are not present. There are a handful instances where this is being attempted such as Zomato, Hike but the jury is still out.

Global SMB Market

Indian startups are rocking the Global SMB market. A strategic inflection point that has made this possible is that small business are searching for solutions to their problems online.

When a solution can be delivered online through SaaS, the purchase consideration is based on the experience of solution (try and buy) and not based on the trusting the salesman who delivers the software CD. Given this dynamic, it does not matter if the solution was built in Alabama or Alwarpet in Chennai.

The comparative cost advantage of doing desk-based selling from India makes it possible for price points unimaginable in other parts of the world. This in turn opens many low-end markets that have been earlier priced out. Companies that are trend setter here are Zoho, Freshdesk, Wingify, KissFlow, Kayako, ChargeBee, Hotelogix and many others.

Global Enterprise market

There is also good precedence of traction for Global Enterprise with more than a handful examples. The pattern here has been to prove product with pilot customers in India and scale it faster with global market selling. This involves migration of feet-on-street sales team globally. iFlex has been the Zoho equivalent grand daddy to set precedence here. Recent examples are Druva, Eka and newer folks like Innovaccer and Unbxd are following suit.

There are startup ideas that are tech components, and may sell into a value chain into one of these market and not directly - for example, a developer toolchain. The effect of traction in the market has same implication for them.

The above map is not going to be static and is bound to change. Certainly, the past is not an indicator of the future. However, the history of technology has taught that path-dependency plays a huge role in shaping of markets. A realization of this map has allowed few startups to change gear in reaching product-market fit or scale. This map also helps understand that the playbook for winning a market is different from one for creating a market.

To quote Marc Andreessen:

When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens.

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