Forbes reports that the underlying theme in India’s startup ecosystem will be consolidation. The publication mentions five trends for this year’s startup ecosystems:
Growth of Vertical SaaS
Vertical SaaS caters to a specific vertical, like hospitality, travel or retail, and data from startup analytics firm Tracxn, claims that over 60 startups operating in the vertical SaaS domain received funding in 2016, comprising 50% of the overall SaaS funding during the year.
Innovation by Technology Companies
This year may see more investors backing early stage technology companies, given that last year Team Indus (a spacecraft for lunar mission), Wrig Nano ( a smartphone-sized device developed to measure hemoglobin count within minutes), Pandorum Technologies ( 3D printing of human tissues), GreyOrange (robotics systems for automation at warehouses) and Ather Energy (electric scooters) have successfully raised funds from Tiger Global, Accel Partners, Blume Ventures, among others.
Consolidation in e-Commerce and Real Estate
Mumbai-based Kotak Institutional Equities says that the e-commerce sector is expected to see steady growth and is likely to register a 45% annual growth over 2017-2020. It is likely that investors will combine and consolidate their holdings rather than be pitted against one another.
A More Robust Drug Sector
Forbes says the pharmaceutical sector has the potential to grow to $55 billion in revenues by 2020 from $20 billion in 2015. This industry has attracted foreign investment worth $14 billion (sixth-largest recipient of FDI across all industry categories) since 2000. Seeking to address concerns regarding excessive controls that were stifling innovation and competitiveness in the industry, the Indian government will soon announce a new drug policy where the National Pharmaceutical Pricing Authority will be disbanded and price control will be delinked from essential drugs. The new system will be more flexible and prices will be regulated only when required.
M&A Activities
According to Tracxn, in 2016, the country’s startup ecosystem witnessed a total of 165 mergers and acquisitions. Due to the ongoing interest from financial and strategic investors in the Indian economy, Ernst and Young expects M&A activity in 2017 to stay positive. Sectors such as technology, life sciences, and financial services are expected to attract significant investor attention in 2017.
