What’s On(line) India – 2017?

This is an update on a blog from 2011 titled What’s On(line) India? I wrote that blog about a year after I moved back from US and compared the services that were available in India online to the ones in the US. I had identified a few areas where the services had just launched in India and a few more where we did not have an equivalent service in India.

I was curious to check how things have changed in India and so did a refresh of that table.


Some observations:

  • Most categories popular in the US are all available in India and with reasonably good options
  • There are a few categories (particularly in O2O) that were non-existent (or very early) in 2011 that have quickly evolved in both US and in India and have got to reasonable scale. These categories are highlighted in green.
  • The categories that are driven by subscriptions or purely digital revenue (e.g. Movie rentals) are still early in India – particularly since subscription businesses are yet to catch the Indian consumers favor.
  • Most of these products/services are still getting traction mostly from the top of the Indian consumption pyramid
  • With the growing smartphone penetration and growing income levels, we can expect some of these products/services to trickle down to the next layer of Indian consumption – what Goldman Sachs calls the Urban Mass

The above list is by no means exhaustive. Curious to hear what products/services you would love to order from your mobile or your computer that you are not able to yet in India.

Note: Blog also posted here




Rise of the Indian marketplaces, and what the future holds


Increased connectivity and the spread of smartphones over the past decade have completely transformed Indian commerce. As more and more Indians get access to online services, they become accustomed to buying online – from books and tickets to smartphones, TVs, electronics and increasingly grocery and daily goods.

Over time, the dominant business model of e-commerce players has settled on the marketplace model. While inventory driven e-commerce may often grapple with issues of warehousing or product sourcing, marketplaces have on balance less initial constraints to deal with. More than a dozen startups of the annual Unicorn list published this year by WSJ, had business models that would align themselves to marketplaces. The distinct nature of marketplaces is such that there are push-and-pull factors between buyers and sellers that lead to virtuous cycles – the buyers and sellers on the platform keep providing value to each other thereby bringing scale to the venture.

Before understanding the distinct nature of marketplace, it may be helpful to highlight some of the characteristics that markets must exhibit before they can be accessed using marketplace models. After all, not all offline services can be viably brought onto a marketplace platform. However, there are certain characteristics that take well to marketplaces such as:

  1. High frequency use: The service being provided is of high frequency, such as hailing taxis, ordering food or making restaurant reservations. If the purchase cycles are longer, brand recall and user engagement tend to get minimized thereby preventing the marketplace from gaining network effects and scale.
  1. Existing fragmentation of supply and demand: Fragmentation of value chains lead to hidden value that are either not being used or optimized. Further, it also means less friction for a new marketplace player to enter the market. Cumulatively there also appear to be greater advantages that sellers and buyers can receive from each other that they cannot by themselves.
  1. Network effects: Over time, the marketplace ought to be giving you value that is better than the one that you received in the beginning. In short, the more people that use the service, the better it should get at providing it. Network effects of this kind end up creating tremendous value for both buyers and sellers.

Beneath this view of marketplaces, a helpful distinction can further be made between different categories of marketplaces in this regard. In a sense, not all marketplaces are created equal. Indeed, based upon the service, marketplaces can be divided and sorted into three main categories: basic listings, curated marketplaces, and managed marketplaces. Some characteristics of these are listed below.

Basic listing: These are the plain vanilla listing platforms that basically allow anyone to sell products that they own. A prominent example of this model in the beginning was Ebay and Craigslist. Such platforms have no tabs on the pricing of goods placed on the company as well as they do not dictate the precise user experience (UX) for each good. Expectedly, the service level that a buyer would gain from each listing also varies.

Curated marketplaces: The key difference between this and the basic listings model is the added input that the marketplaces themselves provide to make sure the user experience is a somewhat standardized one. In such a model, there is a filter imposed to vet services/goods providers. In addition, there are mechanisms in place that manage the curation experience through ratings and so on. A large chunk of the marketplaces that have gained scale and have entered the billion+ valuations such as AirBnB, Etsy and Groupon can be bracketed under this rubric.

Managed marketplaces: The last category is that in which services are still provided by a third party. However, the environment, pricing as well as service experience and customer support are all guaranteed by the marketplace itself. TaxiforSure and Ola are perfect examples of how an effective marketplace can develop with buyers and sellers operating under a standardized user experience that in turn is coupled with an assurance provided by the marketplace regarding certain basic quality parameters.

Accel and marketplaces

At Accel, we have worked with many terrific entrepreneurs and helped them in building businesses that have had well executed marketplaces at the core. Globally, we have led the charge in helping build marketplaces that have redefined categories. In the US, Accel has been involved with marketplaces such as 99designs (design services), Etsy (handmade products), Groupon (daily deals) and Trulia (connecting home buyers, renters and sellers). Furthermore, in Europe, Accel has led efforts in startups such as Avito.ru (Russian classifieds), BlaBlaCar (ride sharing service), Deliveroo (food delivery) and Wallapop (a P2P second hand goods marketplace).

In India, our partnerships with entrepreneurs in the marketplace category have ranged from hugely successful e-commerce players such as Flipkart & Myntra to movie/event ticketing platform BookMyShow and taxi hailing service TaxiForSure and Ola. More recently, we have also backed innovative new companies across industries such as Capricoast (home furniture solutions), Coverfox (buying insurance online), Medigo (arranging medical tourism), Portea (healthcare at home), PropTiger (real estate transaction facilitator), Swiggy (food ordering and delivery), Vedantu (online tutoring for K12 students), UrbanClap (all your local services) and ZopNow (grocery ordering). All these startups connect service providers across various sectors while ensuring certain standardized quality that the Indian consumer now expects and demands.


In addition, marketplaces also have tremendous value in streamlining and improving the efficiency of business-to-business transactions. Power2SME is an example of a marketplace that functions in the B2B space. Through Power2SME, Small to Medium Enterprises (SMEs) get connected to suppliers of essential commodities and supplies that allows them to gain savings and ultimately scale their business more efficiently. Similarly, we have three other businesses in the B2B category that are still early in their evolution.

The future of marketplaces

The broader ecosystem of connectivity that has led to the emergence of the new Internet economy also has other components ranging from the tremendous smartphone penetration to social media engagement among India’s younger demographics.

There is, therefore, a huge opportunity to remake the first generation of Internet marketplaces (across industries) and make them more responsive to the needs of the young Indian mobile consumer. In particular, the demands of the smartphones would place greater emphasis on the User Interface (UI) and User Experience (UX) of the product so that it meets the experiential demands of the discerning Indian consumer. The emphasis that mobile products place has shifted from being transactional — getting the best value for a particular good to being experiential – enjoy using the medium that allows me to get a particular service. In the current scenario, the feel and user friendliness of the medium of availing the service is almost as important as the service itself.

Through YourStory’s ‘The Marketplace’ campaign, we hope to engage with a whole new set of startups that are using innovative marketplace models to disrupt traditional and first-generation Internet businesses in India and to touch millions of Indian consumers and businesses in the years to come.

If you are building one, then apply now! – http://themarketplace.yourstory.com/2015/

Note: YourStory published this blog here.

image credit – shutterstock

Education Investments in India – 2013 (Part 1)

It is more than a year since we took a close look at the education investment landscape in India. In this blog post and a couple of subsequent ones, I would like to cover the following:

  • Quick update on investment landscape in education in India
  • How do we split up the education sector and market potential across sub-sectors
  • What are the challenges for each of these sub-sectors
  • How does this compare to what’s happening in the US

India investment landscape for Education

If we look across all VC and PE investments in India it has held more or less steady in the last few years with about 20 investments and about $200M being invested annually (data below courtesy Venture Intelligence)


If you leave out Private Equity investments (growth stage) and look at only Venture Capital and Angel investments the number for 2012 was about 15 investments (and $55M total invested).


Now, lets dive deeper into what’s happening across the various sub-sectors of Education. For the purpose of this discussion, let’s look at the following sub-sectors: Test Preparation, K12, Higher Education & corporate training and Skills/Certification training

In this blog, let’s take a closer look at Test Preparation and in subsequent blogs we can dive deeper into other sub-sectors.

Test Preparation

Test Preparation companies focus on helping students prepare for various entrance exams for engineering, medical, management and other professional streams.  This is probably one of the largest organized sub-sectors within education and has emerged strongly over the past decade. To set the context, there are about 1.2M students who take the engineering entrance exam and about 350K who take the medical entrance exam alone in India. The total addressable market for this sector is safely north of Rs 3500 Cr in revenue potential. Here is a good blog by education entrepreneur Jayadev Gopalakrishnan pegging the market conservatively at about Rs 4000 Cr.  There are two public companies in this space – Career Point and MT Educare and at least 5 other with revenue >Rs100Cr.

In the blog above, Jayadev points out three major trends – exams going online, exams consolidating (JEE Main as an example where there were multiple entrance exams earlier) and renewed importance of Board exams.

We believe that all three are important and hence companies that embrace technologies such as tablet and online practice systems and offer integrated test preparation have an edge. Integrated test prep refers to programs such as FITJEE and ACE-Deeksha that provide integrated board and entrance test preparation thereby using the students time more efficiently without having to shuttle between school and tuitions (for test prep) and using the extra time to effectively practice online or with tablets (full disclosure: ACE is an Accel Partner India’s portfolio company)

One of the pleasures of being an investor in education is that I get to meet entrepreneurs trying to disrupt test preparation using technology. A few companies that are doing outstanding work in this regard are Edutor (tablet learning), Vedantu (online and tablet), Embibe and Toppr (both provide online/tablet based test prep).  These are just a few off the top of my head – I have met at least a dozen other interesting startups in the space.

Challenges: A few challenges that startups that are taking the technology route need to think through:

  • Platform providers: If you are a technology platform provider to test preparation companies you would need to ensure that you are deeply embedded into the test prep companies ecosystem and that you will not be easily switched out.  A good measure of this  – most test prep companies charge >Rs25K per student/year, what fraction of that are  you able to retain?
  • Primary vs Supplementary: For startups that are aiming to go direct to students and selling their solution as a primary test preparation tool, based on numbers I have been able to gather 70-80% of the 1.2M test takers go to some kind of coaching for test preparation. These students are already bombarded with practice tests from their test prep institute and do not have time to use supplementary tools. And so, for your tool to be used by the student, it might be necessary to get it integrated into the test prep institutes curriculum.
  • Addressable market: You need to be able to command >Rs10,000 per student/year so that if 40% of students use your technology solution that is about a Rs500 Cr market (1.2M*40%*Rs10,000)
  • Distribution: And finally, how will you acquire your student customer? Will it be through coaching institutes or by directly marketing to them? If its direct marketing (online and offline) what will be the cost of customer acquisition and will your revenue per customer (over the two years of preparation) support that customer acquisition cost?

Through the Edustars program (applications open through end of November), we hope to discover that next great disruption in the Test Prep market using technology. The above questions are meant for you to think through the basics of building that business so that we can quickly get past these questions and onto building a company that touches millions of students over the coming decade.  Would love to hear your questions and get your feedback on the Test Prep topic.

Will touch upon the other three topics in the next blog post: K12, Higher Education & corporate training, Skills/Certification training

Note: Yourstory.in published this blog here.

Accel @ Nasscom Product Conclave 2013

Wanted to briefly recap a couple of events in which Shekhar Kiran and I had the pleasure of participating at the recently concluded Nasscom Product Conclave 2013. Overall, we really enjoyed being at the event (this is my third year attending the event). Just like previous years, the 2013 event managed to get a great set of entrepreneurs to attend and really enjoyed interacting with them. Now to the recap.

Building fundable startups

Shekhar Kirani (my colleague at Accel) and Vijay Anand (from TheStartupCenter in Chennai) brought out the essence of how to build fundable startups in this 45 min panel. Topics where covered in a top-down fashion where they set the context that for Indian VC’s a good exit to shoot for is $200M+. And to achieve that the two essential components are – market and team. They went into great detail on how to pick the right markets and what are the essential components of building a team. If you are a first-time entrepreneur, would encourage you to spend 45 mins reviewing the following video.

Desi vs Pardesi Capital

I had the pleasure of moderating a short 30 min panel on raising capital from Indian investors vs. from investors outside India. More details about the context for the panel is here in this blog post. A quick summary of what we discussed:

  • If you are a startup going after the local Indian market, your best option might be to raise capital from India
  • On the other hand, if you are startup going after the global market, you might want to talk to investors from India as well as outside.
  • We also discussed nuances of fundraising outside India and then trying to raise capital in India (and vice versa).
  • And a shameless plug, there are funds such as our own (Accel.com) that has global presence and so you have flexibility to raise capital and get help from our team in India as well as across the globe (US, Europe and China).

We are sure there are many questions we did not manage to cover in our short sessions. Please feel free to share those via our Accel India Facebook page.


I want to be VP of Engineering of Flipkart, can you help me?

I get this question from time to time from people who are looking to move to India from the US and other parts of the globe. These are very qualified people but the fact of the matter is. for more mature startups, most of these senior roles are already filled. As someone who moved back to India after more than a decade outside, I always try to encourage people on making this move and have  blogged about things to ponder while planning a  “Career Move to India”. For senior technologists and product folks who are looking to move back, I want to add a few more points here:

  • Stage: Figure out what stage company you want to join. Early stage (seed/Series A funded) vs growth stage (Series C or later) as it relates to the following points
  • What do you want to get out of the experience: This is something you need to be very clear about. Do you want to use this role as a transition to doing your own startup in a couple of years (might be better to go to a later stage startup or even an MNC)  or do you plan to grow with the company over a longer period through their exit (early stage startup)
  • Roles and responsibilities : Are you particular about a VP or CXO title – if so an early stage startup might be more appropriate. Tougher to find these in growth stage companies. As an example, a seed/early stage company probably will have a tech team of between 5-20 people and might want a VP of Engineering to lead the whole team and also wear the CTO hat to figure out tech strategy for the company over the next couple of years. A growth stage company might have a 50+ member tech team and might need a team lead for one particular product which could still be a 10 member team. What role is more suitable for you? 
  • Salary vs. options: How is your cash flow situation. If you have a good safety net and don’t mind lower salary and would like to take on more options, then an early stage startup is probably better for you. Alternately, if you need slightly higher income but don’t mind lower options – growth stage is for you. While doing this math, especially for people looking to move back from US, remember that if you adjust for Purchasing Power Parity, India is roughly at 1/3rd US. and so if you are making $200K in US and someone offers you $100K in India you are going to be saving a lot more in India from your salary. But, you are never going to save enough from your salary (US or here) to retire in 10 years, whereas the options will give you that upside (if the company clicks of course).
  • Age: Know this can get controversial, but if you are in your mid-late 30s  and  if you can split the next 20 years into 4-5 year chunks, you probably have 4-5 shots at goal in your working career. In most startups, within the first 2-3 years you will realize if the company is going to do well or not and most probably your options will be vesting over 4 years and so you will be 50-75% vested in 2-3 yrs. By this math, if you have 4-5 shots at goal left in your working career, this is the right time for you to take those bold bets and go earlier stage into a startup that you think has a higher chance of success and have a big impact as a leader in that company to ensure success. You could take two such shots at goal over the next 6+ years and if either of them clicks you are good to retire and don’t have to work for money. If not, you would have learnt enough across a breadth of responsibilities to be hired in a senior role at a growth stage startup or an MNC at a cushy salary and you go back to status quo in building your retirement kitty slowly over time.

One other point to note about the Indian startup ecosystem is that, over the past year or so, I have seen a few VC backed early stage startups not doing great (shutting down or being merged into other companies), but the good news is that talented senior people from these teams (particularly technologists) are being aggressively hired by other startups. This is good for a culture that is known not to tolerate failure in the past – we are learning that the startup game is bound to have failures but not all failures can be attributed to people. And that good people, irrespective of the startups outcome, deserve and will get good jobs.

Look forward to hearing from people planning to make such moves or looking to join startups. I know many startups in our portfolio and outside that are looking for good senior technology and product folks across multiple sectors. Feel free to ping me at in.linkedin.com/in/ananddaniel/ if I can be helpful.

Upskilling 150 Million People


The Economist recently ran a special report on India which was highly informative. I particularly found “A Billion Brains” to be a great summary of the education scene in India. One aspect called out in the article was the humongous skill gap that we have in India.

Here is the gist of it. The current annual demand for skilled labor in India can employ 100% of the population entering employable age. But only 4 MM people (2.8 MM through higher education and 1.2 MM through vocational training) are getting any sort of formal training while 17 MM trained labor is required every year. Majority of graduates study humanities (2.5 MM) and hence have to be trained on the job. The following slides share more details on the demand for labor across sectors and the supply side issues.

Skill Gap In India

Given the above context, the efforts of the National Skill Development Corporation (NSDC) to upskill 150 MM people by 2022, is quite commendable. Here are some highlights from my conversation with NSDC on this topic.

  • Goals: They have 20 identified sectors (plus the unorganized sectors) on which they have tons of market information they have shared via this knowledge bank. They have approved 77 projects so far (61 in training/upskilling and 16 for sector skill council ventures)
  • Criteria for selection: a) Main focus is the ability of the funded project/company to upskill/train a minimum of 100K people in 10 years (this number could be across sectors – same company training IT, Hardware, etc.). b) 70% of the trained people should be gainfully employed. c) And the company should have a robust 10 year business plan
  • Structure of the funding: No specific cap on the funding. They will fund 75% of project cost (without land and buildings). Money is given out in tranches. Mostly as loans – 6% interest (could have an interest moratorium of 2-4 yrs)
  • Stage of the company: They are open to funding from early stage startups to mature companies (as shown in the table below. But, it helps to have some early proof points on how the model will work
  • Sectors: They are keen to fund projects across all 20 identified sectors but seem to have more of an appetite for non-IT projects to balance out their portfolio

The table below summarizes the list of projects they have listed on the website. As you can see, these listed projects aim to upskill about 70 MM people over 10 years and on an average each project upskills about 1.4 MM people at a cost of Rs 36 Crores over 10 years.

NSDC Projects

For startups out there in the training/skills development space (particularly non-IT), NSDC could be a great way for you to get non-dilutive funding for scaling up your operations. If you are a company that has gone through the NSDC process, it would be great if you can share your experiences/tips for other aspiring skills development startups.