Startups In India: What Clicks, What Fails

Startups in India will see consolidation in the next few years, and not everyone is going to survive.

- Vishal Krishna

The Moment You step into the cheery offices of InMobi, the youthful energy that pervades the place hits you. Not surprising, given that the average age there is 25. The mobile advertising company recently unveiled a platform called MiiP, which offers advertisers animations that are customised for each individual consumer. CEO Naveen Tiwari says, “This platform will be available to all retailers, and will make their advertising more interactive, and will engage consumers better.”

Between 2008 and 2014, InMobi raised $220 million. And in August this year, it raised $100 million in debt. It has grown to become one of the big success stories among Indian startups, and Tiwari says he hopes MiiP will make InMobi a billion-dollar business.

TalentPad, by contrast, lasted a little over a year. Funded by Helion Ventures, the company sought to make it easier to match skilled individuals with employers. It shut shop in August, citing its inability to build a scalable model. And sources say the valuation of Housing.com has dropped dramatically. In November 2014, when Softbank invested $100 million in it, Housing.com was valued at $400 million, and the current valuation is $50 million.

The smartphone-driven economy is teeming with startups, big dreams, big money — and big investment risks. Conventional wisdom is difficult — perhaps impossible — to apply in an economy built with creative ideas, technological innovation, and budding business models. It is hard to separate the winners, from the companies that will sell out, from those that will shut shop.

Of course, not all sellouts are losers. Fashion e-tailer Myntra cost Flipkart a neat $300 million, travel portal Ibibo paid $135 million for RedBus, a bus reservation app, Snapdeal acquired payment company Freecharge for an all-stock deal worth $400 million, and classifieds platform Quikr reportedly acquired realty portal CommonFloor for $130 million.