Digital farming services are taking off: Dehaat Founder, Shashank Kumar
Most startups get product-market mix wrong: Innov8 Coworking Founder Ritesh Malik
28 September 2023
New Delhi
Many markets in southeast Asia and Africa have structures that are similar to India and Indian business model innovations can be adapted successfully in those markets, according to Umang Kumar, Co-Founder CarDekho. "Proven success at home makes it easier in a new geography," he said. Mr Kumar was speaking at the 50th National Management Convention organized by All India Management Association (AIMA).
Mr Kumar said that CarDekho has built a sizeable car finance business in Indonesia because that market is fragmented like India and also allows high spreads like India. The Indian model would be difficult to replicate in developed markets, he said.
However, Indian startups going to other emerging markets face challenges in regulatory compliance and hiring. Mr Kumar said that Indian startups take the digital infrastructure and culture for granted but each market has its own rules and regulations. He pointed out that a car finance and insurance aggregator like CarDekho have to deal with different financial regulators in each country and delivering digital loans and insurance is not equally easy. "In India, credit bureaus are more evolved and the digital loans are encouraged," he said. Still, the biggest challenge is hiring, said Mr Kumar, because Indian startups begin as unknowns in other countries.
On the subject of startups solving rural India's problems, Mr Shashank Kumar, Founder and CEO, Dehaat, said that use of digital agriculture solution is more advanced in the western and southern India than in the north and the east. He said that 65%-70% farmers in the western India use digital services whereas only 35% farmers in the eastern India tap into those. However, with the spread of data connectivity, mobile phones, and the UPI payment interface, the adoption of digital farming services is increasing, he said. He pointed out that more and more farmers are beginning to look for information on seeds, fertilizers, finance, crop market etc on apps. Dehaat, he said, is also selling farming inputs and buying crops, and it has a network of digitized warehouses and storage in many states. The startup has been able to raise plenty of capital and grow 50 times during the past 3-4 years, he said.
Mr Ritesh Malik, Founder, Innov8 Coworking, said that short-term and affordable office space is major challenge for India's startup ecosystem. He said that he started by working from a Starbucks and then decided to build a Starbucks like working space for others. "With a coworking space, a startup does not need a lot of capital to start with," he said. Still, India is a price sensitive and payment resistant market, and the rentals for shared office spaces have to be kept extremely low and local, he said.
Talking about the prevailing funding winter for Indian startups, Mr Malik said that most Indian startups do not understand the product-market mix and therefore they are not profitable. He said that among the 109 Indian unicorns, hardly 24 are profitable. "In India, the customer and the consumer are different," he said, adding that for coworking spaces, it is the CFO who is the customer and not the user.
Mr Shashank Kumar said that Indian startups are facing a second funding winter, after the first one in 2017, and there has been a major VC exodus. This funding winter is because of lack of profitability whereas on the previous occasion it was because of lack of size, He said.
The session was also livestreamed on AIMA's social media channels.
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