With smartphones and mobile devices becoming commonplace, it was going to be only a matter of time before they permeated into every area of our life, and who would be best placed to take us there but the mobile startup companies.
Whether it is ordering a taxi, pizza, tracking your health statistics or buying a house, the mobile phone seems to have become indispensible. Across the world, mobile apps are solving problems that are local in form but global in nature. Helping them get there is Qualcomm Ventures, the VC arm of the global mobile technology giant.
Nagraj Kashyap, Senior Vice President for Ventures and Innovations at Qualcomm Inc., was in India recently. YourStory met with him along with Karthee Madasamy, Managing Director, Qualcomm Ventures, and Varsha Tagare, Director of Qualcomm Ventures, India, for a chat on how the mobile space is evolving. Read on for excerpts of the conversation:
YS: What’s changing in the mobile business in India?
Varsha: There are four deals in India that we have done this year. Portea Medical is in the home healthcare space. They work with wireless devices as well as sending the staff home, collecting data and sending it out remotely. Second is MoveInSync, they sell transport data to corporates. In Mumbai, we have two deals, one is Housing.com, and the other one is Traffline.
As you see, it is a split across multiple sectors. We have healthcare, consumer internet, and core infrastructure. So we see mobile going horizontal across many of these sectors.
YS: Which countries in your portfolio are doing better?
Nagraj: The areas we operate obviously include the US, India, China, South Korea, Israel and Brazil. Especially in India, China, and Brazil, we are seeing a lot more mobile-first companies. So these three I think are leading the charge.
In India, we’ve seen tremendous exposure in smartphone growth in the last six months, so we are seeing a number of companies here who are basically saying either I start on mobile or I’ll optimize on mobile, I don’t really care about the PC. So that’s been happening fairly uniformly across geographies. Naturally on the US side, where there is very high penetration of internet, many of the new companies coming up are essentially mobile first. They really don’t have anything outside of their mobile app, so I think we’re seeing this fairly uniformly across the board.
How do you see the impact of the smartphone deepening further?
Nagraj: Because of the components used in the smart phone and the scale of the smart phone, the cost of many of these components of the smartphone have has reduced been driven down to levels where they can now be used in markets where they were not earlier making them more accessible. Robotics is a good example. Robotics has been around for a long time, these were very expensive machines and could not get to consumer grade. But now because you’ve got sensors and processor connectivity in the smartphone, the costs have come down and they can now be reused in many of these markets. You’ll see many adjacent markets where the smartphone components will drive innovation and usage of consumer devices that were not possible a few years back. It’s because the mobile platform with billions of devices has driven that cost down.
That sort of thing is starting to happen in adjacent markets, where we’re seeing a lot more innovation going. We may have companies in India which will start to think about adjacent markets, whether it is software controlling drones or services based on that. So, there may be innovations that come about because the smartphone exists, and is driving down prices in other markets.
Healthcare is another area where we see mobile leading the charge.
YS: What is the current trend on hardware innovation and startups?
Nagraj: Hardware innovation is a big company game, I don’t think there is any small company that can have the scale to make innovations in this area. There will always be areas like sensors where innovation will happen, but in terms of core processor and connectivity, innovation requires a lot of scale, lot of R&D, and that’s not typically a VC funded model at this point in time.
The amount of investment needed to do semi-conductors and that sort of research has just gone up substantially, and that’s become less of a VC funded and more of a big company research.
We are doing it. At Qualcomm, we are doing a lot and I think a number of our competitors are also doing it. So it is happening. That’s why you see that this thing (the smartphone) has the power of a super computer of 10 years ago. It’s just that you don’t see it from the startup side, because of the scale required. You need 40-50 million dollars to get a product out and that’s not something a VC would be willing to fund.
Even in the US that trend is very clear. Startups are more in software infrastructure and application as opposed to pure hardware. Hardware is coming up in a different format, that is building different consumer devices using the innovation that big companies are doing. So whether its drones or robotics for games for kids, startups are drawing upon components and creating new, interesting consumer devices. All that’s fine, but the core innovation inside it is being driven by the big companies.
YS: What are your thoughts on ‘Uberization’ in the developing world?
Nagraj: Clearly with Uber in the US it was different. They introduced a new class of vehicles into the system. In many other markets, even in China, there is inefficient resource available and they’re using the smartphone to make it more efficient. So more of the scheduling and logistics art of it, not necessarily introducing something brand new.”
“We are seeing a lot of that. There are a lot of inefficiencies in many new areas, whether it’s delivery of food, it’ll get more efficient using the phone. So I think many of those markets will be harnessing what already exists, but making it more organized. There is a lot of value that can be created leading to the creation of out of that and big businesses. can be created out of that.
YS: What are the infrastructure hurdles?
Varsha: “I think we still have to evolve our infrastructure, on that side, but it’s definitely making progress, in terms of payment gateways or failure rates. Things are improving, but I think unlike in the US, we have to fix many things in parallel.”
Karthee: We’ve seen that in e-commerce, whether it’s the cash on delivery type of structure or building your own logistics, we’re seeing that in every sector you have to tackle an India specific issue.
Nagraj: I think infrastructure will continue to get solved in a very different way in India as compared to other places, which is great. For some of the businesses you can’t really predict what’ll happen because it’s not like you can just take what happened in the US and just apply it here.
One of the advantages of Qualcomm Ventures being a global fund is we can also share the learnings across geographies. Specific things that work in one geography may not actually work in other geographies. But at least you know what has not worked in other places and see very different kinds of problems being solved. It’s so exciting that a lot of entrepreneurs are looking at the technologies that can solve it. Sometimes you can export it, sometimes some of these problems are there in other markets, if you solve it in India then you can solve it in other markets.”
YS: What does the year ahead look like?
Nagraj: One of the mainstays is we’re not only a global fund, we do not have a long-term horizon for any investment. As opportunities come about we’ll take advantage of it, we don’t have constraints in terms of how many thing we can do and not do. If the team here brings up a good opportunity, we’ll invest in that. We’re very bullish about what we’re seeing in India today specially if it’s coupled to Qualcomm’s main business of smartphone growth and I think it’s really happening together. I’m very positive and bullish about what I’ve seen just in the last two-three days I was here. Clearly, there’s a lot of excitement, a lot more new entrepreneurs coming up and a lot more sources of capital so I think the next 12 months look very exciting.
The mobile business is exploding like never before and innovations in the space will need the support of an experienced hand to keep up with it. Qualcomm Ventures is clearly well placed to be that support.