All of us, whether participants, observers or just plain sceptical about the Indian startup ecosystem, have a view on Flipkart. And a strong view at that.
We loved it, hated it, but always had something to say about it. Nobody could ever ignore Flipkart. Not when eBay came in, not when Amazon pumped in billions to give them a run for their money. This week, Flipkart made history by becoming the world’s biggest ecommerce acquisition.
Last night at Mumbai airport (where I was) and I’m sure in many corners of India and the world, the conversation was around Walmart and Flipkart. And, as the news sinks in, we cannot ignore the signal it throws to the world.
During a recent visit to Germany, an Indian-origin gentleman I met at a gathering was vocal in his opinion that the Indian startup story was over. The well-meaning individual further advised that YourStory might be better off writing about cryptocurrencies. So, at some level, the deal has shut up most, but not all, especially the naysayers, the people who have been itching to write the obituary of the Indian startup entrepreneur.
The beginning of a new era
The big question here is: will Flipkart's acquisition go down in Indian startup history as the moment that led to a whole new wave of exits?
There is no shortage of skeptics who call the deal a flash in the pan because India has never been fertile ground for big exits.
Distress sales and acqui-hires outnumber real exits 100-to-one.
I believe the sceptics are wrong.
For one, there is India’s macro story with facts that can’t be dismissed. India is the world’s third-fastest growing economy with a GDP growth rate of 7.3 percent. It has a middle class of nearly 300 million and counting. (The Economist had recently written about the missing Indian middle class – so this is also a good time to ponder about whether a massive, nuanced, and heterogeneous market like India can be dismissed in a one-dimensional, consumer-only analysis.)
And let’s not forget digital penetration of 400 million or more. That’s just a little over one-quarter of our population. And only half of them transact online – the potential is huge. In three years, this number will be close to 650 million, and they use the internet for two things: entertainment and to buy or pay for something. Most Indians access the internet on mobile. We bought $16 billion worth of goods and services online in 2016 and Statista projects this number to triple to $45 billion by 2021.
I have other reasons to remain optimistic. Let’s not forget that there have been many firsts with Flipkart. They popularised cash-on-delivery and also took no-cost EMIs online. It fought back a bigger competitor with deeper pockets with a slew of innovative moves, reclaiming lost ground in less than a couple of years. The ecosystem, in turn, has watched Flipkart go through its ups and downs and learned from it. So one does wonder whether this exit doesn’t actually mark the beginning of a series of successful exits by other Indian promoters.
I think, it will. It will be that watershed moment when global giants recognise the value that has been built by these new-age entrepreneurs and startups.
Many happy returns
I also believe that we will see a lot of investments being made by young entrepreneurs in the startup world. To give some context, Flipkart founders Sachin Bansal and Binny Bansal have together invested in 30-35 startups in their personal capacity, including deep technology companies like Pandorum and Ather Energy.
Binny has also put his faith, and more importantly his money, in first-time fund managers and new venture capital funds like Alteria Capital, Stellaris Venture Partners, Pi Ventures, and 021 Capital, among others.
No longer are ESOPs just money on paper in startup land. The last I heard, Flipkart has created hundreds of millionaires (though I also hear money hits the bank in the next three months). Flipsters past and present are being teased privately and online for getting rich overnight. I get reminded of what Sir Isaac Newton said, "If I have seen further, it is by standing on the shoulders of giants." And the next upcoming exits in India will owe a lot to this exit.
The latest and biggest wave of the startup ecosystem in India is only about a decade old. It is not a simple market. Cookie-cutter approaches do not work here, as several stakeholders have discovered to their disappointment.
India demands innovative solutions because it throws up unique problems. If a solution can crack an Indian problem, then a simpler version of it can probably solve similar problems in less complex economies. And like Flipkart, there are other Indian startups innovating, inventing, evolving, and solving problems that would easily confound the rest of the world. It is only a matter of time before their worth too is discovered and investors unlock their real value.
And to all my entrepreneur friends who are in the trenches with me, I would remind them that it does not matter who you are and what mistakes you have made, it is what you do and what outcome you bring about that matters.
And Flipkart will ‘matter’ for a long, long time to come!