We see over 11,500 software product startups by 2020: Ravi Gururaj, Nasscom

Nasscom Product Council chairman Ravi Gururaj believes there will be more than 11,500 software product startups in India by 2020, employing over 2.5 lakh.

By Anand J

Already, more than 800 startups are sprouting annually in the country, says Gururaj, a serial entrepreneur and angel investor himself. In an interview with Anand J, he says M&As in the Indian startup space will pick up momentum over the next few years. Excerpts

Nasscom has said this year has been an inflection point for Indian startups. Can you elaborate?
We are seeing a lot more funding happening with the startups attracting $2.3 billion over the past four years from the 70-plus active venture capital (VC) funds in the country. We see many of them gaining traction in terms of revenue momentum and global forays. They have started to build products for a global market. More than 800 startups are coming up annually in India. As a result, there will be over 11,500 startups by 2020 employing more than 2.5 lakh people.

For product companies and startups, Nasscom has two programmes now — the 10,000 startups initiative and the product conclave, both happening across metros. What are you aiming at with these?
The 10,000 startups programme, running over the last six quarters, allows us to engage with early-stage companies and people just getting into entrepreneurship. It is broad-based and pan-India.
Product conclave, on the other hand, is about both early- and late-stage companies. The late-stage companies at NPC have already got some funding, and they are now getting into the growth stage. Design is clearly a priority area for us and we need to improve our skills and take it to the next level. We have summits in four different areas: growth hacking, product management, sales and marketing and, finally, design.

We see many more CIOs and CTOs of large companies at this year’s NPC. Is their presence incidental, or do you expect them to acquire startups?
We work with them and connect both parties. We want the CIOs and CTOs to understand what is going on in the startup sphere. We want them to see the energy and innovation happening here. Ultimately, startups need access to revenue and customers, and often they get these through large companies with scale. It will be good if these big companies engage with startups and give them business or even advice on market demand.

Are you a bit disappointed that Indian companies are still not acquiring startups?
Companies that acquire startups are mature entities. They have gone public and have a lot of cash to spend. You will now see that happening here. Many have also appointed people for M&As.
The second thing is, we should not be fixated on M&A as the outcome — it comes a little late and our volumes will always be low. M&As happen across a range of companies for various reasons, many of them beyond what an early-stage startup can do. Sometimes, it is just about the technology or talent.
Also, most big Indian companies are still IT services companies and they have a different DNA. If they find a product company adding value, they will buy.

When will we reach a phase where an IPO will be on the minds of Indian product companies?
We had Justdial and MakeMyTrip IPOs. New rounds of funding have got so big for some companies that the next, bigger round can only be an IPO. They have gone beyond the private equity range and, in twelve months, we will see some action. IPOs are never a phase — even in the US they come in as a trickle. You need many more companies to see a phase of ‘going public’. And IPOs can happen only when the window is right, the markets are going up and the economy is growing.

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