Business

India's fast-growing start-up business scene

Indian entrepreneur Richa Kar Image copyright Zivame

It was back in 2011 when Richa Kar realised that, when it comes to buying lingerie, Indian women were under supported.

Then 30, it dawned on her that many such retailers didn't stock a wide enough range of sizes, and that in some parts of the country such stores were hard to find.

At the same time, she found that many Indian women felt uncomfortable buying underwear from a shop, and that they had a lack of awareness of the different types of such products available to them.

Ms Kar, who four years ago was helping a global lingerie retailer develop an Indian marketing strategy, decided that the solution to all these issues would be to open an India-wide online lingerie shop.

So quitting her then day job, she did just that, launching her website Zivame in August 2011.

Speaking at a panel discussion on the Indian-start up scene organised in Bangalore by BBC TV show Talking Business, Ms Kar says: "Usually retailers stock only fast-moving sizes, while tail ends of sizes remain under-served.

Image copyright Zivame
Image caption Zivame's website has now been up and running for almost four years

"And some sales personnel only push sales, rather than providing consultation on the right fit and style. That is why I conceptualized an online lingerie store."

Since its launch, Zivame's revenues have more than tripled each year, helped by the growing number of Indians shopping online.

The Bangalore-based company today employs 250 people, and has raised more than $15m (£10m) from large Indian investors. In addition to lingerie, it now sells swimwear and pyjamas.

Ms Kar is just one example of the many hundreds of young Indians who are increasingly taking on the challenge of setting up their own businesses.

Led by new entrants into the country's technology sector, this is transforming India into the world's fourth-largest hub for start-ups, according to the Ministry of Finance's Economy Survey 2014-15.

And thanks to the vast scale of India's marketplace - the country is expected to overtake China as the world's most populous country from 2028 - overseas investors are increasingly showing an interest.

This is especially true in the online space, where 240 million Indians now have internet access, according to research group IMRB International. IMRB says this is the third highest in the world after China and the US, which India is expected to overtake this year.

Failed business

To tap into this ever-increasing number of internet users in India, 26-year-old Anand Satyan launched Bangalore-based sports fan website Boutline in 2013.

In cricket-obsessed India, Boutline is a platform where fans of all sports can chat with other likeminded people.

Image caption Anand Satyan urges young businessmen and women to seek advice

The website makes its money through sponsored content, providing fan insight for brands and sports teams, and by selling premium content.

But showing that setting up a successful business is difficult whatever the size of the marketplace, Boutline is Mr Satyan's second attempt, after an earlier venture failed.

His first start-up was a delivery business called Deliverwithme that didn't survive its first year.

Mr Satyan says: "There were a multitude of problems. The founders and co-founders didn't get on very well, and that led to several other problems.

"We realised much later that our vision for the company didn't match and we were also running out of cash."

As Boutline continues to grow, Mr Satyan advises other young people thinking of starting a business to seek advice and support.

"I do feel that a lot of mentorship needs to be given to start-ups for them to analyse, and put enough thought into, what is the kind of business they want to do, what problem are they really solving, and what value do they bring?

"In absence of this mentorship, I do see a lot of failures. "

Infrastructure issues

Investment fund injection into Indian start-ups hit more than $3.5bn (£2.3bn) in the first half of this year, a new high, according to Yourstory.com, one of the country's most popular websites for entrepreneurs.

A significant proportion of this money is now coming from overseas, with funds such as Tiger Global, Sequoia and Accel in the US, and Japan's SoftBank, leading the way.

Image copyright Getty Images
Image caption Bangalore is India's main centre for technology companies

One of the many reasons why investors are showing increased interest in Indian tech start-ups in particular is the fact that Prime Minister Narendra Modi has worked hard to highlight the sector on the global stage, and the number of investment opportunities.

The government has also pledged to make India an easier place in which to do business.

However, challenges still remain when it comes to running a business in India, whether it be in or outside the technology sector.

Somnath Meher, the founder of Witworks, a Bangalore-based business which connects people with ideas for consumer products with potential manufacturers and investors, says there are too many infrastructure and regulatory hurdles.

Image caption Arjun Narayan cautions that investors in India need to be patient

"India is still a decade behind becoming a matured manufacturing hub," he says. "It is not just infrastructure that's a problem, there needs to be an entire ecosystem built around it.

"As of today, as a manufacturer myself, I would be very sceptical about being able to make products in India. Firstly because of the speed, secondly the quality of products, and thirdly because of lack of access to the components that go into manufacturing various products."

Arjun Narayan, founder of Catamaran, a private investment company that has offices in both Bangalore and London says: "Investors often don't have a choice but to be patient [in India].

"I think India is a country where to build anything takes time. It takes a lot of learning here as it is a very heterogeneous market with lots of different tastes and variants," he says.

"In many cases investors don't have patience and don't let that learning curve happen."

Yet despite such concerns, the big growth in the number of new Indian start-ups continues, as does the level of investment they are able to secure.

You can see more on this topic on this week's episode of Talking Business. The programme is broadcast on the BBC News Channel on Saturdays at 20:30 BST, and on BBC World on Fridays at 14:30 GMT, Saturdays at 00:30 GMT and on Sundays at 12:30 and 18:30 GMT.

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