Of the world’s 393 unicorns, half are in the U.S.—the largest startup and venture capital ecosystem in the world. Over the last couple of years, many startups in Asia also have hit the $1 billion valuation mark, creating strong global brands and innovating to solve problems in the process.
Speaking about the growth of Asian startups at a panel discussion at the World Economic Forum’s India Economic Summit on Friday, Oyo’s India and South Asia CEO, Aditya Ghosh, says that it all comes down to these entities’ audacity to dream and execute plans. “Whether it’s Oyo or any other startup, or a successful business, at the core of it is whether we’re trying to solve a fundamentally hard problem to solve. Hotel business is not new. Our approach is what makes the difference,” Ghosh said.
He said that the dream was not to see Oyo as a startup from India but as a truly global company which is trying to solve a problem around the world. “The proof of this being a secular need around the world is the pace at which we have been able to grow. Not only in India and China but also in the so-called mature markets like the U.S. and U.K.,” he explained.
He said that in less than six years Oyo, valued at $10 billion, has about a million keys in 80 countries. “It goes on to show the need of the consumer of not wanting to pay this crazy amount of money to get what should be basic hygiene and consistent service,” Ghosh said.
“We have seen this in many industries like automotive and FMCG,” said Ghosh, “that when you bring down the cost of access, the propensity to use it becomes exponentially larger. There lies an opportunity to create a multi-billion-dollar business.”
Ankiti Bose, co-founder and CEO of Singapore-based Zilingo, said there are a lot of innovative business models and technology that are being built here and can truly be taken to the world. “It’s not just about having an app on top of an existing industry, technology is genuinely changing industry on the whole,” she said.
About the opportunity for companies like hers, Bose said that the apparel industry is almost 5% of global GDP ($3.8 trillion) and it has also the most broken supply chains in the world unlike pharmaceutics and electronics. “And lack of technology at every step is leaking margins at an unprecedented level. That’s where we come in adding technology and fintech across the whole supply chain in apparel. Today we work with over 60,000 brands globally making it perhaps one of the largest supply chain disruptors in the world in just four years,” she said.
On matters of funding in the startup space, Sequoia Capital’s Shailendra Singh said that what catches his eye is whether founders have ideas that can disrupt an industry. In India that is found in abundance. “The sheer size of companies in India and Southeast Asia and the quality of founders, their ambition and execution at a global scale is just remarkable. We invest across industries. Technology is transforming full industries that have existed in a certain way in the last couple of years. Venture capital was first mostly invented in the Silicon Valley. It existed there for decades before it came to Asia,” Singh, managing director of Sequoia Capital India and Singapore, said.
In Sequoia Capital’s 14-year journey in India, Singh felt, it has been only in last four-five years that innovative companies have really started to come up on their own. But there is a fundamental difference between the U.S.-based and Asian startups. “U.S. markets are so large that often companies have no need to do anything else. In Asia what we found is that there are a lot of white spaces. And individual market opportunities are sometimes smaller. So companies can easily mutate to adjacent verticals and adjacent markets. They can build platform companies at a pretty rapid pace,” he said.
Guruprasad Mohapatra, secretary, Department for Promotion of Industry and Internal trade (DPIIT), agreed that there is tremendous potential in Indian startup ecosystem but it cannot be without a required regulatory framework. “As far as the regulatory environment is concerned, regulations are required in a market economy. It will apply to startups as it applies to other established entities. Our job is to encourage them. We’re working on a new e-commerce policy. There are issues like data. There are issues like brick-and-mortar versus e-commerce,” Mohapatra said. “What is the level playing field for them?”
He says the government will make a policy in order to listen to each and every stakeholder of the country as it will not only affect companies in the country but will also have ramifications for Asian investors who want to come to India. “At the moment we have a little more than 50,000 registered startups with the DPIIT and that’s the only way of registering them for availing benefits. We expect to reach another 50,000 by 2024. It [the policy] is a work in process. But I can assure you that the policy that’s to be made will be very good and sound policy,” he said.