Angel Tax Notification: A Step In The Right Direction, But More Needs To Be Done

There have been some notifications which have come out last week, it is heartening to see that the government is trying to solve the matter. However, this is a partial solution to a much larger problem, the CBDT needs to solve for the basic reason behind the cause of Angel Tax (Section 56(2)(viib)) to be able to give a complete long-term solution to Indian Startups.

While the share capital and share premium limit after the proposed issue of share is till 10 crores and helps startups for their initial fundraising, which is usually in the range of Rs 5-10 Cr. Around 80-85% of the money raised on LetsVenture, AngelList and other platforms by startups is within this range, but the government needs to solve for the remaining 15-20% as startups who are raising further rounds of capital, which is the sign of a growing business, are still exposed to this “angel tax”. Instead, the circular should be amended to state that Section 56(2)(viib) will not apply to capital raises up to Rs 10 Cr every financial year provided that the startups submit the PAN of the investors.

The income criteria of INR 50 lakhs and net worth requirement of INR 2 crores is again a move by the government that requires further consideration for the investing community. Therefore, to further encourage investments by Angels or to introduce new Angels to the ecosystem, there is a need to look towards a reduced income criterion of INR 20 Lakhs or a net worth of INR 1 crore, enabling more investors for a healthier funding environment. We also, need to build a mechanism to facilitate investments by corporates and trusts into the startups.

Most importantly, any startup who has received an assessment order under this section should also be able to for the prescribed remedies and submit this during their appeal. They should not be excluded from this circular since its stated scope is both past and future investments. The CBDT should also state that the tax officers should accept these submissions during the appeals process and take it into consideration during their deliberation.

So, to summarise:

  • Section 56(2)(viib) should not apply to any investment below Rs 10 crore received by a startup per year or increase the share premium limit to Rs 25 Crores, from Indian investors provided that the startup has the PAN of the investors
  • Section 56(2)(viib) should not apply to investors who have registered themselves with DIPP as accredited investors, regardless of the quantum of investment
  • The threshold stated should be either a minimum income of Rs 25 lakhs or a net worth of at least Rs 1 crore
  • Any startup who has received an assessment order should be able to seek recourse under this circular during their appeal

Through this circular, the government has reaffirmed its commitment to promoting entrepreneurship and startups in India. With these suggestions, the spectre of the “angel tax” will end up as a footnote in the history of the Indian startup ecosystem.

We look forward to the early resolution of these pending matters. For any suggestions, Do write to us [email protected]

The article is co-authored with Siddarth Pai, Policy Expert – iSPIRT Foundation and Founding Partner – 3one4 Capital.

Call for Volunteers: FinTech Leapfrog Council [FTLC]

iSPIRT’s FinTech Leapfrog Council (FTLC) is an initiative designed to help incumbent, government-owned banks make the transition to an era of cashless, presenceless and paperless transactions enabled by India Stack and other emerging technologies.

At iSPIRT, our belief is that banking will change more in the next five years than it has in the last 50 years. For a variety of reasons, the changes happening in India will follow a path that is very different from other countries. Indian Banks, therefore, have two choices: Create a new playbook to deal with these changes, or stick to the old rulebook and risk being disrupted.

Over the last two years, FTLC has been helping SBI, Axis, BOB and IDFC Bank create new playbooks in six orbit shifts that will help banks successfully transform themselves. These six orbit shifts are:

  1. Fee-based Payments to UPI and Payments as a Service
  2. Closed Billing Systems to Bharat Bill Payment System (BBPS) and Billing as a business  
  3. Asset-based lending to (Cash) Flow-Based Lending
  4. Closed Pipe Architectures to Open APIs and Platform Banking
  5. Core Banking Systems to Internet Architecture and Transaction Engines
  6. Data Silos to Consent-based Data Sharing

These FTLC banks have major government shareholding and comprise more than 30 percent of the Indian banking system. Therefore, helping them create these new playbooks is a mission of national importance.

FTLC works with the CEOs and leadership teams of these banks through a series of quarterly workshops and customised workshops in the above-mentioned areas. Some of the industry leaders who spoke at FTLC workshops to facilitate these orbit shifts are:

  • Shamir Karkal, Head of Open APIs at BBVA Bank, Spain, and co-founder of Simple Bank
  • S Ramakrishnan, former Chief Data Officer of Citibank
  • Prof. Saras Sarasvathy of the Darden School of Business
  • Nandan Nilekani, Non-Executive Chairman, Infosys
  • Sharad Sharma, Co-founder of iSPIRT & Ex CEO – Yahoo Inc, R &D. 
  • Sanjay Swamy, Managing Partner of Prime Ventures.

We are looking for an anchor volunteer who can work closely with the FTLC banks to ensure that they are making progress on these orbit shifts, and gradually take my place at FTLC.

For me, being the anchor volunteer for FTLC has been rewarding in many ways. The opportunity to work with other volunteers whose work is reshaping the fundamental nature of banking in India has been very exciting. The opportunity to work with some master strategists who can see the big picture without losing focus on the nitty-gritty details of execution has been awe-inspiring. Seeing young volunteers take on crucial roles and excelling in it has given me great hope for the future of our country. And finally, the fact that iSPIRT’s work is helping India create a world-class digital infrastructure is something that fills my heart with great pride. I had initially signed on as anchor volunteer for FTLC for one year, but the work was so interesting that one year became two before I realised it! We are now looking for a volunteer who can replace me, but start off gradually as a volunteer-in-training.

As you probably know by now, it is difficult to become an iSPIRT volunteer, but easy to cease being one. The arduous process of becoming a volunteer allows each side to feel each other out. We want you to get into volunteering with your eyes open. As part of this counter-intuitive mantra, we let you hibernate without any hesitation. This enables you to make soft promises that you can keep.

If you are interested in being a volunteer for FTLC, contact me at [email protected] or [email protected]

While Well-Intentioned, Budget 2018 Falls Short of Expectations

Starting nine years ago, Aadhaar, eKYC, UPI and the rest of India Stack laid the foundation for a formalization of the Indian MSME sector. With the introduction of Aadhaar for Business and the unlocking of GST data for lenders, we are poised to see an explosion in flow-based lending to MSMEs, ultimately having a multiplier effect on jobs and economic growth. This is great news for MSME focused digital lenders and the product startups serving them. Therefore, a significant digital dividend for the Bharat economy is finally in sight.

It is heartening to see government adopt the same digital-first approach when it comes to health and education. While this is a great start, much work remains. Laying the policy foundation alongside an India Stack inspired technology spine will ensure the rise of the Bharat focused tech-entrepreneur. We need India’s entrepreneurs to lift outcomes for patients and students not adequately served by our existing system.

On the startup and investor fronts, this budget is a missed opportunity to address the important near-term issues. We had hoped to see the resolution for Angel Tax and other such Stay-in-India Checklist issues. Slapping a Long-Term Capital Gains Tax on the previously untaxed sale of listed equities will adversely affect the List-in-India initiative. Additionally, the compliance overhang of listing will no longer be tempered by the promise of tax-free gains. The promised tax regime must incentivize and protect foundational (angel and domestic investors) as opposed to fleeting capital.

While well-intentioned, this budget falls short of our expectations. India’s complexity and diversity call for a much more responsive and action-oriented policy-making approach. Only then can we harness our entrepreneurial energy to address India’s most pressing challenges.

About iSPIRT
iSPIRT is a non-profit technology think tank that builds public goods for Indian product startup to thrive and grow. Learn more: www.ispirt.in

Sanjay Jain, Nakul Saxena, Sudhir Singh and Sanjay Khan Nagra Fellows from our policy team have issued a press release on 1st February 2018, a copy of it is here. Reach out to Sanjay Jain in case you would like to know more details.

Special thanks to our volunteers Sharad Sharma, Siddarth Pai, Tanuj Bhojwani, Sarika Mendu, Anukriti Chaudhari, Karthik KS. 

StartupBridge India – Strengthening Potential Strategic Partnership to the world

startup-bridge-india

There are many dimensions to India becoming a Product Nation. A thriving  local market is critical, which are shaped by changing consumer preference and policy.  Also important is increased trade in areas of comparative advantage.

Digital consumer market in India that opened few years ago saw its waves and cycle of valuation however it is already witnessing its next shift from India Metro to Bharat due to technology and regulation disruption going hand in hand (aka India Stack).

An undercurrent that has been largely unnoticed is emergence of B2B companies from India. Top 30 enterprise startups in India that are tracked in the iSPIX B2B is $10.25 billion last year. Saas market for Indian startups is exploding — and is on pace to be over $10 billion annually by 2025.

Like Israel is to Cybersecurity, India is becoming Saas capital for the world.

Ease of doing business in India is improving, out of 34 items in Stay In India check list part of Startup India Policy, 29 critical ones are fixes in progress.

Cross border partnership of US-India startups always existed, it is the right time to come together as software product industry to strengthen this linkage to highlight this new dimension. Two related initiatives to towards this

Initiative 1 –  India Technology Product Exits Industry Monitor 2016, measuring liquidity especially global.  

iSPIRT and Signal Hill in partnership is releasing our annual report for 2016 on state of exit deals in India. During 2014 & 2015, India witnessed a Product Technology funding boom with over $10bn getting invested in consumer tech / e-commerce companies and $1bn in enterprise tech start-ups. Whilst funding levels in 2016 have seen a steep decline (54% decline during first 3 quarters), mainly on account of a very steep drop in hedge fund activity, M&A in Product Technology with $1.34 billion in exits during the first 3 quarters (from 113 transactions), is on track to beat 2015 levels (137 transactions with $1.35bn transaction value) which was a record year for Indian Product Technology M&A. Furthermore, many global Tech majors including the likes of Apple, Google, Facebook, IBM, Naspers and Salesforce have now completed at least one Product Tech acquisition in India. However the large majority (81%) of M&A transactions are still very small (<$5m in transaction value), with the bulk (>70%) of the transaction value in the last 3 years being accounted for by 7 large (>$100m) M&A transactions. Hence there is currently a missing middle in the $5-100m deal range in Product Tech M&A in India. With an increasing number of companies that received funding during the 2014 & 2015 funding boom achieving scale during the next couple of years, we expect Product Tech M&A levels in particular across mid-size and large transactions to pick-up multi-fold from here.

Detailed report here

Initiative 2 – StartupBridge India, strengthening foundation to  increase cross border linkages.

Towards enhancing cross border linkages iSPIRT is organizing a conference called StartupBridge India in partnership with TiE SV and Stanford Center for International Development (SCID) on Dec 2 at the Stanford campus.

This conference will bring top 30 business software startups from India to the US with aim to foster cross-border partnership and potential strategic opportunities.

The conference is designed to be a symbolic and relationship-building bridge between top Indian SaaS and deep tech startups and US companies, to forge long-term relationships.

More details here www.startupbridgeindia.com

The SaaS Juggernaut: Advantage India

An Indian software company serving majorly clients in the US or Europe is not an unusual thing anymore. However, if anybody were to guess the location of the India office, a company that counts amongst its clients about 100,000 small businesses globally, they would most probably chose Bangalore or Hyderabad. However, Appointy, which is an advanced web-based scheduling software tool and has around 90,000 salons, spas, and dance and yoga classes as its clients in 100 countries does it out of Bhopal. Similarly Kayako, which sells support software to over 30,000 clients including NASA, Peugeot, Sega found its roots in Jalandhar, which as per their own website is “one of the least likely places to establish a technology start-up”.

The emergence of these companies from relatively smaller towns, highlight India’s comparative advantage in terms of ability to build high quality companies in the domain of Software as a Service (SaaS). The inherent model of the SaaS business does not require proximity to the end user. In the simplest terms, it is a software that can be accessed through a web browser, by paying a subscription, either on a monthly or yearly basis. The software is hosted exclusively by the provider, as opposed to being downloaded upon purchase and subsequently hosted by the client. The customer gains by spending less upfront, not having to maintain hardware and not worrying about upgrades & data security. Driven by such factors, the SaaS model is growing exponentially and the global market for 2015 stood at USD 31 billion (NASSCOM). The growth is expected to continue at CAGR of 18% to reach a market size of USD 72 billion by 2020. Another study by Google and Accel Partners estimates the 2020 market to be USD 132 billion.

The Indian SaaS landscape is expected to evolve even faster. The FY16 market is estimated to be USD 407 million, a 34% growth over FY15. This figure is expected to triple by 2020 growing at a CAGR of 27%, 1.5 times the global growth rate. It is easy to see why India is going to be a hotbed of activity for SaaS companies. The cost of product developers is one of the biggest items in a SaaS company’s P&L Statement. A software developer in India costs 25% of what a similarly skilled one based in the US would cost. India has an estimated 36,000 product managers, 25,000 SaaS engineers and 100,000 other engineers with the skills for building a SaaS product. Another critical factor is the adoption of mobiles as the primary device for accessing data. India being a mobile-first nation is well placed to ride this shift as its young companies are more flexible and can focus on mobile platforms.

Buoyed by these advantages, companies have been sprouting in every segment of the sector. NASSCOM estimates that there are around 150 Indian companies offering SaaS solutions. 40% of these companies have been incorporated after 2010. Customer Relationship Management (CRM), Content Collaboration and Communication (CCC) and Enterprise Resource Planning are the hottest segments accounting for more than half the market in FY16.

Screen Shot 2016-06-17 at 8.54.06 am

 

Growth in the domestic market is also expected to be a major boost factor for the Indian companies. A deeper dive into the key underlying sectors which are adopting SaaS brings even more attractive prospects to the fore. Healthcare, E-commerce, BFSI and education sectors have been the most targeted segments by emerging SaaS companies. Each of these sectors is expected to expand at a healthy pace in the near future riding on the overall economy’s consumption led growth. At 7.6%, India’s GDP growth rate for FY16 has been the highest in the last 5 years. Small and Medium sized businesses emerging in these sectors would be much more nimble and receptive of SaaS solutions to avoid upfront large capex on technology.

The investor community, financial and strategic, has also embraced the SaaS opportunity with both hands. A total of USD 650 million was invested in SaaS companies in India till 2014. The funding in 2014 is estimated to be between USD 170 million to USD 200 million. However, the funding skyrocketed in 2015 with USD 450 million in the first half of the year itself. Some of the most active investors who are backing SaaS companies India are as below.

  • Accel Partners (Freshdesk, Hotelogix, Mobstac, Mindtickle, Chargebee, Zettata,)
  • Blume Ventures (Zipdial, Hotelogix, Mettl, FrameBench, WebEngage, Mobstac)
  • Nexus Venture Partners (Druva, Indix, Unmetric, TargetingMantra, Genwi, Helpshift)
  • Norwest Venture Partners (BlueJeans, CRMnext, Act-On, Capillary Technolgies, Attune)
  • Sequoia Capital (Druva, Capillary Technologies, Knowlarity, Practo)

The investors will have their hands full the short to medium term as most of the companies move traverse from Series A to B to C and so on. With companies maturing and cash balances building up, the sector is also expected start throwing up M&A opportunities much faster than any other sector.

The SaaS story hasn’t quite meant curtains for the traditional software licensing business model yet. Currently, SaaS commands only about 9% of the over Indian software market which is estimated to be USD 3.1 billion. However, Indian SaaS companies have already been able to create a market perception of building great products at lower cost. Currently, a large number of Indian SaaS companies would lie in the revenue range of USD 1 to 2 million. However, there are enough cases of rapid scaling up companies (such as Freshdesk, Capillary Technologies and CRMNext) to help us believe that we will soon see companies with multiple billion dollars in revenue emerging from India.

 

Screen Shot 2016-06-17 at 8.57.35 amThis is a guest post by Arvind Yadav, Executive Team Member at Aurum Equity Partners LLP.

 

Thinking PN: Tribute to the Spirit of ISPIRT

The Dream of a Product Nation, to give India its true Identity and enable Bharat to be the crown jewel of the World, took seed in Feb 2013. An idea to harness the energy of many volunteers inspired by the Open Source movement took the shape of iSPIRT and Product Nation.

The Spectrum of Volunteering spreads from Bad-to-Good-to-Great. Adam Grant in his book Give and Take highlights this mindset of Giving & Taking. There are some Volunteers who Commit to Doing Whatever it Takes, Giving completely Selfless, while some even Indulge in Malicious Free Riding. 
ThinkingPN

Celebrating iSPIRT’s 3rd Anniversary

Creating a Unique and Distinct Organization, unlike Trade Bodies, and keeping the Spirit of Volunteering in the mind at all times, makes it an even arduous journey. But iSPIRT just completed 3 years and celebrations of the 3rd Anniversary, has instilled a great sense of community building, while Thinking Product Nation (Thinking PN).

The 3rd year Celebration on its Agenda had a lot of things, but it mostly highlighted the Success of Volunteering and the Power of Selfless Contribution.

There were many Events and Sessions since Morning, Notably

  1. Highlights of Various iSPIRT programs like Playbook Round Tables, iKEN, InTech50, SaasX, etc.
  2. Health Tech, M&Connect are tracks which promise a lot for the Startup Entrepreneur
  3. Ecosystem Policy Nudging Programs
  4. India Stack and the FinTech Revolution brewing currently.

But the Most Notable one was Celebrating the Spirit of ISPIRT.

Spirit of ISPIRT

This video below tells the Celebration of the Spirit of ISPIRT, better than words can describe.

Conclusion

India will Innovate for the next 6 Billion. The dream of a Product Nation will be realized only by harnessing the Collective Energy of millions of Change Makers. People who create great poetry by being on the arduous journey of a Volunteer, of a Selfless Contributor. The Spirit of ISPIRT is best embraced by getting your hands dirty, focusing on small, mundane, and gritty details to do whatever it takes, to positively affect the outcome of initiatives. That is what Power Volunteers DO, & that is what gets Celebrated. Join the Movement & say Cheers to the Spirit of ISPIRT!

2016 iSPIRT Annual Letter

AnHRA0C0tF4mI0qO-9WAwf-AXl383SqEDMGC9He_wzNoSeven years ago a band of volunteers came together to move the Indian software product ecosystem into the next orbit. Three years ago this movement became a think tank, iSPIRT. We pioneered the idea of building public goods without public money in India. Today, India has many software product Unicorns and many more are in the making. We are doing one M&A a month. India Stack is reshaping many sectors especially the financial sector. And, the Government of India recognizes the power of startups and have started changing their systems to enable us. This has been a long and a fun journey for us all. This letter captures what we have been up to, our learnings and our dreams.

Bharat Goenka, Jay Pullur, Naveen Tewari, Sharad Sharma, Vishnu Dusad

Governing Council, iSPIRT Foundation, 4th Feb 2016

 

When it Comes to Startups, an 80% Fix is No Fix

In this polytheistic world of entrepreneurs, who is the Startup Initiative for?

There are many types of entrepreneurs. There is the self-employed vegetable-vendor type, the Thelawala. Then there is the small businessman in Okhla or Peenya who has grown to be in GST net. And how can one ignore the technology entrepreneur who graces the pages of ET every day . Even these tech startups come in many shapes and sizes. Some are after mainstream `Bharat’ consumers; others are building mass-luxury brands.Then there are fast followers in global markets or those who are rattling ferocious global players. And who can ignore startups that are filling white spaces in the safer domestic market and are aspiring to be national leaders.

What’s the one tool all successfulIn this polytheistic world of entrepreneurs, who is the Startup Initiative for? If it’s for all the various types of entrepreneurs, then it will quickly succumb to the 80% syndrome. Policy-makers will address things that are the common denominator for all types of entrepreneurs. While this is necessary , it’s not sufficient. As any product manager in the technology industry will tell you, this 80% fix is a recipe for failure.

To make a critical mass of changes, a persona-based policy making is needed. The biggest problem for Thelawala type entrepreneurs is absence of easy credit. For Peenya and Okhla business Peenya and Okhla businessmen, it is the inspector raj. For technology star raj. For technology startups it’s outdated regulations that thwart venture financing.

Each of these types of entrepreneurs is in pain today . Last year 54% of the funded technology startups redomiciled themselves outside India. This year, iSPIRT estimates, the exodus has accelerated and the number of companies redomiciling out of India will be 75% of all funded startups! There is crisis on another front too. India’s Global Innovation Index has been falling for four years in a row. We are no longer in the top 85 countries of the world! This innovation deficit has a bearing on sustainability of the entrepreneurship boom that we are witnessing right now. We are overly reliant on copy-paste entrepreneurship and this can only sustain if we keep MNCs out like China has done.

The most important decision for a policy-maker is focus on a specific type of entrepreneur. Only then the `how’ comes into focus and a cross-ministerial approach kicks in. Some of this is starting to happen. Later this week, there will be an important announcement by the Ministry of Finance about addressing venture-financing gaps in areas beyond e-commerce, neighbourhood commerce and consumer tech. There is a lot of work to be done to bring Startup India initiative to life. A nuanced henotheistic approach is needed (henotheism: involving devotion to a single god while accepting the existence of others). It can be done. Early signs give reason for cautious optimism.

 

Happy Independence Day from iSPIRT #IndiaCanInnovate #PNGrowth

It’s Independence Day today, and the last year has been one of the most exciting years in India’s product ecosystem. Just last week, the news that Sundar Pichai has taken over as the CEO of Google has been another shot in the arm for Indian techies. If ever it was the time for Indian product companies to raise the battle cry to take on the world, it is now.

Screen Shot 2015-08-14 at 6.15.42 pmIn conversations with other people in the ecosystem over the last month, there has been a realisation about the need to create what we call category leaders in the product space.

In India right now, we do not have #1 in any large category. Freshdesk (#2 in category), VWO (#2 in category), FusionCharts (#2 in category), are all virtual market leaders but these are our own unicorns.

And this in turn begs the question – do we take a route of supporting only large leaders, or multiple contenders, at which we already have the above companies killing it?

In this discussion, overwhelming support was for more number of companies; we simply need more entrepreneurs, and MORE IMPORTANTLY more product people.

These new companies we want to see don’t need to become category leaders, but category winners. And this would mean a whole new approach to building a company.

We have reimagine our team/culture, process and product to have a shot at being a category winner.

For team/culture, we need a hiring model that is tied to results from the beginning. Hiring great, not just good, talent in the early days requires hunting people down across the world, and creating a culture that scales.

For process, it starts with eschewing chewing-gum culture and thinking about solving all problems with technology in the way that allows Uber to operate with higher customer satisfaction despite having a fraction of the employees that other companies have.

Metaphorically, it is about having German Product Management, American Marketing and Russian Programmers.

For product, it comes to recreating the category, and sometimes creating a new one. And it’s also definitely about scientific and yet disruptive pricing.

Why all this on a national holiday, you might think? When else, then? Today, when we are watching the Independence Day parade in New Delhi, some of us weight think as to what significance our careers have over, say perhaps an Army jaw an who guards our borders? Isn’t his the more important job for the nation?

It certainly is, but we mustn’t forget that in our own way, our work is also aimed at making a stronger country. When we start building world class products the world uses, we are raising the bar for achievement as well. Our may not be to do and die, but maybe our role, in this quest to build India as a Product Nation, is simply to inspire the next generation.

iSPIRT announces the launch of InnoFest 2015

 innofest_logo

      A ‘first of its kind’ marquee event to kick-start the next innovation wave in India, where

     Bengaluru takes the lead in showcasing Public-Private Partnership.

 

With iSPIRT, we are happy to announce the launch of InnoFest – a day long Innovation festival jointly organized and sponsored by Public and Private Enterprise. The event, to be held at the Indian Institute of Science in Bangalore on August 22nd 2015 is significant – in a daring break from a ’traditional event’ format, InnoFest shall be run as a festival celebrating Innovation…

Here is why…

India needs this movement; not only for Indians, but for the aspiring and emerging worlds’ 5 Billion people, as compared to innovations focused on the one billion in the first world, who are already well served. This is the only way India can avoid the middle income trap, as we grow at 7-8%. The vibrancy of grass root innovation cannot be experienced through speeches and panel discussions within enclosed halls; its energy and exuberance has to be felt and unleashed.

The Patrons of this event are Mr. Jayant Sinha, Minister of State for Finance, Government of India; Mr. Nandan Nilekani, Former Chairman of Infosys and Former Chairman of UIDAI; Mrs. Kiran Mazumdar Shaw, Chairman and Managing Director of Biocon and Mr. Mohandas Pai, Chairman of the Board, Manipal Global Education.

Speaking at the launch, Mr. Pai said, “The idea of InnoFest is absolutely aligned with the Government’s thinking. If we are going to increase productivity, employment and opportunity for everyone in this country then we need a grassroots movement that will bring the best ideas to the table. Our Prime Minister Mr. Narendra Modi has great vision in developing 100 smart cities across the country as well as a digital India and a leading science and technology program; innovation will certainly be a key driver for all these initiatives.”

Why Innovation, you may ask…

Simply because we have an ‘innovation’ deficit in the country today! We are no doubt an enterprising nation, but we still have a long way to go when we look at being an ‘innovative’ nation. However, please note that there is no shortage of imagination and creativity in India. We need to build our skills where this imagination and creativity is applied to generate unique solutions to local problems. InnoFest is the platform to tackle this challenge.

We strongly believe that to reduce the innovation deficit in India, we need to operate at two levels: the individual and the policy. InnoFest uniquely brings these two elements together:

  • The Young Ignited Minds: will sharpen their innovation skills in a fun and experiential setting
  • The Government of India: will activate thoughtful policies that will help fulfill the innovation potential of India

InnoFest will have various programs like MakerSpace, Product Zone, Hall of Fame, Young Innovators Zone, Townhall and eminent speakers across a galaxy of disciplines including Naveen Tiwari (InMobi), Rohan Shravanan (Notion Inc), K Ganesh (CEO, Portea Medical), Arundhati Nag (Film Personality), Vijay Chandru (Strand Life Sciences), Bhavish Aggarwal (CEO, Ola Cabs) and Phanindra Sama (RedBus).

According to Sharad Sharma, Co-Founder of iSPIRT and Co-Convenor of InnoFest, “If companies can innovate and transform their functioning and performance radically, why can’t countries? The idea of InnoFest is to distil the best ideas in enterprise and inspire individuals, corporates and Government organizations to take innovation to the common man. We are delighted that the Government has stepped in in a big way to enable this transformation and this cooperation between public bodies and private enterprises will lay the foundation for radical transformation in the country.”

InnoFest has been conceived as a day-long festival of ideas and inspiration that will exponentially multiply innovation across the country and make India into a Product Nation. iSPIRT strongly believes that a robust software product ecosystem is the key to rapid growth across the country. More than 1,000 professionals are expected to participate, pan India.

So, if you want to change the world AND put your own dent in the universe; make sure you are at InnoFest !!

Further details of the event are available on the Innofest website & FAQ’s can be accessed here.

SEBI Startup Listing Exchange – Nasdaq of the East

Efforts of iSPIRT’s List-in-India Policy Expert Team have reaped the desired results. The securities market regulator, SEBI, has announced relaxed norms for a separate platform to allow “new-age companies” having an innovative business model and belonging to the knowledge-based technology sector to list in the country.

The existing legal framework has considerable challenges for a successful listing, including the mandatory track record of distribution of profits for 3 years. Consequently, Indian technology startups (with their usually disruptive business models) have been increasingly looking to list overseas in view of the less stringent regulatory hurdles. It is hoped that the relaxed regulatory regime will provide software product companies with an opportunity to raise capital through listing onthe proposed platform, and give them a viable alternative to offshore listings. The new platform is also expected to provide an exit opportunity to the investors who have invested in such startups, thereby generating further cycle of investment in the economy.

The iSPIRT List-in-India Policy Expert Team is very happy with this outcome. Things have moved really quickly after we kicked off the effort on Dec 19th in Blr. Mohandas Pai has been an excellent mentor and driver of this effort. We are now working hard to address issues that drive exodus at the Seed and Series A stages of software product startups.
More details of the SEBI Policy can be taken from here. Some of the coverage we have got from LiveMintBusiness Standard and Economic Times are here.

 Guest Post by Sanjay Khan, Khaitan & Co

InTech50 – helping software product companies connect with influential CIOs from across the world

In a recent article in ET, Mohandas Pai and I suggested that if India does not produce enough product companies, our economy will not be sustainable in the future. The data is compelling. To quote from that article, “Boeing and Airbus alone generate almost as much profit as all global airlines put together. Pfizer’s profits are more than those of the top 100 hospitals in the US. Cisco’s profits are more than those of all European mobile operators. Microsoft generates more profit than those of top 20 pureplay global IT services firms.While Indigo is a very well run airline, being a Boeing creates far larger value.”

Indian entrepreneurs and businesses can be world-scale and world-class. We have demonstrated that convincingly in services. Airtel, Jet, Indigo, Apollo Hospitals, Fortis Healthcare, TCS & Infosys, etc. are fine examples of companies that are respected across the globe. There is no reason why we cannot create world-scale and world-class product companies in India. The environment is conducive for entrepreneurs to now think ‘products.’

We created iSPIRT as a non-profit think tank with the aim of accelerating the software product eco-system in India. Since our inception in 2013, iSPIRT has focused on solving tough problems that will foster software product companies in India. Making M&A happen is one such problem. iSPIRT’s M&A Connect Program has made a big difference there. The last one-year has changed that perception of India as just a software services destination, and we have now generated early but enthusiastic interest in the international markets for our software products.

Some of that change in outlook started becoming apparent when, in January 2014, Facebook acquired Little Eye Labs, a Bangalore based startup that develops performance analysis and monitoring tools for mobile app. This was followed by Yahoo’s acquisition of Bookpad, whose document-viewing product is similar to Google Docs. The latest in the series of acquisitions is that of ZipDial (a mobile and analytics company) by Twitter. Some of these acquisitions, which got significant media attention in the startup eco-system, will hopefully encourage more entrepreneurs to think products.

Another hard problem

Another problem, which is equally hard, is to do with getting quality access to big-name CIOs in US. InTech50 address this issue. It is a one-of-a-kind forum where shortlisted software product companies get an opportunity to showcase and interact with some of the most influential CIOs from India and other parts of the world. This unique platform is a springboard that provides software product companies a connect with potential customers, investors, partners and influencers – that they would otherwise find it difficult to access, and certainly impossible to access over a 2-day period. InTech50 – a collaboration between iSPIRT and Terrene Global Leadership Network – serves as a platform for recognizing the most promising software products by entrepreneurs in India. After a thorough screening of applications, 50 innovative technology startups from the software product space are shortlisted to interact face-to-face with a panel of renowned CIOs and investors from across the globe. Through their close interaction with them, these startups gain valuable insights, which can facilitate them in scaling up globally.

The event, scheduled for April 15-16th 2015, is our 2nd edition. In our inaugural InTech50 event last year, we curated some high-potential companies. The audience of CIOs and other stakeholders took note. They now recognize that India is on the cusp of becoming a product nation.

InTech50 is the only forum of its kind where startups can get unparalled access to top global CIOs and investors, closely interact with them and showcase their products extensively with the end goal of closing deals. The best part is that CIOs from across the globe will assemble right here in India with the sole objective of finding interesting software product companies that they can engage with.

Though the applications for InTech50 are closed, if you are convinced about your product and feel that it deserves every chance to be showcased at the event, you have ONE LAST CHANCE TO APPLY by getting one of the Fellows, Founder or Product Circle Donor at iSPIRT to recommend you. (You can view the list of iSPIRT Fellows).

13897639212_c86c8c02ed_cIf you are shortlisted, do work with Mentor Panels and Business Catalysts, to prepare your pitch, and interact with our team and past participants to understand how to best leverage this unique opportunity. Take a look at our illustrious panel of Business Catalysts here.

NRK Raman, Co-Founder of iFlex (instrumental in its acquisition by Oracle for a whopping USD 909 million in 2005), is driving our effrots to help product companies sharpen their pitch and presentation.

With InTech50, you have everything you need to GO BIG, right here, on a platter – the right connections, the requisite support and everything else that you’ll need in the process.

Watch this space. India is on its way to becoming a Product Nation.

iSPIRT: Big ideas on little napkins. #iSPIRTturnstwo

You’ve heard of famous napkin sketches such as the Southwest airlines route map or Robert Metcalfe’s Ethernet diagrams. But did you know that iSPIRT also started out as a series of such sketches?

It was a late wintersun afternoon in December 2012. I was sitting in Bangalore’s Karnataka Golf Association across Sharad Sharma and Avinash Raghava. It was the day after a marathon few weeks of us “volunteers” putting together India’s largest startup event that year. I’d done my small bit building out the Program Guide, helping with the scheduling tetris and hosting a UX workshop for startups.

Now when Sharad or Avinash call, you can be sure of one thing: you’ll walk out of that conversation buzzing. The KGA meeting was one such chat. It was when I first heard about the “sketches” behind iSPIRT – an acronym for the Indian Software Product Industry Round Table. One of their big ideas was founding the entire iSPIRT as a platform anchored on volunteers’ energies and selfless service, as a platform that represented Indian startups. There in the middle of beer and coffee mugs I remember reams of paper on our table. These papers had ideas and boxes and arrows and circles. There was Industry. And government, and academia. We discussed a million questions:

is this a Think Tank? A Content Platform? An Enabler? Logistically, a Round Table? How do these pieces connect?

I offered to build on some ideas in early 2013. We made concepts and threw most of them away, in the true spirit of prototyping. After all iSPIRT was a startup too! It needed multiple experiments running!

iSPIRT_amit_pande

2013 started with much momentum for iSPIRT and Product Nation. The identities seamlessly blended into one visual identity and website. The product round tables continued to be a huge success. As iSPIRT picked up momentum, my own life took a few different turns. I left for Stanford Business School for the Sloan Fellows program and traded a corporate job and Bangalore life for a dorm room and back-to-school lifestyle in Palo Alto. I was with iSPIRT in spirit, and I saw it from 14000 KM away, taking shape as early stage startups do. The Product Roundtables. The Product Technology Ratings. InTech50. #PNCamp.

2014 of course was an even bigger year for iSPIRT. The engagement with the new government, the policy papers, and the acceleration of startup investment activity were palpable. Midway during my Stanford year, I had the opportunity to introduce iSPIRT to my GSB Professor and now friend Sharique Hasan, one of the best researchers out there in Organizational Analysis. Sharique like many others in the Valley had heard rumblings around Indian startups. When he finally met the iSPIRT team, it kick-started new initiatives within the M&A Connect program.

2015 promises to be even bigger. I hope to contribute more, volunteer more. But even as I imagine the largeness of things to come, I will never forget those sketches at KGA, that bright winter afternoon, and those ideas that seemed distant, like a dream you can almost touch.

Today when iSPIRT turns 2, I am reminded of the power of big ideas sketched on little napkins. I am reminded of that famous line:

you cannot stop an idea whose time has come.

Product Management Roundtable For Startups by iSPIRT In Pune. #PlaybookRT

After all the missed opportunities of being at a PlaybookRT by iSPIRT, I finally made it to Pune last weekend for the roundtable on Product Management. Amit Somani and Rahul Kulkarni conducted the session. While I can’t do justice to all that was discussed at the session, I am translating my notes from the Roundtable into this blog post. After sharing some of our product dev insights in my last post Learnings From Building A Consumer Facing Web Product, this was a good opportunity to become a sponge and soak in all that I could manage. 

As a startup founder who hasn’t previously worked in a product company, starting a product business is tough. And being a CEO with no technology background, doesn’t help the mix either. The challenges for building an internet product for me may be more than the average amongst the ones attending this Roundtable, but product management is still a tough beast. Understanding consumer needs, building a product around it, figuring the right metrics for your business, measuring it and iterating is puzzling for anyone, specially given the fact that we are always chasing a moving target.

2014-11-08 14.15.57To give you a taste of how things play out in the real world:

When we started PriceBaba back in 2012, mobile apps were a good to have, desktop traffic was bulk of Internet usage and little did i know that India is on the verge of such massive investments in online shopping. Over 2 years later, the story is very different. Mobile is huge (both web and apps), online shopping is real and consumer Internet in India and the investment landscape which was looking slow between 2012-2014 has picked up crazy momentum.

For a startup that is bootstrapped, at an accelerator or even seed funded stage, getting the product market fit, raising funds to survive, hiring good techies and dealing with an uncertain market which is changing fast is a daunting task. If you add to that the learning curve involved to make things successful, you would know why I appreciate this Product Management PlaybookRT by iSPIRT so much.

The Product Management #PlaybookRT

Amit and Rahul kicked off the session by helping us define our product vision (and separating it from the company vision and mission). We were asked to make a 30 sec pitch by each of us on our product vision along with two things that we would never do. Both Amit and Rahul played devils advocate and helped us think through what we are doing. Learning: A quick dipstick to check if your product vision is well defined, ask employee no 20! If they can define it well in your (founders) absence, then you have set your product culture right.

Stack rank your requirements. What is the single most important thing you? Rahul suggested us that things can’t move forward till we stack rank our priorities. We must know what is the most important thing that we do. A somewhat heated discussion was on how important the user interface of a product is for being successful. Should we fret about having the best UX out there or build a product that is very compelling, offers a better price than competition and delivers what is promises reliably? To cut short on what could be a day long debate, here are two independent bits I picked up from our facilitators. i) If you are offering something that no one else can, your consumer will also use a command prompt to get it. ii) Your Apps UX is much more important than what it was a few years back and it is getting more and more important by the day. But that may not be the lone factor in getting a winner out there. That said, don’t purposely try to build a bad UX 😉

The user experience is not just defined by what the user does on your mobile or web interface. It is every touchpoint that the consumer has with your brand / service. It is the whole packaging of what a user goes through. For a e-commerce site it would go down to the professionalism and courtesy of their delivery boys. Similarly, when taking a view of product, the challenge isn’t always about getting that killer UX designer to work on your mobile app. It is really defining what your product does and how.

Each of us got enough time to define our key metrics and find ways of measuring them. With my experience I can surely tell you that it is indeed true that which ever metric you track on a day to day basis, improves quite magically 🙂

Tips on collecting feedback & effective product management: 

  • Take feedback from your extreme users. Either the ones who are very naive and would ask very basic questions. Or from the extreme users who would want every pro feature out there
  • Group users by commonality. Set goals for users who perform well. So track a users life journey within your app, figure key milestones and set them as goals. Optimize for these goals. So if you know that a user who completes Level 1 of your game, is most likely to play till Level 4, try to optimize such that you acquire users who will complete Level 1

Apart from the evergreen Google Analytics which is great for averages, tools like Mixpanel, Kissmetrics and Wizrocket are great for digging into specifics. You may want to give them a spin. You may also want to check Dave McClures talk on Startup Metrics for Pirates. 

playbookRT

Hiring. The Big Deal. 

So the tired entrepreneur in you is thinking already, when can I hire someone to take some of my money and all my product problems? Well, well not so soon! Product Managers come in various flavours and to begin with, YOU are the PM. Hiring a lead product manager is tough and transition is not easy. You need folks who are curious, bring product insight, are analytics, can be strategic and can work with really smart engineers. This is an individual that blends great communication skill and simplicity. So where do you find such a mahapurush?

Amit suggested a good strategy of hiring young grads and train them to become good PMs in a year. They will love the opportunity at the start of their career and won’t burn a big hole in your pocket. That said, a dedicated product lead will take over the duties from the founder(s). This would ideally happen at a later stage for most of us attending the Roundtable. The three flavors of Product Managers are:

i) A Project Manager who will get your task list executed

ii) A product manager who will get the job done but won’t give a new direction to the part they are leading – the CEO holds the strings. Also example of Windows OS where changing one aspect as per will of a Product Manager won’t fly, it would need the to go hand in hand with the whole OS

iii) The Business Owner – Give this product manager your metrics and let him/her chase it down for you with full ownership

^cheat sheet: Google for questions asked to Product Managers at Google / Amazon / FB 🙂 

2014-11-08 14.22.30Best Practices For Product Development: 

i) The Amazon Approach – Write a press release before starting the product development. Also read this by Ian McAllister of Amazon:

ii) Before you launch the product, predict the no of users your new product / feature would have for the next week & month. Define the usage metrics

iii) Have extreme clarity in goals, let people make mistakes but own the job

iv) Questions to ask yourself – Is this world class? Can an engineer look this up and build it in 2 days? Why are you uniquely positioned to do that?

Also appreciate if someone else has users and learn as to why they have users for what they have built. You can learn a lot from that. Eg: Google & Apple learnt about good features that would eventually go into their OS by looking at some trivial but popular apps on their App Stores.

Books recommended by Amit and Rahul: 

  • The innovator’s dilemma by Clayton M. Christensen
  • Start with why by Simon Sinek (also the TED talk by Simon)
  • Profit from the Core: Growth Strategy in an Era of Turbulence by Chris Zook
  • Only the Paranoid Survive: How to Identify and Exploit the Crisis Points that Challenge Every Business by Andrew Grove

2014-11-08 16.26.16

Indian Mid-market SaaS companies: Forging a new path to disruption

SaaS has changed the competitive dynamics for Indian enterprise software product firms, putting them on a level playing field with their western counterparts. It has opened up new market segments, notably the small and medium sized enterprise market, whose requirements are different from those of large global 2000 businesses. These customers demand products that are less complex, plug-and-play and come at a lower price tag. This has pushed product companies catering to this segment towards a light-touch, virtually enabled model, dramatically reducing the need for close customer engagement, large field sales force, and elaborate implementation – all of which traditionally put Indian companies at a disadvantage.

Leveraging this wave, a new generation of Indian software product firms such as FreshDesk, FusionCharts, KissFlow, WebEngage, RecruiterBox and others have started to emerge. This has created an important disruptive force in the mid-sized enterprise market. What is also interesting is that, in their pursuit for a light-touch model, these companies have evolved a unique strategy to define the product, market/sell the product and engage with customers. This iSPIRT report discusses the three core tenets of their strategy – Digital immersion, Desk marketing/selling and Cloud-based customer engagement.