Tonbo in Vilnius

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Logo_TonboLithuania is as distant as it gets for entrepreneurs running startups in India. Arvind Lakshmikumar, Founder & CEO of Tonbo Imaging, discovered that Vilnius, the capital of the Baltic nation Lithuania, is the key to his firm’s fortunes. The Bengaluru-based developer of imaging and sensing systems is banking on the stockpile of laser experts in the first state of the erstwhile USSR which had declared it’s independence. Lakshmikumar’s hunt for very specific skillsets around laser technology led him to the talent pool at Vilnius. Tonbo shot to fame in October 2016, when it bagged a $100 million deal to manufacture and supply night vision sights for guns intended for the Peruvian Army. The company has since broadened its focus to use its technology to target global businesses in industries as diverse as imaging and automobiles. It is now among a clutch of Indian startups building their businesses for global markets, unlike a vast majority of startups in the country focused on the domestic market. Tonbo, for example, gets over 80% of its business from outside India, and the number is climbing.

Indian startups will have to struggle to go overseas, because many of these markets require on-ground contacts and industry knowledge. “Having worked with the US Department of Defense and having a depth of contacts there, along with contracts for units such as the Israeli Special Forces, helped us get a foot in the door,”Lakshmikumar says. Despite that, Tonbo took time to get off the ground. Started a year after Flipkart, Tonbo reportedly has an estimated revenue of around 100 crores; for comparison, Flipkart reported a revenue of around 20,000 crores.

A couple of kilometres from Tonbo’s office in Koramangala, Nishith Rastogi and his teamare building a business aiming to automate the process of moving people and parcels. Founded almost four years ago, Locus started with a handful of Indian clients. Logo_Locus.shBut it has its eyes firmly set on the prize — overseas business! One day in 2014, Rastogi developed an “irrational fear” about his sister’s safety when she took an Uber. He and friend Geet Garg built RideSafe, an application that detects route deviation real time. To their surprise, some food tech companies adopted the product to track their fleet. The opportunity to work with these companies gave the duo an insight into the inefficiencies in logistics supply chain. The seed for the idea that became Locus was thus planted. With a 10-member data-science team, Locus wants to expand its focus from India to Southeast Asia. The company has Manila, Jakarta, Bangkok, Kuala Lumpur, Singapore and Ho Chi Minh City on its radar. These cities are around an hour’s flight from each other, making it easier for a small sales team to cover. Moreover, these cities have twice the active (those who pay for stuff online, not just surf for free) internet population of India.

The past decade has been about India’s startup story — highlighted by the emergence of a dozen unicorns (venture funded startups valued over $1 billion). But this phase also saw several companies burning out. Forced to compete by funnelling millions of dollars into deep discounts, dozens of startups had to close down their business. Singed by these flameouts, investors have turned off the fund tap and are focusing their attention on another rising trend. Make in India, for the world — this is the new motto of several startups. The mantra is simple; provide the best solution for customers and compete based on value, not price arbitrage. This will form the next wave of growth.

Logo_HackerEarthWhether it was technology platforms or enterprise SaaS solutions, Indian startups have grown from being copycats to service providers to now being innovators and thought leaders. There are now companies that were started in India but are expanding globally, such as recruitment solutions provider HackerEarth — and those that started with US customers and is now expanding to other countries including India, such as marketing solutions provider Synup.

Competing in the money-draining global market can be a nerve-racking experience for startups. In mid-2016, Ashwin Ramesh discovered that his company, Synup, a provider of local marketing intelligence, had barely three months of cash left. After splurging their angel funding, this discovery served as a timely reminder for him to become organised.

Logo_SynupRamesh began his entrepreneurial stint in Class 9, when he stumbled on a data entry job. His ambition leveraged on the experience of the past decade to first build a small consultancy, before trawling the net for work. Synup’s business model then focused on improving the quality of local listings and helping companies and brands manage and /or measure their listings, reputation and local search analytics. This meant Ramesh and his team had to convince businesses with online listings to use Synup’s tools to make sure simple things such as shop numbers were updated, along with details such as wheelchair access and WiFi availability. He then graduated from working with small businesses (some 28 million of these are spread across the US alone) to signing up with larger brands overseas. And it was not as if the biggies did not need help. A Google search listing, for example, showed that a Costa Coffee outlet had a phone number that was not functional, and there was no indication of a working wireless internet access either. Ramesh is now trying to prepare Synup’s software to ride the next wave — of voice search — powered by the likes of Amazon’s Alexa and Google Home.

Logo_SigtupleMentoring and investment are crucial for startups looking to target overseas markets. And this help can sometimes come from unexpected sources, like in the case of SigTuple, which is focused on artificial intelligence based medical technology. Flipkart founders Sachin and Binny Bansal helped SigTuple. The company’s technology, says CEO Rohit Kumar Pandey, can improve the productivity of diagnosticians 4-5 fold. That should be a good reason for clinical labs to rush in to buy its offerings. But only if things were that simple for startups. Indian ventures will have to take a long and winding road to success while prospecting for clients overseas. In the case of SigTuple, for example, its products have to conform to CE certification, used as a quality barometer in the European Union and Japan. Only then can they get even a toehold in these markets.

It was a challenge for Squad Platform, a company focused on AI-powered solutions. Six months after Apurv Agarwal’s three-year-old enterprise software firm started selling inScreen Shot 2018-06-15 at 4.52.43 PM India, it set an audacious goal of aiming for the highly competitive US market. “Everyone we spoke with, advised us against it, as conventional wisdom demanded a mature product and a team with an established network in the US,” says Agrawal, “We had early traction (in India) but the product was still at a beta stage.” The founders realised that tapping the large US market was critical for the firm’s survival.

Entrepreneurs give various reasons for steering away from the Indian market. “Selling in the Indian B2B market is quite challenging as most organisations have built their infrastructure on legacy systems and are now finding it challenging to adopt new-age technology,” says Agrawal. “It will take a while for startups to sell B2B software because currently it usually means long sales cycles (as much as 12 months or even more) and companies require continuous on-site support for maintenance and training.” This kind of capital spend deters most B2B startups from selling in India.

To crack the US market, Agrawal and his team started making cold calls via emails to potential customers in late 2013 and early 2014. They managed to convert some prospects into annual contracts, providing some certainty of survival. “Eventually, we had enough clients to be able to travel to San Francisco. And a little over a year later, we opened an office in San Francisco and now have more than a few large brands working with us.” Such success stories notwithstanding, industry watchers caution these firms will have to keep a watch on the behemoths they expect to unseat.

Logo_GreyOrangeTake Grey Orange, for example. The space it is competing in (advanced robotics systems for automation at warehouses, distribution and fulfilment centres) is getting crowded. Look at their competitors — Kiva Systems, which was acquired by Amazon Robotics; Boston Dynamics, which was acquired by Google; Fetch Robotics and Swisslog. And these are just the larger competitors. Why would a US e-commerce company entertain Singapore-headquartered Grey Orange as opposed to, say, Amazon Robotics? The answer lies in how innovative Grey Orange’s products are! It is, after all, the first Indian robotics and artificial intelligence company to get international funding — $38 million from Tiger Global and Blume Ventures. Grey Orange is registered in Singapore but all operations are handled from Gurgaon.

To add to the challenge, the crowded robotics space is also seeing a new entrant: Chinese companies. European and Japanese firms have historically dominated the industrial robotics space, while commercial robotics has been the stronghold of startups from USA. China-based warehousing robot companies have been actively expanding their overseas operations. Beijing’s push to spread 5G and AI is also a trigger for the growth of these Chinese firms. China is expected to become the world’s largest single market of industrial robots, with shipments of 1,34,000 units in 2018.

Another company trying to stay one step ahead of the giants is Alphaics. Its founders and computer chip industry veterans Nagendra Nagaraja, Vinod Dham and Prashant Trivedi want to use their intellectual property (IP) repository to do so. The 2-year old firm is focused on designing chips for the emerging world of AI. Semiconductors don’t have theLogo_Alphaics.png computing capability to keep pace with the massive processing demands of AI, says Nagaraja. Everyone from traditional chipmakers such as Intel, Qualcomm and Nvidia to Google, Facebook, Microsoft and IBM are trying to muscle into this space. Google’s TPU chip, for example, is already used across the company’s data centres and is central to everything happening under the hood: from voice searches on Android phones to results on the search engine. Alphaic wants to play ball with these behemoths. It has devised what it calls an RAP chip and is commercialising it for use in segments as diverse as robotics, self-driving cars, unmanned vehicles and cloud computing.

Logo_CooeyPrabhakaran TP and Manu Madhusudhanan, founders of Cooey Technologies, have been on the hunt for their next round of funding for their health tech firm. “We have 300,000 users of our solution across the world. But even then, it is a challenge to convince investors about the viability of building a global tech business from India,” says Prabhakaran. While the duo did raise a small amount of angel funding, most of their financing has been from their own pockets. And this fund flow is to run out soon. Cooey, a mobile platform that uses internet of things and partnerships with medical device makers to try to capture health vitals at hospitals and clinics, needs capital to fund its expansion. It wants to sign up with more customers in the US, but is also considering other markets, including Asia and Europe. “We hope to close a round of funding this year,” Prabhakaran adds.

For many fledgeling ventures like this, a funding boost will help them in their global leap. But Indian VCs fund copycats, not innovative ventures, isn’t it? More for later on this subject. I am also writing a book on it.

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