Page 68 - Bloomberg Businessweek-October 29, 2018

◼ TECHNOLOGY Bloomberg Businessweek October 29, 2018

transparency,” says Policybazaar Chief Executive Fund and others at the end of September, is push-
Officer Yashish Dahiya. “We have no equivalents ing hotel owners to upgrade dilapidated lodges in ● Indian Unicorns
in the U.S. or China.” His company became a cities across the country, then stamping them with Since May 2014, 14 of
the country’s startups
unicorn—a startup valued at $1 billion or more—over its brand and listing them on its website. In this have been valued
the summer, when SoftBank Group Corp.’s $100 bil- way, Oyo is gradually creating a lodging network at $1 billion or more
lion Vision Fund led a $200 million funding round. travelers can trust for basic amenities such as clean 5/2014 Company
India’s first generation of internet unicorns sheets and running water. Five-year-old Oyo lists value
adapted business models from abroad. Ride- about 125,000 rooms, about 5 percent of India’s
hailing company Ola looks like Uber, for exam- total hotel inventory, and is adding about 12,000
ple; online retailers Snapdeal and recent Walmart a month. Ritesh Agarwal, its 24-year-old founder,
acquisition Flipkart look like Amazon.com; digital- says one of his key advantages has been that his
wallet leader Paytm, like China’s Alipay. The new home country is full of “optimistic entrepreneurs
cohort is aimed more squarely at the hundreds of looking to make India more efficient.”
millions of potential users who don’t live in India’s The new Indian unicorns are being run more
major cities and may not speak much English. smoothly than their predecessors, says Neha Singh,
Four of the five companies that researcher CB co-founder of startup tracker Tracxn Technologies
Insights says have reached $1 billion valuations Pvt. “Their fast-paced growth is making it difficult
in the past year target some of India’s fundamen- for U.S. or Chinese companies to enter and com-
tal needs in the education, logistics, and lodging pete,” she says. The proliferation of smartphones $10b
industries, says Sanchit Vir Gogia, who heads anal- and cheap data plans throughout India has also
ysis company Greyhound Research. helped the companies reach a scale the SoftBanks
“A young population, increased spending of the world will notice faster. There are more than
power, and rapidly growing digital infrastruc- 450 million smartphone users in India today, vs. 9/2015
ture are helping India-relevant models to scale 86 million five years ago.
quickly,” says Byju Raveendran, CEO of online The country’s latest success stories have reason

26 education company Byju’s. to worry about what comes next. Oyo’s push into
Some public schools in India don’t have enough China, the U.K., and the United Arab Emirates marks
money to hire teachers or make sure the ones they the group’s most serious expansion effort so far and
hired keep showing up, and the broader education has yet to bear much fruit. As with China’s mega-
system tends to take rote learning to an extreme. startups, it’s unclear whether models tailored for
By that standard, Byju’s videos, which explain frac- India will carry easily into the global marketplace.
tions or the laws of motion at a conceptual level, And in most cases, they aren’t yet profitable, says
are a serious step up, drawing 1.7 million subscrib- Tracxn’s Singh. “People are investing a lot on devel-
ers who pay about $135 a year for access to its three- oping the market, even though unit economics and
year-old app. Annual revenue has almost tripled profitability don’t look so good,” she says.
this year, to $190 million, with the app adding about Enthused global investors are even pouring
130,000 students a month. By contrast, “think of money into traditionally bad bets such as food
the effort and the capital involved in building delivery apps. In the past few months, Swiggy and
thousands of schools and training teachers,” says rival Zomato have collected about $500 million
Raveendran, whose company crossed the $1 billion in venture funding, and both are already seeking
mark in March. more. For now, the fear of throwing money away
India’s supply chain and logistics are rudimen- remains far behind a different worry, says angel
tary, and middlemen who proliferate between investor Ravi Gururaj: “That is, if you don’t bet on
manufacturers and retailers profit enormously India now, you’ll lose.” 10/2017
from the broken system. Udaan, a two-year-old Policybazaar’s Dahiya says he’s not taking his
marketplace-app maker valued at $1 billion in half of India’s $1 billion online insurance market for
September, connects more than 150,000 buyers granted. Although he’s fought off the government
and sellers of electronics, clothing, and staples, insurers that tried to keep price quotes out of his Swiggy
$1.3b
using a chat feature that allows real-time conversa- interface, he says he’s still working on turning a
tion in multiple Indian languages. Founders and for- steady profit. “Large investors like SoftBank want Policy­
bazaar
mer Flipkart Internet Pvt. executives Sujeet Kumar, digital disruptors,” he says. “They also want digital $1b
Amod Malviya, and Vaibhav Gupta have said they’re disruptors who make money.” �Saritha Rai Byju’s $1b
looking to rapidly add product categories.
Travel startup Oyo Hotels, valued at $5 billion in THE BOTTOM LINE Insurance, education, logistics, and lodging Oyo $5b Udaan $1b
a $1 billion round of funding from SoftBank’s Vision are among the industries that India’s latest breakout apps have 9/2018
targeted with a principal focus on relatively unique local issues.