Power of ideas: Five hottest sectors for startups that may yeild healthy returns
With technology finding new ways to sneak into our lives, it is little wonder that the sector has thrived and has been dishing out healthy returns.
With technology finding new ways to sneak into our lives every single day, it is little wonder that the sector has thrived and has been dishing out healthy returns for investors. This, in turn, has created a robust network of mentors, who are supporting more technology companies, creating a virtuous cycle.
Zinnov, a management consultancy that closely tracks the sector, estimates that between now and 2015, up to 600 new technology ventures will be created every year in India. The gold rush is clearly on. "Across internet services, ecommerce and travel portals at least two to three companies will be billion-dollar bets for certain," says Vani Kola, co-founder of Kalaari Capital, an early stage investment firm.
However, picking the right bet from an overflowing technology basket is key for a new venture. Despite the advantages of money and a growing market, barely a fifth of the technology ventures set up in the last seven years have raised a second round of funding.
Industry experts reckon picking the wrong business idea can drive the failure rate even higher. "You cannot manufacture cars when there are no roads," says Kola. ET spoke to a cross section of investors and industry experts to pick the Top Five Sectors to launch a technology venture today.
CLOUD COMPUTING
The attractiveness of cloud-based applications across sectors, from hospitality to healthcare, is driven by ease of use and lower cost.
Thi has led to India becoming a hub for young cloud computing companies. Chennai's OrangeScape provides cloud solutions to firms like drugmakerAstra-Zeneca, consumer-goods company Unilever and automaker Ford.
In Bangalore, storage company Datagres, which sells data management products to large enterprises, was founded in 2010 by Srinivasan Viswanathan, an alumnus of Indian Institute of Science. These young companies, which need less capital, are growing faster and are more profitable compared to traditional enterprise technology ventures.
The high rating for the sector also comes from some of the biggest exits for investors in this segment. He put in Rs 60 lakh as the initial capital to start the firm. Last September, the company recieved first round funding of over Rs 10 crore from Nexus Venture Partners.
In the past 18 months, Mumbai-based Netmagic sold a majority stake to Japan's NTT Communications for Rs 900 crore while Citrix Systems paid over Rs1,000 crore to acquire Cloud.com. Gluster, a cloud computing startup, was bought by Red Hat for about Rs 667 crore.
Seed investment: Rs 50 lakh
SINGLE-BRAND ECOMMERCE
Ecommerce in India, especially in the multi-brand category, has gone from being the new kid on the block to a crowded industry.
However, web-only brands, where a business can create its own brand of products in any category like apparel or jewellery and retail it online, is emerging as the new growth opportunity.
BlueStone launched in August 2011 as a manufacturer and retailer of light precious jewellery like earrings, pendants and rings has raised $5 million (about Rs 27 crore) in funding from Accel Partners, Silicon Valley
Bank and serial entrepreneurs Meena and Krishnan Ganesh.
