Here is what's most challenging for global-minded startups

By Samir Kumar

Startups such as Flipkart and Paytm, which are focused on India’s burgeoning consumer class, have hogged a disproportionate share of the headlines over the past decade. However, in terms of building a truly global business, it is perhaps cloudbased business-to-business startups that are showing the way ahead.

Thanks to the internet, access to overseas markets has become democratised.


Inside sales folk, that is people pitching for deals sitting in Bengaluru for potential clients in the US and elsewhere, have mushroomed.

In our portfolio and beyond, we have companies such as Unbxed, Tricog and Insta Health building robust businesses almost entirely targeting global markets. From a time when fledgeling companies had to spend precious resources on feeton-the-street salespeople, today the internet has drastically decreased most such expenses.

Multi-modal communication tools allow these virtual sales folk to email, call or video chat potential customers, show them online demos and turn the “tap” off remotely once deals have been signed or ended.

The rise of these ventures points to the next stage of evolution for India’s entrepreneurs. For much of the past decade, we have heard, read and seen plenty of stories — and fables — around India’s consumer-focused internet economy. Flipkart, Ola and Paytm have become household names, unicorns by valuation. Dozens of entrepreneurs have modelled their entrepreneurial ambitions on the success of the Bansals, Vijay Shekhar Sharma and Bhavish Aggarwal. These markets have obvious attractions for Indian entrepreneurs.

A growing consumer class and rising mobile internet adoption have compelled many entrepreneurs to try their luck here. While some have succeeded, the majority have fizzled out, and venture capitalists have started asking tough questions. To cut a path away from this clutter, entrepreneurs have started to look beyond India.

This trend started a good seven or eight years ago. Though companies began considering building overseas markets, the technology available then meant the going was slow. However, over time, companies, especially in the B2B enterprise software market , such as Freshdesk and Zoho, have been showcased as India-based standout successes.

This has helped build a case for more entrepreneurs to take the plunge. However, let us not kid ourselves about the challenges of such a venture.

The internet may have democratised access, but Indian companies face the challenge of being unknown abroad. They face strong inertia from the companies they target. They will face some resistance and we advise them to be patient. Having local industry experts (for example, in areas such as healthcare) will help open doors.

The time has come for Indian startups to build businesses for global audiences.

While the initial growth phase is longer and more painful, the acceleration, once you lock in your first few customers, is much faster. In India, for the same product, sales cycles are much longer and realisations much lower per customer. This has pushed some ventures to flip their business model and chase business overseas.

As early stage investors, we value startups (especially enterprise software makers) higher if they have a strong share of sales from overseas, rather than just the domestic market.

That said, the story may not be the same across the ecosystem; businessto-consumer firms may struggle. This is because the market is much harder — each country or region has distinct tastes and preferences. The wording you use to target companies and consumers may vary, too, making it challenging to build a one-sizefits-all solution. And, building these local brands can be a costly and time-consuming affair for startups.

More entrepreneurs will go down this route.

Not only are fewer VCs showing interest in backing me-too business-to-consumer companies, they are more willing to back business-to-business ones and are the happiest if these have a strong global flavour.

Some companies have made a breakthrough in tough markets — Tonbo Imaging is selling its products to foreign defence and hi-tech companies, for example — and these wins will give others the chance to make more inroads into global markets.

As an investor, we think the challenge for these global-minded startups is to win contracts fast and to keep the innovation pipeline strong enough to compete in these markets.

Entrepreneurs need to remember that for a strange company from India to unseat incumbent rivals, they need to show up with something more than just lower pricing.

(The author is the Managing Director of Inventus Capital Partners)