Nailing subscriptions in India

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Today I’m looking at subscriptions in India from two angles: the consumer market and B2B SaaS. — Anna

From subscriptions to sachets

A recent story by my colleague Jagmeet Singh about a wearables launch caught my eye because neither of the two new smart rings launched in the Indian market would employ a subscription-based model.

Subscriptions are a tough sell for wearables (and hardware in general), because you have to keep paying even as the device gets older. That’s still the model that incumbent Oura shifted to, arguing that this allows it to continually add new features. Its user base wasn’t happy about the switch, though.

In contrast, BoAt, one of the two companies launching a smart ring in India, is aiming for a price tag below $80. That’s much lower than Oura’s $299 starting price, and it doesn’t even include the subscription.

4 Indian investors explain how their investment strategy has changed since 2021

India has long harbored a strong entrepreneurial spirit, and it’s not uncommon to see people leaving jobs to set up their own businesses. A hallmark of that spirit is quite visible these days in the country’s flourishing startup ecosystem, which has expanded rapidly in the past few years, to say the least.

However, the global slowdown has impacted startups’ growth in the country, just like everywhere else in the world. After a blockbuster year for venture capital funding in 2021, the flow of capital to Indian startups seemed like it would buck global trends in early 2022, but dried up in the second half of 2022.

Nevertheless, investors are optimistic about their prospects in the country and feel that the global slowdown is helping founders focus more on building and strengthening their core business.

“While this is a tough environment for companies, we see it as an opportunity to pause, take stock and consolidate,” said GV Ravishankar, managing director of Sequoia India.

“Founders are becoming a lot more focused on building and strengthening their core business and are getting sharper about capital allocation and driving improvements in the economic shape of their businesses,” he said.

“Working with uncertainty is very much the nature of the beast.” Roopan Aulakh, managing director, Pi Ventures

All the investors we spoke to agreed that in order to make the best of the situation, startups should conserve runway and prioritize growth if they can afford to do so.

For Ashutosh Sharma, head of India investments at Prosus Ventures, it is paramount for startups to ensure their existence at this time. “This allows startups to take a step back and focus on internal processes, business model evolution and organizational issues [ … ] These factors, once fixed, will lead to more organic product-market fit, which will lead to growth alongside economics.”

India’s startup landscape has changed immensely over the past couple of years, so to better understand how Indian investors are approaching investments, the regulations they are looking out for, which sectors currently have their attention and how they prefer to be approached, we spoke with a few active investors:


GV Ravishankar, managing director, Sequoia India

After a year of hot investments, India saw a significant drop in VC funding in 2022, and this year is likely to be similar. How has your investment strategy changed?

After more than a 12-year bull run for tech in the global markets supported by low interest rates, since the beginning of 2022, we have witnessed a significant slowdown in capital flows. This has resulted in a difficult environment from a capital availability perspective in India and other emerging markets.

While this is a tough environment for companies, we see it as an opportunity to pause, take stock and consolidate. Founders are becoming a lot more focused on building and strengthening their core business and are getting sharper about capital allocation and driving improvements in the economic shape of their businesses.

So it is actually a healthy period and it will result in high-quality businesses coming out of this market in the next couple of years.

What advice would you give your portfolio startups to continue growing at this time?

Focus on growth with good economics and don’t “buy” growth, as that will come with poor economics and hence is not sustainable. Focus on the core business and deprioritize experimental investments.

Double down on the core product if capital is available, as there is a chance to pull ahead from competitors in a market like this through the right investments. The current environment can also provide good opportunities to acquire capabilities through M&A at attractive prices if capital is available.

Compared to 2019, what were the most notable investment trends in India in 2022? Do you expect these trends to continue into 2023? Which sectors do you think will emerge as the next big thing by 2025?

There has been continuous innovation over the last several years thanks to more digital adoption and lower data pricing. After COVID, we saw significant uptick in e-commerce, edtech and technology-enabled service delivery across sectors. We also saw fintech pick up as a big theme and supply chains got digitized, including in manufacturing and agriculture.

Our core sectors are software, consumer, consumer internet, fintech and financial services. These remain continued areas of focus for us and constitute 80% of our efforts. Other upcoming sectors are EVs, climate tech, space tech and opportunities from supply chain shifts to India. Today, these are small and emerging sectors, but tomorrow, they could be massive opportunities.

So we are meeting early-stage founders who are building in this space and partnering with startups that are trying to create innovative solutions for some of the challenges faced in these industries.

The 20% of what we do keeps changing every few years because of market trends and tech innovations, but, by and large, the 80% has remained the same for nearly 17 years. Fundamentally, we are looking to partner with founders who are going after large problems in large markets to make a dent in the world. That will always remain the same.

What sets the sectors you are currently investing in apart from others? How do you evaluate the potential of a startup in these sectors before making an investment?

We evaluate a startup by the market they are going after (whether it is large, growing and has profit pools), the team (founder-market fit; why this team) and business model/moats (do they have a better mouse trap and why will they sustain their advantage?).

What qualities do you find most important in a founder when evaluating their potential for success? Conversely, what is a major red flag that would cause you to back off?

One of the most important qualities we look for in founders is their perseverance and grit to go after the problems they’ve set out to solve. From a founder-market fit perspective, we also ask what makes a founder or a founding team best positioned to win in the market, and what are their unique insights into the problem they are solving.

Red flags are linked to failed background checks or if the business metrics represented don’t check out in diligence.

Ashutosh Sharma, head of India investments, Prosus Ventures

After a year of hot investments, India saw a significant drop in VC funding in 2022, and this year is likely to be similar. How has your investment strategy changed?

Given the environment of rate hikes and geopolitical uncertainty, last year, we adopted a more conservative approach, setting the bar much higher for investments. Following that, we shifted our investment focus to smaller ticket sizes, earlier stages and toward companies in the SaaS and B2B domains.

4 Indian investors explain how their investment strategy has changed since 2021 by Jagmeet Singh originally published on TechCrunch

Dear Sophie: Can our employee travel on DACA?

​​Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

TechCrunch+ members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie,

My company wants to send one of its employees to India to open an office there. He came to the United States from India as a child on a visa, but he now has DACA status.

Can he take on this project and still be able to return to the United States? Will this impact his ability to renew DACA? Are there any other potential repercussions that we should keep in mind?

— Devoted to Dreamers

Dear Devoted,

I appreciate that you and your company are supporting Dreamers and providing peace of mind for your employee. My law partner, Anita Koumriqian, and I have worked with many Dreamers to help them obtain and renew DACA (Deferred Action for Childhood Arrivals) so they can attend university and work. Like other immigrants, Dreamers have to work harder to live the American dream, particularly since the DACA program has faced so many challenges in recent years, which Anita and I chatted about on my podcast.

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

Traveling abroad with Advance Parole

To answer your first question, your employee can travel to India to set up your office there only if he gets what’s called an “Advance Parole” document from U.S. Citizenship and Immigration Services (USCIS).

Since the U.S. ended its COVID-related travel restrictions from India this week, your employee could probably return to the United States with an approved Advance Parole document, complete COVID-19 vaccination and a negative COVID-19 test. You and your employee should know this comes with some risk.

For Advance Parole, your employee (who already has DACA) would have to file Form I-131 (Application for Travel Document) to USCIS and receive approval before he leaves for India. USCIS usually takes eight months or more these days to process travel document applications due to pandemic-related backlogs. Advance Parole is basically a travel document that allows DACA recipients living inside the United States to travel abroad temporarily for up to a year and seek to reenter the United States.

At its discretion, USCIS may grant Advance Parole for one of three reasons:

  • Educational purposes, such as academic research or a semester-long study abroad program.
  • Employment purposes, such as overseas projects, conferences, training, interviews or meeting with clients.
  • Humanitarian purposes, such as to receive medical treatment, visit an ailing relative or attend the funeral of a family member.

Based on our experience, DACA recipients requesting Advance Parole based on employment purposes tends to be more difficult to obtain. USCIS adjudicators seem to be more willing to approve Advance Parole based on humanitarian reasons.

Some things to keep in mind: Your employee should not leave the U.S. before USCIS issues the Advance Parole document, otherwise his departure from the U.S. will automatically terminate his DACA status, his application for Advance Parole will be considered abandoned and he will not be able to reenter the U.S. In addition, he must have a valid passport from his country of citizenship.

Is India’s BNPL 2.0 set to disrupt B2B?

Both as a term and as a financial product, “buy now, pay later” has become mainstream in the past few years. BNPL has evolved to assume various forms today, from small-ticket offerings by fintechs on consumer checkout platforms and marketplaces, to closed-loop products offered on marketplaces such as Amazon Pay Later (which they are now extending for outside use as well). You can also see some variants offered by companies that want to expand the scope of consumption and consumer credit.

Globally, BNPL has seen the most growth in the consumer segment and has driven retail consumption and lending over the past few years. Consumer BNPL offerings are a good alternative to credit cards, especially for people who do not have a credit history and can’t get credit from banks. That said, a specific vertical of BNPL products is gaining traction — one targeted toward small and medium enterprises (SMEs). This new vertical is known as “SME BNPL.”

BNPL can be particularly useful when flow-based underwriting or transaction-based underwriting is used to offer credit to small businesses.

B2B commerce in India is moving online

E-commerce has seen tremendous growth in India over the past decade. Skyrocketing smartphone and internet penetration led to rapid growth in e-commerce across large cities and smaller towns alike. Consumer credit has also taken off in parallel as credit cards and digital lending spurred credit-based consumption across offline and online stores.

However, the large B2B supply chain enabling the burgeoning retail market was plagued by bottlenecks and inefficiencies because it involved a plethora of intermediaries and streamlining became a big problem. A number of tech players responded by organizing the previously disorganized B2B commerce market at various touch points, inserting convenience, pricing and easier product access through tech-enabled logistics and a modern supply chain.

Online B2B and B2C penetration in India in 2019

Image Credits: Redseer

India’s B2B e-commerce space has developed rapidly since 2020. Small businesses have moved from using paper to smartphone apps for running a significant part of their day-to-day business, leading to widespread disruption in how businesses transact today. The COVID-19 pandemic also forced small businesses, which were earlier using physical means to procure goods and services, to try new and online models to conduct their affairs.

Graph depicting growth of India's B2B retail market

Image Credits: Redseer

Moreover, the Indian government’s widespread promotion of an instant payments system in the form of the Unified Payments Interface (UPI) has changed how people send money to each other or pay merchants for their goods and services. The next step for solving the digital B2B puzzle is to embed credit inside every transaction and invoice.

Investments in online B2B in india 2016-19

Image Credits: Redseer

If we compare online B2B transactions to the offline world, there is only one missing link: The terms offered to small businesses by their supplier/distributor or vendor. Businesses, unlike consumers, must buy goods and services to eventually trade them, or add value and sell to consumers or others down the value chain. This process is not immediate and has a certain time cycle attached.

The longer sales cycle means many small businesses require credit payment terms when buying inventory. As B2B commerce scales and grows through digital means, a BNPL product that caters to the needs of SMEs can support their growth and alleviate the burden on their cash flows.

How does consumer BNPL differ from SME BNPL?

An SME BNPL product is a purchase financing product for small businesses transacting with suppliers, distributors, aggregator platforms or B2B marketplaces.

India’s path to SaaS leadership is clear, but challenges remain

Software-as-a-Service is one of the most important sectors in tech today. While its transformative potential was quite clear before the pandemic, the sudden pivot to distributed workforces caused interest in SaaS products to skyrocket as medium and large enterprises embraced digital and remote sales processes, significantly expanding their utility.

This phenomenon is global, but India in particular has the opportunity to take its SaaS momentum to the next level. The Indian SaaS industry is projected to generate revenue of $50 billion to $70 billion and win 4%-6% of the global SaaS market by 2030, creating as much as $1 trillion in value, according to a report by SaaSBOOMi and McKinsey.

There are certain important long-term trends that are fueling this expansion.

The rise of Indian SaaS unicorns

The Indian SaaS community has seen a flurry of innovation and success. Entrepreneurs in India have founded about a thousand funded SaaS companies in the last few years, doubling the rate from five years ago and creating several unicorns in the process. Together, these companies generate $2 billion to $3 billion in total revenues and represent approximately 1% of the global SaaS market, according to SaaSBOOMi and McKinsey.

These firms are diverse in terms of the clients they serve and the problems they solve, but several garnered global attention during the pandemic by enabling flexibility for newly remote workers. Zoho helped streamline this pivot by providing sales teams with apps for collateral, videos and demos; Freshworks offered businesses a seamless customer experience platform, and Eka extended its cloud platform to unify workflows from procurement to payments for the CFO office.

Other SaaS firms stayed busy in other ways. Over the course of the pandemic, ten new unicorns emerged: Postman, Zenoti, Innovacer, Highradius, Chargebee and Browserstack, Mindtickle, Byju, UpGrad and Unacademy. There were also several instances of substantial venture funding, including a $150 million deal for Postman, bringing the total amount raised by the Indian SaaS community in 2020 to around $1.5 billion, four times the investment in 2018.

India’s path to leadership

While the Indian SaaS community has made admirable progress in recent years, there are several key growth drivers that could lead to as much as $1 trillion in revenue by 2030. They include:

The global pivot to digital go-to-market

The number of enterprises that are comfortable with assessing products and making business decisions via Zoom is increasing rapidly. This embrace of digital go-to-market fundamentally levels the playing field for Indian companies in terms of access to customers and end-markets.