We are not looking at 105th fashion e-tailer or 217th hyperlocal delivery firm: GSF's Sawhney
GSF Accelerator has announced the launch of its fifth batch where it will select five startups for a three-month programme. The startups selected under the programme will spend two months in India to refine their products, followed by trips to San Francisco.
The selected startups will be mentored by GSF Accelerator founder and Innerchef co-founder Rajesh Sawhney, former Snapdeal chief product officer Anand Chandrasekaran, Utopia founder Sumesh Menon, IndiaMART.com founder Dinesh Agarwal, and Y Media Labs co-founder Ashish Toshniwal. In an interview with VCCircle, Sawhney talks about his strategy for the GSF 5.0 programme, startups he is looking at and Indian's startup scene. Excerpts:
How are the startups that graduated from previous GSF batches doing? We have had four programmes, funded over 40 startups and have had five exits. Little Eye Labs, a company in our first programme, was acquired by Facebook, its only acquisition in India. Fifteen of our companies have VC investors. Pokkt has Jafco and SingTel as investors, and DailyRounds has Accel Partners as an investor. The companies are doing very well. Of the 40 companies, more than 30 companies raised seed round. It is an incredible story. GSF alumni are now growing and willing to contribute to the newer batches.
What is your strategy for GSF 5.0? This time we are going with a broad tech strategy and we are looking for different kind of startups, from fintech to healthcare to online-to-offline models and also at smart cities and IoT (Internet of Things) startups. It will be a diverse batch and we are looking for exceptional founders with deep commitment to what they are building. We are looking for breakthrough business models which are not just clones or 10% better than other competitors but 100 times better than what their nearest competition is. Since we are going to take only five startups the competition is going to be intense. But given where India is today, we already have 100 plus startups which have applied.
What segments do you find interesting? There is a range of areas that are breaking out in India, starting from fintech—which I think is underpenetrated—to digital health, smart cities, analytics and software-as-a-service and B2B businesses targeting small and medium enterprises. There is a lot of potential in emerging markets. Of course, we are not looking at the 105th fashion e-commerce startup or 217th hyperlocal delivery company. That phase, I think, is over.
What is your view about declining investments in startups? I think 2015 was an exceptional year for startups. There was a lot of froth and a lot of money was available. I feel 2016 is a year of cleansing and a tough year for fundraising. It's not as if the money is not available; good startups are getting funding but investors are taking longer and doing deeper due diligence on what they are funding. We are also, as a result, seeing a lot of consolidation and acquisitions. I think by the end of 2016 the Indian startup ecosystem will become cleaner and healthier, and 2017 and beyond will be incredible years for Indian startups. This a great time for early-stage investors to pick up their bets now, so when the big money comes back in 2017-18 the companies are ready to ride on that wave.
A lot of startups are shutting down. Is this a bad sign? Shutdowns are natural in the startup ecosystem around the world. Exuberance in certain years creates a lot of excitement and many companies get started. Many people who have shut down will either go back to work in startups, which is great because they are sanitized, or they will start new ventures, which is even better. So in India we shouldn't worry about shutdowns but continue to create new things and let them shut down and then again create. We should constantly be experimenting. If a startup has to fail, it should fail fast.
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