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From billions to rebellions, Indian startups saw it all in 2015

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Reddit/Rahul Yadav and EPA/Jagadeesh NV
The good, the bad and the ugly.
  • Itika Sharma Punit
By Itika Sharma Punit

Co-editor, Quartz India

This article is more than 2 years old.

Twenty fifteen can be described as the year when the Indian startup ecosystem grew out of infancy and started teething—which, of course, led to some pain.

From soaring valuations and huge funding rounds to mass layoffs and rebellious entrepreneurs, this year was packed with action for the world’s third largest startup ecosystem.

Here’s a look at the good, the bad, and the ugly this year:

Higher and higher

When the year started, many experts said investors would take it slow, review and probe before writing cheques in 2015. But Indian technology startups raised approximately $7 billion (Rs46,199 crore) this year—around 40% more than what they had raised 2014.

Marquee global investors continued to place their bets on India. Sequoia Capital was the most active venture capital firm in India in 2015 with investments in 33 startups, followed by Accel Partners (32) and Tiger Global (28).

Meanwhile, valuations of Indian startups also continued to rise. For example, Flipkart was valued at $15 billion in July this year, growing from $11 billion in December 2014. Snapdeal’s valuation also rose to $5 billion in August, up from $1 billion in May 2014.

M&As

The calendar year recorded also recorded several domestic and international acquisitions in the startup space. It began on a high note when Twitter announced the acquisition of Bengaluru-based mobile marketing and analytics company Zipdial on Jan. 20. The deal was reportedly valued at around $35 million (Rs215 crore).

Subsequently, several large startups acquired their smaller peers. E-commerce major Snapdeal bought five startups in 2015—fashion portal Exclusively in February, financial services marketplace RupeePower, mobile recharge platform FreeCharge, mobility solutions provider Letsgomo Labs, and MartMobi, which creates mobile websites and native apps.

Flipkart, too, made several acquisitions, including payment services startup FX Mart. Along with Tiger Global, the e-commerce major also invested in mobile technology startup Cube26 Software. In December, Flipkart acquired a minority stake in MapmyIndia, a GPS navigation and location-based services provider, for an undisclosed amount.

The year also witnessed one of the biggest domestic acquisitions in the Indian technology startup space. In March, transportation technology startup Ola announced the acquisition of competitor TaxiForSure for $200 million. The deal appeared to be a natural step towards consolidation, although some media reports suggested that the acquisition was a stress sale because TaxiForSure had failed to raise funds it needed to stay afloat.

The bad boy

In March 2015, a new celebrity emerged in the world’s fastest growing startup ecosystem. It was neither his ability to build a unique startup nor his company’s success that made Rahul Yadav fodder for front-page headlines. The 26-year-old co-founder of realty portal Housing.com shot to fame overnight because of a blunt email he wrote to Sequoia Capital’s managing director Shailendra Singh, one of  the most active investors in the country. The email was later leaked on Quora.

Yadav blamed Singh—whom he referred to as “dude”—of trying to poach employees from his Mumbai-based startup. “If you don’t stop messing around with me, directly or even indirectly, I will vacate the best of your firm. Also, this mark the beginning of the end of Sequoia Cap in India,” he wrote.

This email followed a boardroom showdown at Housing.com. On April 30, Yadav resigned from the company and wrote yet another snide email. ”Dear board members and investors, I don’t think you guys are intellectually capable enough to have any sensible discussion anymore. This is something which I not just believe but can prove on your faces also,” Yadav wrote. However, he withdrew his resignation on May 5.

Finally, on June 23, Yadav was fired from his own company.

In December, Yadav announced his comeback with an e-governance startup called Intelligent Interfaces, which has raised an undisclosed amount of investment from Flipkart co-founders Sachin Bansal and Binny Bansal (not related). “The startup will be an interface that will be used by government officials. I see very large businesses that can be created in partnerships with (the) government,” Yadav reportedly said.

Yadav has also announced that he won’t be raising funds from venture capital investors for this startup.

Pink slips and hostage drama

At the beginning of 2015, technology startups in India were counted among the top recruiters in the country. The 10 leading e-commerce startups in India alone were expected to absorb at least 15,000 new professionals between March and December. Startups were among the biggest recruiters at the Indian Institutes of Technology (IITs) and the Indian Institutes of Management (IIMs).

But as the year progressed, several startups were forced to lay off employees. On Aug. 31, food ordering startup TinyOwl laid off around 100 employees at its Pune and Mumbai offices to cut costs. But this turned out to be way more dramatic than expected. In November, the employees in the company’s Pune branch allegedly held one of the co-founders, Gaurav Choudhary, hostage inside the startup’s office, seeking salaries for at least two months.

“All I want is to go home safely. I am scared for my life,” 24-year-old Choudhary told the Times of India.

In October, restaurant-discovery startup Zomato laid off roughly 10% of its workforce—around 300 employees—in order to focus on areas that are more profitable.

In November, media reports suggested that Mumbai-based real estate portal Housing.com planned to fire 600 of its 2,600 employees across business verticals over the next few months.

“These incidents highlight some bitter realities about the Indian startup ecosystem, which have so far been overshadowed by the multi-billion dollar valuations of a handful of companies, and the multi-million dollar funding rounds they have done,” Arvind Singhal, chairman and managing director of management consulting firm Technopak, said in a Quartz post.

There were several other startups that shut shop during 2015—often due to the lack of a scalable business model or the inability to raise funds. These include Helion Venture Partners-backed technology recruitment platform TalentPad.com, bus aggregation startup Trevo, Seedfund-backed women’s fashion brand Done By None, referral-based recruiting platform Zobtree, and Localbanya, an online grocery startup funded by Springboard Fund, Karmvir Avant Infotech and Shrem Strategies.

Collateral damage

At an appearance on Nov. 23, Bollywood actor Aamir Khan voiced concern about religious intolerance in India.

Khan was subjected to brutal online trolling by those who saw the comment as unpatriotic. An unlikely victim of the episode was online marketplace Snapdeal, which Khan has been endorsing.

Furious over Khan’s comments, many Indians threatened to uninstall Snapdeal’s mobile app or to discontinue using the portal for shopping. The critics reportedly managed to pull down the rating of the Snapdeal mobile app on the Google Play Store. Compared to the 4.2 ratings then for close competitors Flipkart and Amazon, Snapdeal’s app was rated 4.1 on the Google Play Store on Nov. 24.

Snapdeal tried to distance itself from the controversy, and said it is “neither connected nor plays a role in comments made by Aamir Khan in his personal capacity.” But the damage was already done.

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