By Anusha Ashwin
The recent report by Nasscom-Zinnov on ‘Indian Start-up Ecosystem Maturing’ released at the Nasscom Product Conclave in October 2016 revealed that tech startups in India are expected to grow by 10-12% to over 4,750 by the end of 2016.
The same report predicts that India will become home to over 10,500 start-ups by 2020, employing over 2,10,000 people. Ventures in fintech, health-tech, edutech, data analytics, B2B commerce and artificial intelligence are seeing interest, predicts the report.
Evidentially, new technologies like Artificial Intelligence (AI), Blockchain, Beacons are evolving at an accelerated pace for startups to build their products. In today’s world, AI has a larger than life role. AI is required to make computers think and act like humans for any given solution. Currently, there is a pressing need for automating the process of data interpretation and executing automated communicating insights to satisfy end consumers. And, startups have realized that there is enormous potential in AI and its associated technologies that can change the way data can be understood and interpreted in every sphere of consumer service.
AI-based Chatbot is one associated service that startups do not want to ignore. Entrepreneurs believe that Chatbots aid better customer engagement and are also preferred over apps in certain e-commerce portals as it solves immediate solutions.
Apart from AI, few other technologies that are bringing a paradigm shift in the startups are Internet of Things (IoT), Blockchain and Beacon. Blockchain is considered as the central and the most important technology for a successful fin-tech startup. This technology is waiting to be explored at large and has the potential to reshape the digital wallet and financial startup space in enabling absolute secure transactions.
Beacons are next in line. Beacons are said to reshape the retail industry in the near future. Brick and mortar retail stores use the beacon software for mobile commerce, offering customers special deals through mobile marketing, and can progressively enable mobile payments through point of sale systems.
A recent report released in August 2016 from market research firm Tractica forecasts that the annual global revenue for artificial intelligence products and services will grow from 643.7 million in 2016 to $36.8 billion by 2025, a 57-fold increase over that time period. As such, it represents the fastest growing segment of any size in the IT sector.
AI gives massive opportunity for startups especially in the e-commerce vertical. It is implied as a technology that is essential in understanding the importance of customer interaction and a necessity in analyzing human emotions, and more importantly a tool that enables customers to take quick and informed decisions. AI tools, offered as modules in language, vision, speech and reasoning, have all been exploited by global startups and inevitably Indian startups have been at the forefront of adopting and offering these technologies in their startups.
Management consulting firm, Zinnov recently released a report on AI. The report reveals interesting figures on investor funding in AI startups. Globally, funding in this sector had notably increased more than 10-fold over the past five years, from $94 million in 2011 to $1,049 million in 2016. In India, 170 AI startups were identified, with total funding of $36 million. Bengaluru leads the list with 64 startups that have raised $27 million so far, followed by Delhi that has 26 startups which has raised around $330 million.
Startups deploying AI also envision an untapped potential in other key sectors such as healthcare and automobiles. Healthcare startups are building their products around AI, knowing that the technology can help learn from thousands and even millions of patient data points and images to make more accurate diagnosis. AI, on the other hand, is also transforming the auto industry too. Startups that are engaged in driver-less vehicles are set to disrupt the market in the years to come.
Beacon has been in buzz since 2013, since tech giant Apple introduced its iBeacon technology. Beacon is considered as the latest and innovative way of connecting with customers, more specifically in the retail industry. Beacons use low-cost devices that communicate with smartphone apps indoors through a Bluetooth signal. Beacons help big retailers collect data, push coupons, and generate billions in in-store sales. Beacon technology, when combined with other enabling technologies like mobile wallets and apps, can deliver tangible benefits for the consumer and for the retailers.
In 2015, Business Insider released an in-depth report on Beacon technology. The report indicated that about 60 million iBeacon units by Apple are expected to be shipped by 2019. Between 2015 and 2016, 100 retailers in the US have been testing Beacons. According to the same report, the beacon installed base will see a five-year compound annual growth rate (CAGR) of 287%. There will be about 4.5 million active beacons overall by December 2018, with 3.5 million of these in use by retailers. Also, the beacon installed-base should continue to double every six months through 2016.
Blockchain is now a favorite technology among fin-tech startups. It is best defined as a network of computers that verify and approve transactions. The transactions are then recorded on a distributed public ledger. Anyone on the network can see what transactions have occurred. The advantage with blockchain is that it makes transactions safer, simpler, faster, and cost-effective. KPMG in association with NASSCOM 10,000 Startups says that Blockchain is being perceived in India as a game changer. Though it is at a very nascent stage and is yet to mature into a mainstream application, the technology is receiving encouraging reviews from market players in the country. Quoting an example, KPMG said that Zebpay in India launched a Blockchain lab to develop proof of concepts and innovative services. The company has received about $1 million in funding from equity investors to build talent and accelerate the company’s Blockchain-based services.
Reserve Bank of India has also set-up a committee to understand the possibility of using Blockchain technology and to determine appropriate regulatory policies. In December 2015, RBI had released a ‘Financial Stability Report’ detailing the possible impact of Blockchain technology. RBI in its report has indicated that Blockchain has the potential to transform the functioning of the back offices of banks, increase the speed and cost efficiency in payment systems and trade finance. A number of major IT players in India are piloting projects that implement Blockchain in financial processes. This obviously means that large IT companies will partner with startups to outsource their backend services with Blockchain implementing capabilities.