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Startups: Sectors to watch out for in 2016

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Startups: Sectors to watch out for in 2016.

With an eventful year drawing to a close, it is time to look to the future in anticipation of what 2016 can bring.

Red Newswire | Source: ET Bureau | By Ashish Mittal  | Dec 14, 2015 04:30 PM IST.

Indulging in some crystal ball reading, the sectors that will do well in 2016 are:

Internet of Things (IoT) – Around the world Internet of Things (IOT) is hot and the same is the case in India. IoT enables objects to collect data and transmit it over the internet, which means things or objects look and behave a lot like it did in Sci-fi movies. We will see some interesting applications emerging in sectors such as automotive, construction, fitness and healthcare where objects in our lives are getting connected.

With governmental schemes like Digital India, Smart Cities and Make in India the sector is expected to see a great level of interest. According to Nasscom, in five years, the global opportunity is likely to touch $ 300 billion and the Indian IoT market itself could be about $ 15 billion.

Notable startups in the space include the very ambitious Team Indus that is taking part in the Google Lunar X challenge that looks to land and operate a rover on Moon and win the $ 20 million prize. Others include Savari Networks, SenseGiz, Connavate, GoQii, GreyOrange, iBot, Nimble Wireless, Sylvian, Stellaps and Systemantics.

Software as a Service (SaaS) – When Twitter acquired Bangalore-based ZipDial early this year, it marked the coming of age for India’s SaaS startups and further reaffirmation of the quality of new companies in the space. Boutique and niche cloud consulting and services companies such as TurningCloud will drive the next generation of applications. SaaS has gone on to encompass a wide range of functions and global SaaS companies operate across areas like cloud infrastructure, security, marketing, sales, HR, ecommerce, retail, finance, healthcare, education, travel and hospitality among others.

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According to Tracxn over $650 million has been invested with more than $200 million being invested in 2014 alone. While the numbers for 2015 are not known but big and notable VC firms like Accel Partners Blume Venture, Nexus, Northwest and Sequoia have been very active in the space.

Startups in this space are making waves across the globe and companies like Freshdesk, Druva, Capillary Technologies, Practo, Exotel, Wingify and RateGain and TurningCloud among others is leading the charge.

Marketplace Lending – Born from the ashes of the financial crisis in 2009 and the widespread mistrust of the established banking channels, alternative finance platforms have become much bigger than anyone could have imagined. Using technology as their main weapon, these platforms has gone on to create quite a bit of ripple. A rage in the UK and US, alternative or marketplace lending startups in the peer-to-peer lending and crowdfunding space have become increasingly popular in the country.

According to Tracxn about $ 27 million has been invested across alternative lending companies in just the last 18 months and there are about 30 companies across P2P Lending & SME Lending verticals, with more than half founded in just the last 18 months. The promise of cheaper, faster and hassle free finance has made these startups hugely popular among people.

Startups like Faircent, Capital Float, Ledingkart, RangDe and Milaap have done a good job in the segment. However, absence of any regulations and policies to govern the segment has left an air of uncertainty and the Reserve Bank of India and the Government must come up with policies to regulate this highly promising segment.

Education –India’s educational gaps are well known and the opportunities it provides for private participation is well chronicled. Startups have managed to create a niche around Education Technology or commonly known as EdTech.

IBEF’s sectoral outlook for the sector, says the country has more than 1.4 million schools with over 227 million students enrolled and more than 36,000 higher education institutes. India has one of the largest higher education systems in the world. India’s online education market size is expected to touch US$ 40 billion by 2017.

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IBEF goes on to add that the sector is poised to witness major growth in the years to come as India will have world’s largest tertiary-age population and second largest graduate talent pipeline globally by the end of 2020. As of now the education market is worth US$ 100 billion. While EdTech is relatively small in the space, startups like FutureVidya, EduPro App , EduKart, Toppr, iProf, Meritnation and Simplllearn are doing a stellar job in addressing problems in the education space.

Healthcare – Given the enormity of the challenges in the healthcare space, it is obvious the government alone cannot be tasked with solving India healthcare needs. According to a FICCI – KPMG report, India’s healthcare sector is expected to be $280 billion in size by 2020, growing at a compound annual growth rate of 16 per cent.

For startups, ventures around telemedicine, mHealth and platforms that are asset light, easily scalable and based on technology, have been the favourite. Practo, Portea and Lybrate are great examples of it. On the innovation count, startups like Embrace that have developed technologies to help combat maternal and infant mortality in India and other developing nations, has seen venture money from the likes of Khosla Impact and Capricorn Investment Group.

The year 2016 is likely to see the sector grow even stronger as it starts tackling even larger and serious healthcare problems in the country. Good luck to all the startup founders for a great 2016.

(Ashish Mittal in Angel Investor and Chief Mentor at TurningIdeas Solutions, a startup incubation platform based in Noida. Ashish can be followed at @ashishmitt)

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