The startup ecosystem in India today is in a healthy position. There are more startups and more investors than ever before. Startup unicorns, once-mythical creatures, are now commonplace, and no one bats an eye when a barely fledgeling startup announces a seed round of $10+ million.

Amidst all this brouhaha, it is easy to forget that things weren’t always like this.

Just ten years back, there were a handful of startups and a far smaller bunch of investors. A $100,000 funding round was considered respectable and VC decisions took months to move from interest to mandate.

So how and why did things change?

If one were to look back and connect the dots, it wouldn’t be farfetched to conclude that if there was one event that catalysed this revolution, it would be when Lee Fixel, then head of Tiger Global, invested $10 million into a then largely unknown online bookseller called Flipkart.

This was a seminal moment for VC investing in India in three ways:

Size: At that time, a $10 million Series A was unheard of. Flipkart itself had struggled for many months to raise a modest $1 million round prior to Fixel’s investment.

Speed: Fixel decided to invest in Flipkart in a single meeting. In fact, the meeting itself was a result of Fixel reaching out to the Flipkart founders through multiple channels, something that no Indian VC would have contemplated doing in that time.

Scale: At the time of the investment, by all popular estimates, the size of the overall Indian e-commerce market was $20-30 million. Flipkart’s valuation alone was nearly twice as much as the entire perceived market size at that time. Clearly, it was an ambitious bet on India’s future potential as an e-commerce market.

Of course, things didn’t change overnight. But Fixel kept at it. Over the next five years, he backed more than a dozen e-commerce startups in India – from cab aggregator Ola and classified ads platform Quikr to e-tailers like Myntra and ShopClues. In addition, he kept backing Flipkart with increasingly larger rounds leading up to a mammoth $1 billion investment round.

By 2014, results started showing. E-commerce started becoming mainstream in India and the advent of mobile phones changed market dynamics. There was a perfect storm moment with huge exits in China and low-interest rates in the US leading to an unprecedented interest in India as a funding destination.

In 2015, Fixel doubled down on India. He made more than 30 new bets and invested over $1.5 billion into Indian startups, largely in the consumer space.

Then, disaster struck.

With e-commerce player Amazon’s aggressive entry into India and the likes of Japanese multinational conglomerate SoftBank backing competitors like Snapdeal, in 2016, Flipkart’s growth stalled.


Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

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