Five Sectors to Watch out for in 2017

Following five sectors, will have a rocking 2017.

By Abhishek Goyal • Dec 12, 2016 Originally published Dec 12, 2016


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So far, the domestic consumption story was the key area of interest among the investors, but now it is getting diversified. New trends include start-ups taking a pie from global and domestic enterprise markets, domestic small and medium enterprise (SME) market, financial services market and agri supply chain market, along with the continued momentum in the domestic consumption story. Herein, following five sectors, according to me, will have a rocking 2017.

1. Enterprise Software forGlobal Markets:

Enterprise software products and technologyenabled services will continue to be a mega wave for next decade. Across multiple segments, Indian startups are competing very aggressively against their global peers, such as Freshdesk, Helpshift, Mindtickle, Tracxn, and BrowserStack.

Cost advantage in production is also significant even today. For e.g., a software development engineer at Google in California, US draws a salary around $125K, whereas in Bengaluru it comes just at around $25K as per Glassdoor – jobs and recruitment portal. Further, as more and more business-to business (B2B) purchases are being made remotely, it is more advantageous for Indian product producers on distribution front. Start-ups and software product companies, with subscription revenue model, will have a promising future.

2. Zero Friction Spaces:

With start-ups that are doing great work by offering exciting workspaces, without burning a hole in entrepreneur's pocket, the future of office spaces looks very interesting. More than 50 start-ups, including Bengalurubased co-working space start-up BHIVE Workspace, are aggressively disrupting this market.

Similarly, young workforces are also embracing managed homes than renting their own home. Here, more than 30 start-ups including Nestaway, Zenify, and Homigo are leading this shift.

3. Alternate Lending:

Banks globally continue to lag behind in their ability to evaluate the risk of giving loans to a large segment of consumers. This is primarily because of their under-investment in technology to build interesting "out of the box' risk models. This includes incorporating data from local search engines, like Justdial, e-commerce, and other marketplaces, or point-of-sale data to improve risk models of SMEs and consumers.

New lending platforms like EarlySalary (loans for salaried professionals), CapitalFloat, LoanZen(loans for small businesses), and slicePay (loan for students) are going after different segments to build interesting risk models and enable convenient access to loans, particularly to people who couldn't access it earlier.

However, this is a highly regulated market. Hence, Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) will have to do a lot of forward thinking to solve issues. This includes first, lending marketplaces require provisions of nodal account for disbursement and collection of loans. Without this, a marketplace will have to spend a non-trivial amount of time and money for each installment. This prohibits implementing true diversification of lender's risk. Second, there need to be provisions to allow alternative providers of credit rating that essentially allows start-ups to do a lot of iterations on the risk model.

4. B2B Food Produce:

The supply chain of perishables and consumables products are reaching consumers and retailers in much faster and efficient manner in multiple ways. For example, goods are directly delivered to consumers and businesses from the producer. Consumers get fresh produce, and farmers get better prices. Over 50 start-ups like Bharat Bazaar (B2B marketplace for fruits and vegetables) are disrupting this market.

5. From Classroom Learning to Self-learning:

Content has slowly been moving up the value chain of learning. Now, it is crossing the tipping point to become the key source of learning. Bengaluru-based edtech start-up Byju's and Unacademy, a free online learning platform, are leading the trend here along with above 50 start-ups.

(This article was first published in the December issue of Entrepreneur Magazine. To subscribe, click here)

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