India has been the torchbearer for a plethora of disruptions that rattled the world, be it the automotive revolution or the software era. With the rising popularity of IoT, will Indian startups be able to emerge as champions of the connected new world too?
IoT typically means an interplay of hardware, software, and telecommunications. Given the huge pool of capital and talent in the country, it does give us an edge to create a seamless integration between the physical world and the virtual world. Indeed, this is a huge opportunity for India as it straddles two distinguished initiatives of the government of India—Atmanirbhar Bharat and Digital India. What could only be termed as a revolutionary paradigm shift in the way things are done, there is an inexhaustive number of use cases that can be built and are yet to be figured out.
“Looking at the size of India’s population and the kind of data points which can be generated only in India, India is destined to become a hotspot for IoT,” says Manish Porwal, Founding Team Member & Business Head, LogiNext.
IoT is at its infancy in India, the same stage where the IT world was in the early 2000s. Just like any nascent technology, the opportunities to grow in the field are ripe and plentiful.
Every 100 kilometres or so, the complexity of the challenges in the Indian market changes along with consumer behaviour changes, and the need for differentiated services becomes more prominent. But this also provides an opportunity for startups to test a range of permutations and combinations and figure out what solution fits which consumer the best.
Healthtech, for that matter, is the obvious example of one such sector, given the times we live in. While the entire world is reeling under a pandemic, the importance of IoT-enabled devices in the medical sector has been proven to be the biggest at the moment. Moreover, given the jarring discrepancy in the doctor to patient ratio in India, there is an urgent need to be able to provide care for multiple patients simultaneously to counteract the lack of medical resources. Innovative IoT solutions that help diminish this gap are definitely the need of the hour.
Logistics is another burgeoning area where IoT solutions have made the job much easier, especially in Tier 1 and Tier 2 cities. New IoT solutions that make logistics easier and simpler are coming up every day, which proves how big the opportunity is, more so in a country as big as India.
Having said that, one truly remarkable aspect where IoT has become a game-changer is the agricultural sector. India is a largely agrarian country, and it is a no-brainer how big of an opportunity IoT companies are targeting to solve the problems related to the same.
Making IoT startups successful
While the opportunities are countless, the startup game is still a tough nut to crack for many. In an age of new startups, making one successful remains a challenge.
“IoT startups in India have been thriving in diverse spaces. The applications are not just limited to the standard home care or transportation solutions but also expanding towards other sectors where one could not have anticipated IoT to play any role,” says Porwal.
First, to make sure a startup is not just like any other, it is essential to validate the existence of a problem statement that is troubling a large enough user base.
“You really need to have some customer sponsors and map them to what your idea is. If they are willing to buy a solution based on that idea, you can be assured that it is going to be viable,” advises Sanket Bandyopadhyay, Co-Founder & Vice President, Daikoku Innovations.
From an investor’s perspective, Suresh Narasimha, Managing Partner, PESU Venture Labs (PVL) and Cofounder of CoCreate Ventures, notes that a solution that is meant for a niche market has a hard time gathering funds. This provides us with this formula—a viable solution for a scalable market.
While it looks good on paper, building a startup is seldom so smooth. With the reliance of IoT heavily on hardware, reaching the zenith takes a lot more effort than a solely software startup. A hardware startup, whether IoT-enabled or not, needs a significant level of engineering expertise at the first stage itself. The wider the expertise, the larger the profit.
However, getting a diverse range of experts is not an easy job for any new entrepreneur.
One must realise that IoT is not a one-man show. The hardware is just as important as the software. Thus, having a solution that takes care of every possible aspect can become a more lucrative option for a budding entrepreneur. Figuring out what the company can do best and investing more energy on those fronts can be a way of making sure you have one strong core element as part of the solution.
“Certain bits give you good returns in terms of focusing and channelising your energy in one direction. The more important thing is that there should be some sustainability plan in case one front fails,” advises Porwal.
“India has a superset of problems I would say, so if you solve problems in India then the subset of Indian problems will flow into the global market,” says Bandyopadhyay.
The target of IoT is to solve daily-life problems and make the user functionality easier. In a country like India, where the variety of problems are more, it helps to note that when looked from a global perspective in all its uniqueness, similar problems exist all over the world. So, the genesis of thinking global is around looking at the problem one is solving.
With respect to the process of figuring out the problem in common that IoT is looking to solve, extensive research and hit-and-trials are done. This makes sure that the design of the solution solves the pain point not just for Indian consumers but also globally. “India is a very cost-sensitive market, so if you can test your product in India and it works, you can actually sell it outside in regions like Europe and Asia,” informs Bandyopadhyay.
Carving a global map for an IoT startup is definitely not going to be a piece of cake. But the advantage here is that most IoT startups run on the software as a service (SaaS) model, which makes it much more scalable in the international markets. Also, making sure that the product or solution is possible in all reputable markets is a way of figuring out if there is a chance of it becoming a hit internationally.
“One thing that I think that startups could start thinking about immediately is to go by the lean principles,” advises Bandyopadhyay. “Once the idea of standardisation comes into the picture, IoT plays a big role there. For example, if you can standardise things in a PLC manufacturing unit in India, you can take that to other bigger units in the West.”
With Industry 4.0 taking the world by storm, focusing on optimisation and standardisation of processes is an ideal way to go about. Designing a solution that works in India and also functions with the same efficiency in other markets can be tedious. Because there are way too many factors that need to fall in place for a product to fit all possible markets. The buyer’s persona changes from one country to another; the priorities of a customer in the UK may be quite different from that of a customer in India.
“Before we customise our plans for different countries, we should first customise the plan for the product that we are building on,” advises Narasimha. In order to localise a product or platform for the country in which it will operate, it is essential to gather a larger user base, something that is extremely crucial for an organisation spreading its wings to other countries.
The additional components of IoT have complications, which include managing the hardware, the supply chain logistics, certifications, shipments, and the final deployment despite its scalability option. Moreover, the intensive data collection by IoT platforms makes it susceptible to exhaustive scrutiny by government authorities that wish to prevent any instance of data and privacy breach.
On the contrary, Narasimha advises that a startup should rather rack their brains to think about their overall problem, get their propositions and their market right in one country before they think of going global. “Globalisation needs to be thought of on the basis of the product that you’re building and the complexities that you get into but, most importantly, on the core IP that you’re able to demonstrate which is not available in other countries,” he adds.
Pricing is another crucial aspect that needs to be taken care of, especially when expanding to more than one region, because one price doesn’t fit all. For instance, the pricing of cost-sensitive markets like Southeast Asia and South America cannot be the same as that of, say, North America. “We are fundamentally talking about a different marketing effort in these countries and set of sales resources in each of these countries, and for me intuitively it means that it is not a startup,” notes Narasimha.
Open-sourcing alongside IoT
Aeroshil Nameirakpam, Managing Director, Nibiaa Devices Pvt Ltd, notes that taking the open source route might just be the key to skyrocket India as an IoT champion. He says, “The concept of open source hardware development is coming along and it is creating a revolution which actually happened during the software era during the early 21st century where open sourcing of codes actually helped establish a lot of new companies.”
In fact, IoT is arguably the right contender to be brought about in this new age where collaboration, a quintessential part of the IoT space, is done to build scalable and efficient products. Nameirakpam says, “When it comes to building sensors and devices, countries which are very good at it, like China and Taiwan, are helping other companies. When it comes to application building, which we Indians are very good at, we can start thinking of providing vertical solutions.”
Becoming part of the open source community can be a gateway for Indian products or solutions to reach a wider audience globally. A lot of hardware libraries and packages are readily available right now on communities like GitHub who are constantly trying to bridge the gap between emerging technologies through collaboration, which, if we start developing on our own, would take a lot of time. If used judiciously, the open source phenomenon could be the backbone upon which Indian IoT startups thrive.
“Every country is trying to bring about this disruptive technology and we should participate in it and take more of a big leap because we have the resources and a huge pool of educated, smart youngsters who are looking for opportunities,” concludes Nameirakpam.
The future of IoT in India
India has been the beacon of the software revolution that took place in the early 2000s. Software startups got their due in the IT industry when the country welcomed it with open arms. However, the same cannot be said for hardware startups that have seldom been able to mimic similar success stories. “India is strong in software but there is a significant lack of skills in terms of hardware. India needs to strengthen its manufacturing capability if it wants to take on the big guys like China,” says Bandyopadhyay.
Getting funds for any startup is an uphill task, more so for an electronics startup. But IoT startups get a certain leeway mainly due to the availability of a software component to it, which proves to a potential investor that it has the capability to be scaled to new, greater heights.
Nameirakpam argues that only building the software component of IoT while sidelining the other core components will not lead to a holistic development of the ecosystem. He says, “I think for an overall ecosystem development we need an all-round development. We have to give emphasis to hardware startups as well.”
An example he gives relates to the dire situation the country faced during the havoc caused by the second wave of the Covid-19 pandemic in terms of fulfilling the requirements of essential medical equipment like pulse oximeters. “People needed to save lives on the ground, and we were importing them from other countries. If there were startups that were making these medical devices in the country, and if they got the required funding, there is a possibility that we would have been able to procure them faster.”
“The truth is, when you make a manufacturing capability stronger, the entire value chain benefits from it. It can push the startup culture beyond the top ten cities that we are currently looking at, and it can go into the smaller towns too,” adds Panneerselvam Madanagopal, Advisor at Niti Ayog and Senior Advisor at T-Hub.
In addition to this, telecom—a core element of the IoT segment—is also witnessing a new revolution with the introduction of 5G in the country, which many believe would be a gamechanger for IoT players. In spite of that, the maturity of the entire ecosystem seems to be a far cry. Even with 4G, different parts of the country have different quality of network access, which broods the question: Will 5G really be the game-changer one expects it to be?
“It is not just a matter of a few isolated companies becoming efficient, but the overall IoT ecosystem must go up for Indian startups to succeed,” notes Madanagopal.
IoT startups have the potential of widespread growth provided they have three things in place—the ability to see a distinct value proposition (enables them to change the way they are doing things), ability to provide their solution at a reasonable price point, and, most importantly, being able to enhance the customer’s post-purchase experience through a well-tracked distribution and post-sale service. “Once we are able to crack this, IoT is going to exponentially grow to a very significant level given the kind of market opportunity that India offers,” says Madanagopal.
It is anticipated that India is in line for a heavy demand, and it is essential to be prepared. A solid infrastructure is needed that can actually develop the hardware, software, and data in a lesser time and reduced cost when compared to countries like China or Taiwan. “The applications are limitless when we look at the horizontals that it can cover, and I am a firm believer that together in terms of our own technology as well as our business acumen, we can do wonders,” adds Porwal.
IoT space promises immense opportunities to scale. With an increase in terms of data points that ultimately lead to the beginning of the machine learning and artificial intelligence era, it shows the beginning of a blossoming future alongside IoT.
How to grow in IoT
Like every other business segment, the IoT sector is also driven by luck and risk. Both of these exist in the same box, but individuals, startups, and enterprises need a forecasting vision to differentiate between them. The concept which can help foresight success or failure can be determined by performing an exercise known as IoT Readiness Assessment (IRA).
The IRA, designed by Elecbits Technologies Private Limited as one of the micro-services on their online platform, helps in creating precise estimations for an IoT business. If the concept has to be summarised, the IRA says the chance of success in IoT is determined by three factors, which are:
1. The problem. The problem that is being solved needs to be a hair-pulling problem that is not an extension to any existing solution. The startup or individual should focus on the solutions that can go from zero to one. For example, a smart switch is an extension to a normal switch, but creating an IoT ventilator that is cost-effective, space-effective, and takes less time to set up cannot be avoided by those who are in urgent need of that. Your solutions must focus on a particular audience, but it should either save their time, money, or effort.
2. The R&D and PFM. Once the problem is measured and scaled as a non-avoidable problem, the next step is heavy expenditure on the R&D to achieve initial product-market fit. Risk reduction here includes usage of pre-existing modules of gateways, sensors, and enclosures. which provide a push start for easy and effective product market testing.
3. Scalability. An efficient IRA score can be achieved by pushing a lean model where hardware is subscribed rather than being purchased. For example, paying $100 initially for ten devices vs paying $1 each for ten devices for twelve months can help divert money to operations. This can be done by negotiating with multiple vendors and winning a high credit score to deliver an EMI-like model where payment is made from earnings rather than investment.
If the basic principle of IRA is followed, a highly effective growth path in the IoT sector can be achieved. From the three steps presented above, the most common mistake that IoT startups make is the selection of the problem statement. If this can be viewed correctly, the company is already on the path to being successful.
As explained by Saurav, CEO of Elecbits, “The problems in IoT need to be measured by something which is not going to change over the period. For example, (1) Nobody will ask you to increase R&D expenditure for a particular product; people always want faster and cost-effective R&D. (2) Nobody will ask you to increase the cost of the final product (PCB, enclosures, and components); people want cost-effective products. Always concentrate on the problem which is not going to change over a while.”
The article is based on the panel discussion ‘IoT Startups: What Makes India Special’ during July edition of Tech World Congress 2021. It is prepared by Siddha Dhar, a business journalist at EFY.