If CBInsights were to do a market map of software product startups in India it will look something like below. For Indian startups that map should be done based on broad markets available to an Indian founder and not slicing of sectors that CBInsights normally does due to nascent nature of these markets.
Startups targeting different markets
and their market cap
Data not exhaustive, it is from a very informal analysis of roughly 700 product startups that iSPIRT has interacted with in last few years through various initiatives.
Strategic insights they yield
Consumer startups have had high volatility in their valuation, a variance of over 50% which is reflection of the fact that value expectation has gone out of sync of reality of market growth. Further growth can come only when firms go beyond the 36m “India 1” city dwellers that they currently have but key question is do they have the right unit cost structure to address for next 100m “India 2” users. So one implication is to think idea ground up for 100m “India 2” users that have Rs 2-5 lakh/pa income.
Because of Cloud and Saas the paradigm of software purchase has shifted from “selling” to “assisted buying”. This opens opportunities for startups outside valley to compete in the global Saas market, the comparative advantage for India is that its cost structure of both engineering and sales help startups from here reach profitability sooner, it also helps enable to create low end disruptor markets that a SV startup cannot even begin to play at.