what’s an end-of-year review without some competition? TOI got experts in the startup ecosystem to vote for the best in the business as well as point out the year’s highs and lows.
Entrepreneur of the year: Girish Mathrubootham
There’s no doubt Girish Mathrubootham is a Rajinikanth fan. Not only do his office walls feature murals of the superstar, but Mathrubootham’s startup has grown to a $700-million company 
servicing 100,000 clients in just six years. Superstar speed indeed, and the 41-year-old has done it his own way. When Freshdesk, his cloud-based customer support platform, didn’t have a proper office in the early days, he invested in Mac computers for the engineers, one of the things that impressed initial investors who realized he placed value on what mattered. Mathrubootham says his “secret sauce” is hiring smart people, but he’s never gone to IITs and IIMs to find them. 2016 has been a year of growth, scaling and acquisitions for the Chennai-based company with 800 employees in offices in five countries.
In the last 14 months, it has acquired six companies, including Framebench, Hotline, Airwoot and Chatmity, to scale up business. In November, Freshdesk raised $55 million in a Series F funding led by Sequoia Capital India, along with existing investor, Accel Partners, taking total funding raised to $150 million. Freshdesk has been valued at $700 million, the highest for any Software as a Service (SaaS) company in India. “We don’t try to micromanage employees but give them full autonomy,” says Mathrubootham. “The focus on company culture has paid off well.” And the Rajini theme continues. “This year, I bought Kabali tickets for the entire staff,” he chuckles.
Editor’s choice: Byju Raveendran
Byju Raveendran, founder of online learning platform Byju’s, brought Facebook founder Mark Zuckerberg on board as one of his investors. Towards the end of the year, International Finance Corporation, a World Bank investment arm, poured $15 million into his company. Byju’s provides video content for children from Classes 5 to 12, apart from video coaching for competitive exams. Raveendran, who hails from a small town Azhikode in north Kerala, started out by teaching students to crack the CAT. He set up Byju’s in 2012. Raveendran was so ambitious that he wanted a valuation that was 40 times the revenue when an investor knocked his door for the first time. He got it.
Startup of the year: Paytm
If there is a sector that’s benefited from demonetisation and the resultant cash drought, it is digital wallets such as FreeCharge, MobiKwik, and Paytm. The moment Prime Minister Narendra Modi made the announcement that cut off people’s cash, digital wallets stepped in to help millions make payments. Paytm, the country’s largest mobile payments startup with more than eight crore monthly active users, took out full page advertisements in newspapers and plastered its stickers on every other vendor’s stall. Demonetisation was a chance to bring new consumers and merchants on board, and it seized the moment. Between November 10 and December 20, Paytm, backed by China’s Alibaba, said it added 20 million new users, taking its total user base to 170 million.
With the dream run have come a few hiccups — it has been struggling to cope with the spike in traffic with users complaining of transaction failures; it had to take its app off the Apple store; politicians and civil society trolled Paytm after it released ads that seemed to trivialize people’s cash troubles and used the PM’s face; the startup discovered cases of customer fraud; and PayPal is moving forward with a copyright infringement regarding Paytm’s logo and color scheme. Paytm founder Vijay Shekhar Sharma isn’t fazed. He has approved hiring of 20,000 employees — Paytm currently has 11,000 — to reach 600 districts. The company has raised more than $700 million so far.
Editor’s choice: Citrus Pay
In a year that saw several startups shutting down, Citrus Pay stood out. The payment gateway company was acquired by Naspers’ PayU for $130 million, of which Rs 43 crore will be distributed among its 50 employees. At least 15 employees are set to pocket more than Rs 1 crore, including an office boy slated to get almost Rs 50 lakh. It will give one of its earliest venture capital investor four times the return. Citrus was founded in 2011 by Jitendra Gupta and Satyen Kothari. “One has to evaluate success in terms of exits rather than valuation or fund raising,” says a seasoned venture capitalist.
What went well…
Some sectors have weathered the storm in 2016 and are poised for growth in the year ahead
Fintech
While the fintech sector received only $485 million in funding this year, compared to $1,175 million last year, it saw more activity compared to other sectors. This April, the government launched unified payments interface, which powers multiple bank accounts, banking features, and merchant payments in a single mobile app. Termed a game-changer for the fintech industry, the UPI platform was leveraged by startups like Paynear and Freecharge, who tied up with banks to introduce their UPI apps. The sector also saw its largest ever M&A this September, when Naspers-backed PayU India acquired Citrus Pay for $130 million. But the biggest push was on November 8, when the government announced demonetisation. According to the government, the number of daily transactions through e-wallet services shot up by 300% in just a month.
Enterprise tech
Both Saas-based companies and product companies gained ground. The sector received $517 million in funding this year. Enterprise software maker Druva, for instance, raised $51 million in a funding round led by Sequoia and EDBI in October. Gurugram-based Knowlarity saw fresh investor interest with Dubai-based private equity fund Delta Partners Capital leading a $20 million in the cloud-based telephony company.
…And not so well
Some of the sectors that started 2016 with great promise are scrabbling to survive now
Foodtech
More than 200 startups shut this year and the biggest casualty was foodtech startups. The slowdown began last year, and the bleak funding scenario in 2016 made the going tougher. On-demand food delivery companies such as TinyOwl, iTiffin, Dazo, and SpoonJoy struggled for a few months amidst layoffs and a cash crunch before finally shutting shop this year. In December, Rocket Internet sold Foodpanda’s India operations to its rival Delivery Hero. Even startups with a big wallets, like Ola, which rolled out its food delivery service last year, shut that arm in May.
Groceries
The other big loss was to the on-demand grocery delivery sector. PepperTap, which was competing with BigBasket and Grofers and raised $40 million last year, announced its decision to pivot to an e-commerce logistics model. Ola joined the list when it shut down its Ola Store a year after launch. Flipkart shut down its grocery delivery division Nearbuy that was launched last October. Grofers laid off 10% of its employees and shut operations in nine cities.
