There are 960 million cellular devices in India, but the potential in the mobile market there is still enormous. The penetration rate in the country in February 2015 was 77%, while other countries, including Israel, have cellphone penetration rates of over 100%, because many people have more than one device.
India's huge potential is likely to prove a gold mine for startups developing services and features that can operate on cellular communications networks. That is the real goal of Mukesh Ambani, the wealthiest man in India with a $21 billion estimated personal worth, making him one of the world's 40 richest people, according to Forbes Magazine.
In late March, Bloomberg reported that Ambani was planning to look for startups that could provide value for Reliance Industries, an Indian holding company he owns, mainly in the telecommunications sector. Through its Reliance Jio subsidiary, the holding company is schedule to deploy India's first 4G network, which will reach 800 cities, by the end of the year, with an investment of $15 billion.
The network is likely to make the company India's leading cellular operator (it is currently the fourth largest) by connecting many Indians to a high-speed cellular communications network. The biggest problem, however, is what they will do on this network. Bloomberg reports that this is the reason why Ambani, through the GenNext investment fund he founded, wants to bring innovation to India and its cellular network from places like Europe, Silicon Valley, and Israel.
One of the ways to do this is through an accelerator operating a four-month program in Mumbai. As reported two weeks ago, two Israeli startups, eLoan, which has developed a social loans platform, and security company InQSec, have been accepted to the programs second class.
"We want to hook up to the Israeli ecosystem, and to discover more innovative companies that can enhance the value of the cellular network whose deployment we're completing right now," GenNext managing partner Vivek Rai Gupta, currently visiting Israel, said in "Globes" interview. "The network we're setting up is only a pipeline, and we're looking for interesting things through which we can provide value for our users in India."
"Education, entertainment, and content, too"
"It could be companies in the security, health, and educational sectors, and even entertainment and content," explains Reliance Industries senior VP Rajan Luthra, who is also visiting Israel. "The network will be the biggest in India, and as soon as it's set up, any service can be put on it."
Luthra said, "Companies like Amazon and Alibaba are successful because their customers are online. You can't build successful companies without users. Because up until now India hasn't had a cellular network with a sufficiently widespread deployment, it was hard for businesses to establish a digital presence. We're not a telecommunications company in the classical meaning of the term; we're a digital services company, but you can't provide digital medical services, for example, if you don't have an audience there."
Gupta and Luthra, who took part this week in an India-Israel forum at Tel Aviv University, and also participated in a meeting with Israeli President Reuven Rivlin, who is scheduled to visit India himself in the near future, are trying to explain the potential for Israel startups seeking to direct their products initially to the Indian market ahead of other markets, especially the US.
"There are 100-200 million potential customers here, and we're here in Israel to find suitable companies to provide innovative service to these customers. It could be an idea, a technology, or a product that is already commercial, and we want to search together for a model that will be relevant to the Indian market," Gupta explains.
Gupta and Luthra say that investing in Israeli startups is only the beginning of cooperation, and they want to create a bigger and more strategic way of providing value for the new Reliance network, and to the Indian holding company's other businesses, in the energy and retail fields, for example. The two are unwilling to disclose exact figures for their planned investment in relevant startups, but Gupta says, "After investing $15 billion in the new cellular network, investing a few million dollars more to bring value to this network is worthwhile for us." "Luthra adds, "There's no limit on the amount of the investment. The question is the value, capability, and synergy that the startup brings us."
Gabi Surujon, who represents GenNext in Israel, said, "This is not an investment for the purpose of making a financial return later. We're looking for companies in order to support and bring innovation to India. It's not just another venture capital fund for charging management fees and bringing investors a return. We're after the value that the companies bring."
According to Luthra, the companies will also profit. "Everybody's talking about the fact that entrepreneurs don't realize the need for innovation in India. Once you've succeeded and done it in a developing country like India, it will be easier to succeed in developed countries," he concludes."
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2015
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