The growing need for companies to provide technology-focussed, innovative solutions has resulted in this jump
This Delhi-based logistics company, which delivers online shopping orders, can do no wrong as far as the tech-focussed SoftBank Vision Fund, PE multinational Carlye Group and Chinese investment company Fosun are concerned. Their faith in Delhivery has helped the company become the most funded business-to-business (B2B) technology start-up so far this year, garnering $413 million.
The B2B tech sector certainly is hot, having garnered nearly $4,582.99 million in funding so far this year, a 28 per cent jump over 2018, according to data from Tracxn, a company that tracks start-ups.
The sector encompasses everything from enterprise applications, financial technology and artificial intelligence to education technology, health tech and the internet of things (IoT). Within this, enterprise applications (catering to business functions such as marketing, HR, sales), and enterprise infrastructure (servers and development tools needed to manage such applications) have seen the highest jump in investments this year.
Demand for solutions
The growing need for companies to provide technology-enabled, innovative solutions to consumers, quickly and without compromising on quality, has brought about this surge, said Ankur Pahwa, Partner and National Leader, E-commerce and Consumer Internet, Ernst and Young in an emailed response to BusinessLine.
With business requirements leaning more towards the digital expanse, organisations have increased their spending on technology that would help them better cater to clients’ demands and eventually, give them an edge over competitors.
This increased spending on digital transformation has pushed up demand for services offered by enterprise infrastructure start-ups, thereby helping them attract higher funding, according to Harsha Razdan, Partner and Head, Consumer Markets, Retail and Internet Business, KPMG.
Though funding for these sectors has jumped, the companies are still burning cash. Freshworks and Enzen, in fact, are the only two in the top 10 funded enterprise application B2B start-ups that have made a profit in FY18.
Building a platform and fulfilling the capability to support their pace of growth will take time, said Ramakrishnan Kalyanaraman, Senior Managing Director, Strategic Relationships, Spark Capital Advisors (India), a Chennai-based mid-market investment bank. He added, But the path to breaking even is relatively shorter for business-to-business companies.
Fear of cloud
With increasing digitisation, the industry is being shaped by technology that is changing the way consumers interact with companies and brands.
Does this indicate people have become more accepting of placing their data on the cloud?
“Absolutely,” said Hyther Nizam, Vice-President, Product Management at Zoho, an enterprise application firm. “These days, Zoho doesn’t get questions like, ‘Is my data safe? Do you have an on-premises version of your cloud software?’
Consumers have now become more aware about privacy, of where and how their data is being used.
Nizam said, “What used to be ‘why should I put my data on the cloud’ became ‘what are you doing to protect data’, and is now ‘Are you ISO 27001 and GDPR compliant?”