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Indian Internet Businesses set for an Upswing

Gaurav Aggarwal
Founder & CEO-Savaari
Thursday, January 31, 2013
Gaurav Aggarwal
Savaari Car Rentals Pvt Ltd is an online chauffeur driven car Rental Company that currently services 60 cities across India. Founded in 2006 the company has raised $1 million in its Series A funding from Inventus capital.

To analyze how Internet businesses growth will be in the next couple of years, we should look at two aspects. The first one, how is the trend going to be in terms of number of people accessing the internet (internet penetration) and the second being the increase in the number of businesses using online as a channel.

While the government is pushing for over 1200 percent increase in broadband connects in next five years, it will ensure that more people have faster access to internet. The increase in the number of smart phone users accessing the internet is even more exciting. Though the PC growth is on the decline, it is the mobile growth that is more than offsetting it. In fact, around half of the access of Internet in India happens through smart phones already and the smart phones are increasing by 10 percent each quarter. Given that 94 percent of the smart phone users access internet through their smart phones and 60 percent of them have made an online purchase, there will be phenomenal increase in the number of people accessing Internet and making transactions. And this growth will not be restricted to just metros as 55 percent of the daily mobile internet users are outside of the top eight metros. This is all inclusive of India's growth story which we see at Savaari Car Rentals too where 60 percent of business comes from tier two and tier three cities. With the push for 3G and entry of 4G, the coming years will offer even more potential for internet businesses.

The number of businesses using online as a channel and their offerings are going to see a manifold increase in the coming years. Though more and more existing businesses are getting online, it is the increase in the number of entrepreneurs that will bring newer and larger number of products and services online. Given 90 percent of start-ups often die prematurely due to lack of funding, how many new internet businesses can happen and thrive will depend on the availability of Seed and Angel funding. 2012 saw Seed and Angel investment deals grow around 50 percent and the accelerators and incubators saw a boom in increasing to 15 from 2 a year before. These definitely will empower many entrepreneurs in putting better products and services online. With data analytics becoming better each day, internet businesses will have even better insights to reach out to their target audience at the right time and right place.

With both the number of users online and the number of internet businesses and their offerings set to increase manifolds, internet businesses are going to see tremendous growth in the coming years. The projections that by 2015 internet users will triple in India to 350 million and internet contributions to India's GDP even more than tripled to $100 billion look pretty reasonable. Online payments' mechanisms and current regulations regarding them are a major bottleneck. While consumer security has to be protected, the poorly implemented 2 factor authentication for 3-D secure tor the web and the One Time Password for mobile based payments make the payment process inconvenient. In fact, if the friction less 1-click purchasing can be made possible, it will further fuel the internet businesses growth especially for those of e-commerce businesses.
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