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It's been nothing less than a celebration for India's fast-growing new technology sectors over the past couple of years. From towering valuations to swelling user-bases and untiring rounds of funding, software product startups and e-commerce companies have given investors, consumers and professionals multiple reasons to cheer.
The past two weeks, however, were different.
Conversations in the country's silicon city, Bengaluru, which had so far revolved around all the good news about young companies and their founders, touched upon issues of “awful” experiences with internet consumer firms, doubts over credibility of investors, and arrogance of young entrepreneurs. In hushed tones, several prominent leaders in the 'ecosystem' took sides.
Among other things, the spat between real estate portal Housing.com's CEO Rahul Yadav and Sequoia MD Shailendra Singh remained a topic of heated discussions. The incident took a new turn last week with Bennett, Coleman & Co, the holding company of Times Group, sending a legal notice to Housing.com and its board, seeking an unconditional apology and Rs 100 crore ($16 million) in damages.
BCCL notice to the online real estate portal's management claimed that an email to employees from Yadav was defamatory to The Economic Times. According to a report in V C Circle, in his email, Yadav had alleged that the media group, which has competing real estate interests through MagicBricks.com, was out to "malign" Housing.com. The email went on to note that MagicBricks was looking to raise funding.
BCCL notice to the online real estate portal's management claimed that an email to employees from Yadav was defamatory to The Economic Times. According to a report in V C Circle, in his email, Yadav had alleged that the media group, which has competing real estate interests through MagicBricks.com, was out to "malign" Housing.com. The email went on to note that MagicBricks was looking to raise funding.
Initially several observers had raised issues over the tone of Yadav's email to Singh (where the entrepreneur used words like 'dude', 'brainwashing', 'inhumane' and 'unethical'), which was leaked on question-and-answer website Quora. However, last week, a prominent angel investor came out in full support of Yadav while speaking to a group of journalists on the sidelines of an event. Requesting anonymity, he spoke of investors “arm twisting” entrepreneurs and the need for “empowering founding teams”.
A story published by Mint newspaper, titled “Behind TaxiForSure's sellout”, fueled such conversations further as it brought to light reasons like “oversized ambition”, “cash burn”, “over-reliance on venture capital funds” and the “times of breaking news media” as the major factors behind one of the biggest acquisition in the sector.
Just a few days into this incident, conversations moved to a likely bubble in the e-commerce space with reports of China's Alibaba distancing itself from a possible investment in Snapdeal over differences in valuation for fresh funding emerging. According to sources, Snapdeal was seeking a valuation of $6 billion-$7 billion for fresh funds worth at least $600 million. Reports, however, said Alibaba was valuing Snapdeal in the range of $4-5 billion.
Even as believers came out in support for the online retail industry, many agreed there was some “froth” appearing in the space, if not a full-blown bubble.
While these were isolated incidents and may not be reflective of a trend in the sector, the changing tone of conversations appears noteworthy. Another multi-million-dollar fund raising may perhaps bring all the cheer back. But that remains to be seen.
