India’s Startup Mafia 2.0: Oyo, Ola, Udaan lead the wave of entrepreneurship; more women logging out of tech jobs

Indian Startup Mafia 2.0: How former employees of Oyo, Ola, Udaan and others are creating a new wave of internet enterprise



India has emerged as the world's third-largest startup ecosystem, with hundreds of new ventures being launched every year. But what is the secret behind this entrepreneurial boom? One of the key factors is the talent pool of former employees from some of India's biggest unicorns who have left to start up on their own.

These entrepreneurs, who have all raised venture funding, were earlier employed at companies such as Zomato, Zoho, Freshworks, Paytm, Citrus Pay, Snapdeal, Swiggy, Udaan, Oyo and Ola, according to data exclusively analysed by Longhouse Consulting for ET. Drawing on a record inflow of venture capital in the past decade, 297 founders have set up some 253 startups, igniting talk of a new-look “startup mafia,” as such cohorts of entrepreneurs are termed in industry parlance.

The term ‘mafia’ for startup executives who go on to launch their own ventures draws from the famous ‘PayPal Mafia’ moniker, which was used to describe former employees of the payments platform who became entrepreneurs. Some of the notable members of the PayPal Mafia include Elon Musk (Tesla, SpaceX), Peter Thiel (Founders Fund), Reid Hoffman (LinkedIn), Max Levchin (Affirm) and Chad Hurley (YouTube).

Similarly, India's Startup Mafia 2.0 has spawned some of the most innovative and successful ventures in sectors such as fintech, SaaS, ecommerce, edtech and social media. For example:

- Jitendra Gupta, a fintech veteran who founded Citrus Pay and served as the MD of PayU in India, launched Jupiter, a neobanking platform for millennials.
- Amit Lakhotia, who used his learnings from fintech major Paytm to start Park+, a car parking startup that uses AI and IoT to solve urban mobility problems.
- Arvind Parthiban and Jayakumar K, who leveraged their experience at Zoho and Freshworks to start SuperOps.ai, a professional services automation startup that helps MSPs and IT service providers manage their clients.
- Ragini Das and Anand Sinha, who put their six-year stint at Zomato to good use by setting up Leap.Club, a women's professional networking startup that offers mentorship, career guidance and exclusive benefits.

These are just a few examples of how former employees of India's leading startups have become entrepreneurs themselves. The list also includes founders of well-known startups such as Cred (Kunal Shah), Meesho (Vidit Aatrey), BharatPe (Ashneer Grover), Khatabook (Ravish Naresh) and Groww (Lalit Keshre), among others.

What drives these entrepreneurs to leave their cushy jobs and take the plunge into the uncertain world of startups? According to Nitin Gupta, founder and chief executive of Uni Cards, a fintech platform that offers credit cards with flexible repayment options, there are two main reasons: deep insights and strong networks.

“For any business, you need deep insights, and (startup) mafia come out of well-established businesses because not only do they get a vantage point on newer opportunities but also find colleagues with whom they can partner to pursue these new opportunities,” he said.

The scale at which Indian internet startups operated in the 2015-16 era helped build a base of important skills in executives employed at such ventures. They learned how to solve complex and large problems for a massive target audience, managing millions of transactions and customers. They also developed a culture of innovation and experimentation that enabled them to spot gaps in the market and create solutions for them.

Another advantage that these entrepreneurs have is their access to a network of mentors, investors and peers who can support them in their journey. Many of them have received funding from their former bosses or colleagues who have turned angel investors or venture capitalists. For instance:

- Ritesh Agarwal, founder and CEO of Oyo Rooms, has backed startups such as Innov8 (co-working spaces), Acko (insurance) and Bounce (bike rentals).
- Bhavish Aggarwal and Ankit Bhati, co-founders of Ola Cabs, have invested in startups such as Vogo (scooter rentals), Avail Finance (lending) and Hapramp (social media).
- Sujeet Kumar, Vaibhav Gupta and Amod Malviya, co-founders of Udaan, have backed startups such as Urban Company (home services), Bijnis (B2B fashion platform) and DealShare (social commerce).
- Girish Mathrubootham, founder and CEO of Freshworks, has supported startups such as Whatfix (digital adoption), Chargebee (subscription billing) and Verloop.io (conversational AI).

These investors not only provide capital but also mentorship, guidance and connections to the budding entrepreneurs. They also help create a positive feedback loop for the ecosystem, as successful exits and IPOs generate more wealth and confidence for the next generation of founders.

India's Startup Mafia 2.0 is a testament to the maturity and diversity of the country's startup landscape. It shows that India has a deep pool of talent that can create world-class products and services for a global audience. It also reflects the spirit of collaboration and innovation that drives the Indian startup community. As more and more former employees of unicorns turn entrepreneurs, India's Startup Mafia 2.0 is set to grow bigger and stronger in the coming years.


Challenges and Opportunities for Indian Startups

Despite the rapid growth of the Indian startup ecosystem, there are still challenges that need to be addressed. One of the major challenges is the lack of access to funding for early-stage companies. According to the Economic Survey Report 2022-23, only 0.6% of startups received funding from angel investors or venture capitalists in 2022. The majority of startups rely on their own savings, family and friends, or bank loans to finance their operations. This limits their ability to scale up and compete with global players.

Another challenge is the revenue generation struggle that many startups face. According to a report by Nasscom, only 26% of startups were profitable or had broken even in 2021. The rest were either incurring losses or had no revenues at all. This can be attributed to various factors such as high customer acquisition costs, low retention rates, intense competition, and regulatory uncertainties.

A third challenge is the lack of access to supportive infrastructure such as talent, mentors, networks, and markets. While India has a large pool of engineers and developers, there is a shortage of skilled professionals in domains such as product management, design, marketing, and sales. Moreover, many startups struggle to find mentors who can guide them through the various stages of growth and provide feedback and advice. Furthermore, many startups lack access to networks that can help them connect with potential customers, partners, and investors. Lastly, many startups face difficulties in reaching out to new markets, both domestic and international, due to geographical, cultural, and regulatory barriers.

However, these challenges also present opportunities for innovation and collaboration. For instance, some startups are leveraging alternative sources of funding such as crowdfunding platforms, corporate venture arms, and government schemes. Some startups are also adopting innovative business models such as subscription-based services, freemium offerings, and platform-based solutions to generate revenues and retain customers. Additionally, some startups are tapping into the potential of emerging technologies such as artificial intelligence (AI), blockchain, internet of things (IoT), and cloud computing to create differentiated products and services that solve real-world problems.

Moreover, some startups are collaborating with each other as well as with other stakeholders such as corporates, academia, and government to create synergies and overcome challenges. For example:

- Some startups are forming alliances and partnerships with other startups to share resources, expertise, and customer bases. For instance, Zomato partnered with Grofers to offer grocery delivery services during the Covid-19 lockdown.
- Some startups are working with corporates to access their distribution channels, customer base, and technology platforms. For instance, Razorpay partnered with Mastercard to enable international payments for Indian businesses.
- Some startups are engaging with academia to access research facilities, talent pool, and innovation labs. For instance, Unacademy collaborated with IIT Delhi to launch an online course on artificial intelligence for school students.
- Some startups are partnering with government agencies to leverage their policies, schemes, and initiatives. For instance, Aarogya Setu app was developed by a team of volunteers from the private sector along with the National Informatics Centre (NIC).

These examples show how Indian startups are overcoming their challenges and creating opportunities for themselves and others. They also demonstrate how the Indian startup ecosystem is becoming more collaborative and inclusive.

Call to Action

India's Startup Mafia 2.0 is a remarkable story of innovation and entrepreneurship that deserves to be celebrated and supported. These entrepreneurs have shown the world that India is not just a market but also a source of talent and ideas. They have also shown the way for aspiring entrepreneurs who want to make a difference in the world.

If you are one of them, then this is the best time to join the startup ecosystem. There are many opportunities and resources available for you to start your own venture or join an existing one. You can also learn from the experiences and insights of the successful founders and investors who have been there and done that.

The Indian startup ecosystem is growing and evolving every day. It is a dynamic and exciting space that offers many challenges and rewards. It is also a space that needs your contribution and participation. You can be part of the change that you want to see in the world.

So, what are you waiting for? Join India's Startup Mafia 2.0 today and unleash your potential!

Conclusion

India's Startup Mafia 2.0 is a powerful force that is driving the country's digital transformation. These entrepreneurs have shown remarkable resilience and adaptability in the face of various challenges. They have also contributed to the social and economic development of the country by creating jobs, solving problems, and generating wealth.

The Indian startup ecosystem has come a long way in the last decade but there is still room for improvement. There is a need for more supportive policies and regulations that can foster innovation and entrepreneurship. There is also a need for more investment and infrastructure that can enable startups to scale up and go global. Lastly, there is a need for more collaboration and cooperation among all stakeholders that can create a vibrant and sustainable startup ecosystem.

India's Startup Mafia 2.0 has shown what is possible when talented individuals pursue their dreams with passion and purpose. They have inspired many others to follow their footsteps and join the startup revolution. As India aims to become a $5 trillion economy by 2025, the role of these entrepreneurs will be crucial in achieving this vision.

Source: 

(2) The Indian Startup Ecosystem: Drivers, Challenges and Pillars of ... - ORF. https://www.orfonline.org/wp-content/uploads/2019/09/ORF_Occasional_Paper_210_Startups.pdf.
(3) The Indian startup ecosystem: Drivers, challenges and pillars of .... https://www.orfonline.org/research/the-indian-startup-ecosystem-drivers-challenges-and-pillars-of-support-55387/.
(6) India’s Startup Mafia 2.0: Oyo, Ola, Udaan spawn most number of .... https://longhouse.in/news/indias-startup-mafia-2-0-oyo-ola-udaan-spawn-most-number-of-entrepreneurs/.
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