Hong Kong-based startup rating firm Oddup, which recently raised $6 million in Series A funding led by media conglomerate Bennett, Coleman & Co Ltd, entered India this week. Apart from rating startups by assigning them a score between 0 and 100, it also provides data that are of interest to angel investors, and venture capital and private equity firms. In an interview with VCCircle, Oddup’s co-founder and chief executive James Giancotti spoke about his outlook for Indian startups, the country's e-commerce sector and why the market, and not VCs, determine a company's valuation. Excerpts:
What is Oddup’s revenue model?
We charge for membership. We have two plans—one for $49 a month and another for $99 a month. We target startups that are between seed funding and Series A. Actually, beyond Series A, startups become like investors—they try to buy stakes in companies or acquire them. So, they also become potential clients.
That said, investors are our main target.
What are your criteria for rating startups? What is the objective?
I am not going to give you the secret sauce (laughs). We look at everything from the founder, location and team to the investor, industry and competitors. Not to mention the data. What is your app doing? Are you getting enough downloads? How many hits do you get? How many monthly active users do you have? We look at all kinds of data before we rate a startup. It is half machine learning and half manual analysis. We have analysts on the ground.
The one thing I always say is that it's not just your startup, but also your competitor. Ola, Didi and Grab, for example, do the same thing. It is the location that defines their success. There are a lot of different components we look at.
The objective is to give investors a detailed view of the health of a startup. We have ‘buy’, ‘hold’ and ‘sell’ ratings. The Oddup score changes every day.
How are you different from competitors?
Most investors want a global picture. They are looking at India, Cambodia and China at the same time. We try to give them a global perspective.
Our selling point is that we give them advice on when and where to buy or sell.
What kind of response are you getting from the Indian market?
We have already on-boarded around 300 startups from India. In the first five hours of the first day, we received 2,000-3,000 applications.
What are your expectations from India?
We don’t have any target in mind right now. We want to build our presence first. The initial focus will be on brand awareness.
Chinese investors are very interested in the India story. We want to help them by covering India better.
Can you elaborate?
Chinese startups' valuations are absurd, and most investors can’t afford to get in there. A lot of these investors see India as a booming destination for the next 10-15 years. Oddup shares that view.
What's your take on India's e-commerce market?
The future of companies like Flipkart is bright. Even though Snapdeal is going through a rough patch, it has become a billion-dollar company from nowhere. That is remarkable. But there are other sectors as well with tremendous potential, such as fin-tech and health-tech.
What do you think of the Flipkart-Snapdeal merger?
I feel Snapdeal is getting sold at a fair valuation, even though it's not a valuation the VCs would want it to be sold at. You see that with a lot of startups, including Snapchat. It had a huge launch, but now it is approaching a fair valuation. The market determines your valuation, not the VCs.
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