My three bets for 2016: education, lending, video

Sid Talwar
4th January 2016

Here’s a prediction: tech companies will raise more private money than IPOs. And a lot of that money will go towards (re)educating consumers, giving them access to debt for anything they want, and providing them a whole lot of video.

There’s lots of talk of venture funding slowing down in India this year. And that’s possibly true. But that doesn’t mean it’s going to come to a grinding halt. Ecommerce alone is estimated to cross US$36 billion during 2016. And since we all know these companies don’t make a profit, cash will have to come from somewhere. Here’s a prediction: in 2016, tech companies will raise more private money than IPOs will raise in India. And I believe a lot of that money could go towards (re)educating consumers, giving them access to debt for anything they want, and providing them a whole lot of video.

Here’s where I think a good chunk of money will flow in the consumer-based technology industry this year


In India, education is failing our students and it’s failing our potential workforce. Earlier this year, The Pew Research Center questioned the existence of an Indian middle class. The article showcased how China’s middle class had blossomed from 2001 to 2011, creating massive disposable income. In India, unfortunately, this hasn’t happened. Instead, the really really poor people are now just poor people – still with little to no disposable income.

The article argued that this was mainly because of economic reforms but I would add education to this as well. We lack quality education in India. Scientist G Madhavan Nair, former chairman of Indian Space Research Organization (ISRO), compared Indian schools to factories recently. And he’s right. The majority of graduates in India aren’t qualified to get a job. And that’s a huge problem to try and solve. We need a system that prepares our students to obtain and retain employment. We need to change the way we create content, train our teachers, communicate with parents, distribute content, communicate with students, and certify graduates. And in each of these areas, technology will need to play a significant role.

I had thought that edtech was going to have a bigger year than it did in 2015. At the time, I didn’t realize how difficult it was going to be to prove product/market fit. Disrupting education is complicated. Just ask anyone trying to do it.

Two important variables that companies need in order to raise large sums of money are a product/market fit and subsequently proving that this “fit” can lead to monetization. Unfortunately, in education, proving a product/market fit takes longer than other industries. I mentioned this in an article recently. The transaction cycle for an educational course is significantly longer than almost any other transaction. For example, for test prep companies, consumers have to complete the course, take an exam, and then fulfill their end goal (like getting into college). And as long as this takes in the West, it takes even longer in India because we prepare for exams longer.

And once the startup has proven that their product works, they need to show that people will pay for it. Unfortunately, only then will serious money come behind the model. And for edtech startups, it’s even more important to prove this out because unlike other spaces, there aren’t comparable models in the West that investors can look at and use as a guide.

Luckily, I think a few companies have now done this. They’ve been spending small amounts of money testing the market. And it’s taken them a couple of years but I think they’re in a position to raise the big bucks. And once a few companies do large raises, more money will flow to the smaller ones. And that’s really exciting.

So where will money flow in 2016? I expect significant investment in test prep (not only IIT, but vocational test prep such as banking exams, CA exams and the like), local language content distribution (Khan Academy entering the market should excite others), and tutoring. I think we’re a little ways away from MOOCs starting in India. And as Richard Levin said some time ago, we’re a little ways away from truly disrupting traditional education.

Disclaimer: As a fund, Lightbox has invested in Embibe.

P2P lending

Last year, I predicted B2C lending would get a lot of funding. Although I’m still excited about their prospects, I see more money going into peer-to-peer lending in 2016. (And especially since the RBI now is looking at preparing guidelines for it.)

Why? Because the borrowing process for the average consumer sucks (and there are a whole lot more people than companies). It’s a harrowing experience that takes too long, doesn’t solve the problems facing millennial consumers (again the largest subset of the population and the borrowers of the future) and is governed by the rules and regulations of a handful of institutions that refuse to adapt.

Add to that, the new generation of Indian consumers are okay with debt, are growing up transacting online, and don’t link trust solely with large banks.

The key for success in this area will hinge on the “experience” of getting and repaying loans. Which is why traditional banks will have a hard time. For all the good they’ve done in India, they have never placed customer experience or their evolving needs at the forefront. Tech platforms can and will do it. I will have access to a loan to buy a pair of shoes as easily as I had access to buy the pair of shoes in the first place.

The other space in fintech I see picking up is crowdfunding (more on this later in the year). Not sure I would bet it will happen in 2016 or not, but long term in India, I see the largest fintech companies being built around both crowdfunding and P2P. Just that regulations need to keep up. And I think they will. Taxi aggregators and ecommerce companies forced regulation into place. I’m sure large funded companies in fintech will also figure out compliance in due course.


I was sitting with the team from TVF this past December and they said something that stuck: “no one in India is creating content at scale for Indians under 30” – the largest segment of the population in India. There is more foreign content available for this segment of the population than Indian. That’s ridiculous. And it’s going to change fast.

Last year, I mentioned original content is going to explode. And although it didn’t receive as much funding as other sectors, it really did take off. And the quality of their content improved dramatically. And went viral.

Over the past year, I’ve spent some more time in this space and I’m going to predict something similar again. But this time more specifically. This year is going to be a break out year for funding of video-based content. And the winners are going to be companies that combine their own content with user-generated content well.

The reason is simple – they are addressing a population that has an insatiable desire for relatable visual content, has the technology to watch it, and isn’t getting it from anywhere else because traditional media isn’t addressing their needs.

Over time, the need to provide user-generated video content is going to be a large part of any video platform’s success. I’m not sure how you scale without it. But I don’t think that’s what going to drive funding in 2016.

Having said that, here’s what I’m battling with as an investor. As much as I’m convinced there’s a huge need here, I haven’t come to terms with how to evaluate companies in this space yet. For example, when it comes to content creation, is there a cookie cutter approach to creating “hits”? Or do you have to build a culture within the organization to keep creating quality content? And therefore, is it very founder dependent? As companies begin to expand, will they be able to create hits outside of their core genre – like comedy? If you become genre-agnostic, do you eventually lose your core audience? Should user generated content be curated? I’m still trying to figure it out. I’m sure I’ll get it eventually. I just hope it’s not too late!