Concept Arbitrage: Summary Trends

I have written about specific entrepreneurial ventures, deals, markets, and trends in the Concept Arbitrage series over the last week. In this piece, I summarize the trends that I see. You can also read the relevant prior pieces in context.

(a) Produced & Consumed in India:

* Concept Arbitrage : Electronic Arts
* Concept Arbitrage : Netflix
* Concept Arbitrage : Travelocity
* Concept Arbitrage : Match.com
* Concept Arbitrage : Juniper

• Consumer is the early adopter in India’s technology market. This includes software, gadgets, internet services, and content. “Soft-good” e-commerce is, by far, the most compelling segment.
• Classic “hard-good” e-commerce is the notable exception to this trend, although efforts like Baazi.com (purchased by eBAY) has worked. The main hindrance is the postal system’s inadequacy, and those who venture into e-commerce that requires a physical delivery infrastructure, will need to use some overlay service of their own. This makes the barrier-to-entry significant.
• Digital photosharing is not on this list because digital cameras have not taken off in India yet.
• There is hardly any enterprise or SME technology market yet.
• I have also seen a digital payment deal and a shopping deal, which I am not as convinced about from a timing point-of-view.
• There is also an effort to do a telecom equipment play (Tejas) which is more an exception bet than a broader trend.

(b) Produced in India, Consumed Abroad:

* Concept Arbitrage : Infosys
* Concept Arbitrage : Manufacturing in China
* Concept Arbitrage : Sylvan

• The industry has gained momentum via the IT & IT Enabled BPO Services markets.
• Now, new opportunities for labor arbitrage are emerging in Tutoring, Animation, and other areas. Those that have not yet seen traction could be Psychological & Spiritual Counselling, Memoir Writing (attached to the numerous digital photo and family geneology offerings in the US), Virtual Companionship (for older people), etc.
• The US Small-Medium Enterprise market is a trillion dollar eco-system that has hardly been able to leverage Indian IT / ITeS so far. This could be the next big market for India to crack, especially by leveraging its Telemarketing core competency, which is essential to build a channel to sell low ASP products and services.

In later writings, I will discuss the availability of startup funds in India in more detail from entrepreneurs’ points of view, as well as availability of fundable deals from investors’ points of view. There is a clear shortage of seed stage investors, and an excess of later-stage funds. My question is, is there also a shortage of fundable early-stage deals / entrepreneurs?

This segment is a part in the series : Concept Arbitrage