Industry 5.0 Startups & Indian PSUs: Accel's Insights

New Delhi, Jul 10 (PTI) Indian PSUs open to adopting digital solutions are emerging as a promising customer base for industry 5.0 startups that are at the cusp of significant opportunities, says Barath Shankar Subramanian, partner at leading venture capital firm Accel.

With India emerging as a key manufacturing hub, startups have a golden opportunity to innovate alongside large enterprises, Subramanian told PTI.

“This is a pivotal moment for Indian startups to seize their advantage on the global stage. Indian startups stand on the brink of an Industry 5.0 revolution, driven by global demand for resilient and diversified supply chains,” he said.

Put simply, Industry 5.0 is the new buzzword in industrialisation and automation with a combination of humans working alongside technology and AI leading to highly-efficient workplace outcomes.

In the realm of enterprise software, particularly within manufacturing and industrial sectors, Indian startups find themselves on the cusp of "significant opportunities", according to Subramanian.

Unlike their Western counterparts, these startups navigate a landscape relatively unburdened by legacy systems. This absence not only streamlines their go-to-market strategy but also fosters adaptability, allowing for innovative solutions to gain traction swiftly, Subramanian said.

“Notably, Indian public sector undertakings are emerging as a promising customer base, with their growing openness to adopting digital solutions, as evidenced by the substantial average contract values reported by established players,” he added.

Leveraging domestic opportunities, Subramanian pointed out, can help Industry 5.0 startups penetrate international markets as well.

The difference in average contract values (ACVs) between Indian and US/EU customers is still quite large, with Indian ACVs being one-third or one-fourth of those in the West.

Yet, by focusing on building strong relationships and demonstrating value to Indian businesses first, startups can use this success to expand into markets such as the Middle East, EU, and Southeast Asia where contract values are much higher, Subramanian said.

His advice to founders: identify large corporations where chief data officers or chief information officers wield significant authority and resources.

"The CXOs can help startups validate problem statements, and participate in co-creating the product,” he said.

Entering the global market in the second or third year, particularly through Indian customers with international presence, offers a faster route for expansion compared to entering entirely new markets and acquiring customers, Subramanian emphasised.

Startups must recognise that founder-led sales are effective up to USD 5-10 million in revenue, Subramanian said, adding that establishing a capable team becomes imperative to sustain growth beyond this threshold.

Startups are already showing fantastic applications in Industry 5.0, the Accel partner said, citing Detect Technologies and Zetwerk as examples.

"Detect recognised that humans can't catch safety violations and potential hazards every time, as the human eye can only perceive so much. They combined the efficiency of digital solutions, like cameras and monitoring algorithms, with real-time scanning for deviations, safety violations, and potentially fatal situations" he said.

These systems trigger alerts for timely interventions, significantly improving workplace safety. "Detect is helping companies like Vedanta and Tata Steel stay on top of safety and optimisation," Subramanian said.

Zetwerk, in his view, has in so many ways revolutionised the business to business manufacturing ecosystem. It is a universal manufacturing network that doesn't just optimise production but also slashes costs and streamlines supplier operations.

"Our seed-stage Atoms startups building in Industry 5.0 - Spintly and Asets - are already driving significant impact. Spintly offers a frictionless, fully wireless, smartphone-based physical access control solution for commercial and residential buildings."

"They already have over 250,000 users on the platform, are working with large global partners like JLL, Anarock, and Brookfield Properties, and global smart infrastructure companies like Cisco Meraki and others to offer integrated solutions to enterprise customers," he added.

Asets has launched an AI-powered, cloud-based multidisciplinary CAD, simulation and engineering design platform that helps Engineering Procurement Construction (EPC) and end-owner companies accelerate their early-stage engineering by 10x.

Their customers benefit from the rapid deployment of engineering resources, lowering effort time and costs related to engineering projects, Subramanian said.