India is home to the third largest startup ecosystem in the world. The number of  DPIIT– recognized startups stands at a colossal 1,17,254 as on 31st December 2023 – an impressive 40 percentage growth from the previous year! While these numbers speak of a flourishing ecosystem, there is a contrasting reality. As much as 9 out of 10 startups fail globally, according to various reports. In India, 80-90 percent of the startups do not make it past the first five years! 

Yet, India has some of the glorious success stories from the startup community. So, what really makes a startup tick? It’s a ‘billion-dollar’ question, considering that startups in India collectively raise a few billion dollars in funding every year. 

To understand the nuances of building a successful startup, CIO Dimension caught up with this young entrepreneur in Bengaluru – the startup capital of India. Yuvaraj Thanikachalam, Founder & CEO of Kreatorverse – a startup venture studio, is anything but a typical Bengaluru startup founder. His company is on a mission to guide promising startups through the often-treacherous path to success and profitability. 

Building on Web3 for the future

Yuvaraj emphasizes that startups need more than just a good product and funding to thrive in the market.

“New venture building exercise requires experimental infrastructure (lab), scientific methodology, entrepreneurial (tech & business savvy) talent, and seed capital. It is super rare to find all of them in one place. Building such an organization for a new venture founder or investor takes years of investment. It is a real big problem for Indian startup founders and investors,” says Yuvaraj. 

A good product is often just the beginning; enduring in a dynamic market is the real test for startups, he observes. 

The venture studio works with early stage startups and serial entrepreneurs to help them build products that stay relevant for a sustained period. With a strong foundation in finance and blockchain, Yuvaraj believes Web3 is the future. So far, Kreatorverse has worked with over 20 startups to build Web3 software products by applying proven methodologies and technologies. The company’s clientele include fintech startups, neobanks, digital banks, private wealth management firms, alternate investment companies, and social media startups. 

All of these startups in the financial services sector stand to benefit hugely with Web3. The primary socio-economic impact pursued by fintech is financial inclusion. Inclusive, neutral, democratic internet infrastructure is a must for global financial inclusion, which is a sustainable development goal. Decentralized finance (DeFi) and real-world assets-backed tokenized economies are the best ways to do it, Yuvaraj says. 

The right blend of technology and business 

So, is Kreatorverse providing just the “staffing” for these startups? Yuvaraj maintains that the company goes much beyond that. Building a product requires more than just the software development understanding. It’s not just about the programming tools and skills. It’s about empathy for the customer and business. Software is not a standalone entity in a tech-first venture, it’s the core of the business, he adds. 

“Just imagine, customers have no incentives for staying with a product for long. Their decisions are influenced strongly by the experience they have with a software or an app. Hence, building each customer touchpoints with experiential value is critical for startups. And that experience is the differentiation for a customer to choose a product. We help startups create this differentiation.” 

The company optimizes innovation outcomes by blending business acumen with technological expertise. They establish a solid foundation through design thinking, innovation frameworks, and diverse problem-solving approaches. This method drives innovation and enables the creation of distinctive products within their studio. Kreatorverse guides businesses from concept to proof of value within 4 to 6 months, says Yuvaraj. 

He observes that Web3 startup co-founders often navigate regulatory and compliance landscapes blindly due to their limited understanding of traditional finance and capital markets. Kreatorverse also offers an added advantage by combining expertise in both Web3 and traditional markets.

“Our goal is to minimize the risk of failure and significantly increasing the rate of business success for startups,” sums up Yuvaraj. 

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According to Forrester’s The Top 10 Emerging Technologies In 2023 report, generative AI will begin to deliver significant return on investment for most enterprises in the next two to four years. To fully benefit from generative AI’s applications, firms will need to navigate its risks, including trustworthiness, evolving regulations, and potential intellectual property complications. 

Despite these risks, generative AI remains a top emerging technology to invest in due to its breadth of impact and ability to accelerate many other top emerging technologies, including autonomous workplace assistants (AWAs) and conversational AI. 

Conversational AI, enabled by generative AI, is the second top emerging technology that will deliver the fastest ROI. E-commerce, B2B sales, and customer service functions will see the biggest impacts from conversational AI. AWAs will also deliver near-term benefits for most firms, as they are poised today to take over increasingly complex but repetitive human tasks. 

According to Forrester, additional emerging technologies that will offer significant benefits for firms in two to four years include: 

• Decentralized Digital Identity (DDID). DDID will ultimately replace physical proof-of-identity documents, with financial services, government, and education likely to benefit most. Blockchains and zero-knowledge proofs will play a substantial role in this slow transformation. 
• Edge Intelligence. Turning massive data sets produced by computer vision and sensors into real-time action requires more intelligent software running at the edge of business and consumer networks. Customer digital experiences will benefit from edge intelligence the most. 
• Explainable AI (XAI). To be useful, new AI software needs to be trustworthy, which means it must be explainable. While XAI capabilities are still immature, this technology will see its greatest utilization in highly regulated and high-risk use cases in the finance and healthcare sectors. 
• TuringBots. There has been a dramatic acceleration in the number and capability of TuringBots, AI-powered software robots that help developers build applications. In two to four years, a substantial part of enterprise applications could be generated by this technology. 

Some emerging technologies that will take at least five years to deliver tangible value for enterprises include: 

• Extended Reality (XR). Only 20% of US online adults are comfortable using virtual reality or augmented reality to consume information, which means that XR will take more years of hardware innovation and consumer adoption.  
• Web3. Despite its promise of a new, more democratic web, Web3 remains a self-referencing ecosystem of financial engineering fraught with risk and scandal.
• Zero Trust Edge (ZTE). ZTE embeds Zero Trust security principles into software-defined networks that are deployed to offices and physical spaces but controlled centrally via the cloud.

“While many emerging technologies show great promise, it is imperative for tech leaders to assess whether these technologies can deliver value and if their business can navigate their associated risks,” said Brian Hopkins, Forrester VP, emerging technology portfolio. “This means side-stepping misinformation, mitigating poor decisions driven by a fear of missing out, and narrowing focus from the shiny objects down to the few technologies that have real potential. Firms must also ensure that their time frame for implementing these technologies is commensurate with their overall risk/reward tolerance.” 

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Worldwide end-user spending on public cloud services is forecast to grow 21.7% to total $597.3 billion in 2023, up from $491 billion in 2022, according to the latest forecast from Gartner. Cloud computing is driving the next phase of digital business, as organizations pursue disruption through emerging technologies like generative artificial intelligence (AI), Web3 and the metaverse.

“Hyperscale cloud providers are driving the cloud agenda,” said Sid Nag, Vice President Analyst at Gartner. “Organizations today view cloud as a highly strategic platform for digital transformation, which is requiring cloud providers to offer more sophisticated capabilities as the competition for digital services heats up.”

“For example, generative AI is supported by large language models (LLMs), which require powerful and highly scalable computing capabilities to process data in real-time,” added Nag. “Cloud offers the perfect solution and platform. It is no coincidence that the key players in the generative AI race are cloud hyperscalers.”

All segments of the cloud market are expected see growth in 2023. Infrastructure-as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2023 at 30.9%, followed by platform-as-a-service (PaaS) at 24.1% (see Table 1).

Table 1. Worldwide Public Cloud Services End-User Spending Forecast (Millions of U.S. Dollars)

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service
Note: Totals may not add up due to rounding.
Source: Gartner (April 2023)

Gartner predicts that by 2026, 75% of organizations will adopt a digital transformation model predicated on cloud as the fundamental underlying platform. 

“The next phase of IaaS growth will be driven by customer experience, digital and business outcomes and the virtual-first world,” said Nag. “Emerging technologies that help businesses interact more closely and in real time with their customers, such as chatbots and digital twins, are reliant upon cloud infrastructure and platform services to meet growing demands for compute and storage power.”

While cloud infrastructure and platform services are driving the highest spending growth, SaaS remains the largest segment of the cloud market by end-user spending. SaaS spending is projected to grow 17.9% to total $197 billion in 2023.

“The technology substrate of cloud computing is firmly dominated by the hyperscalers, but leadership of the business application layer is more fragmented,” said Nag. “Providers are facing demands to redesign SaaS offerings for increased productivity, leveraging cloud-native capabilities, embedded AI and composability – particularly as budgets are increasingly driven and owned by business technologists. This change will ignite a wave of innovation and replacement in the cloud platform and application markets.”

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Web 3.0 has been hailed as the future of Internet. Making a case for Web 3.0, Ethereum co-founder Gavin Wood once said: “Centralization is not socially tenable long-term, and government is too clumsy to fix things,” while calling the current web a “big baby” which “has grown old without growing up”. 

Web3 is considered to be a disruptor in that sense, which marks a shift away from large platforms that centralized control. With its core focus on decentralization and blockchain technology, Web 3.0 or simply Web3 promises to democratize the internet. “Web3 innovations will take the internet into new realms and give rise to applications not previously possible,” said Avivah Litan, Distinguished VP Analyst at Gartner. 

Globally, Web 3 market has been booming, with the Web3 blockchain technology sector estimated to surpass six trillion dollars and continue its growth at a CAGR of 44.6% from 2023 to 2030 (Market Research Future). Closer home in India, Web3 received $30.5 Bn of VC funding in 2021 alone, and over $14.5 Bn in just Q1 of 2022, led by investments in DeFi and NFTs, according to Nasscom. The association estimates that there are more than 450 Web3 startups in India, as of H12022. 

While figures certainly paint a positive picture, skepticism towards Web3 has been high in the recent past. Pundits like Peter Schiff has implied that cryptocurrencies, which is one of the building blocks of web 3, will extinct. 

Nevertheless, experts argue that it’s too early to predict the end of this revolutionary technology. “This industry will not be defined by speculative booms and busts but instead by what it is built on: revolutionary technology that will eventually touch all of our corporations, governments and individual lives,” wrote Jordan Calinoff, VP, Strategy and Revenue at Horizen Labs in a blog for Nasdaq. He believes that 2023 will see more Web3 enterprise adoption. 

Experts also re-emphasize the fact the Web3 is not crypto and the potential of this technology should not be decided by the volatile nature of cryptocurrencies. Interestingly, the Indian start-up ecosystem that focuses on Web3 are in fact focusing less on cryptocurrency trading. 

A Nasscom report says that Indian startups are instead focusing on building diverse solutions across major application areas such as finance, entertainment, infrastructure and decentralized communities. Non-fungible Token (NFT) and Metaverse are the top horizontal use cases that are seeing faster adoption at this stage. 

In the entertainment sector, for instance, startups are combining NFTs and gaming to offer whole new experiences to consumers. In the finance sector, web3 and smart contracts have already made waves in the form of DeFi. 

Web3 will however need to overcome regulatory and privacy challenges and evolve into a more seamless technology that can offer holistic customer experience. Security and fraud will emerge as other major concerns. But as with any disruptive technology, Web3 too holds the potential to transform industries and businesses.

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