ET BureauIndian entrepreneurs are beginning to think differently about failure and they are more willing to embrace the lessons from it than bemoan ill-luck, say global peers who are watching the boom in startup activity in the country.
“If you shut down a company in the United Kingdom, your mother will disown you. In Silicon Valley if you fail, people will say, good! What did you learn from it? I am seeing a lot of that here,’ said Shaukat Shamim, founder of Silicon Valley-based YouPlus who rates this attitudinal shift as an advantage that India holds over China.
With nearly 800 startups launched every year, the country ranks as the third-largest hub for startups worldwide. But it has much to imbibe from mature markets even as it offers insights on how best to start up in an emerging market.
At a recent interaction curated by ET in collaboration with trade body Nasscom, entrepreneurs from Silicon Valley and India debated the challenges they face in both markets and the lessons that each can draw from the other.
India offers many unique opportunities for startups that developed markets do not have. Testing her technology under harsh Indian conditions has enabled Rajeswari Kannan, cofounder of imaging technology startup LensBricks, to make her product rugged, which can work anywhere in the world. In Pune, Gautam Morey, founder of Sofomo Embedded Solutions is enabling healthcare devices to connect with the internet for instant delivery of data to doctors at much lower costs than in developed markets.
Self-belief, which several experts consider a pre-requisite for starting up, is taking root in India, as stories of successful entrepreneurs become part of household chatter. Vekrum Kaushik, chief executive at US-based staffing solutions firm for local businesses, PeopleCo, said in the past he would lose engineers in India because the perception was that there is higher risk of failure in small companies. “But now they know there will be other opportunities.”
This sense of fearlessness is being fuelled by local role-models. Most urban Indians are aware of the billions of dollars in funding that ecommerce firms like Flipkart and Snapdeal have received. A whole generation of fearless students are passing out of campuses.
“These guys are not looking at the VCs. They are looking at their own ideas, failing, then coming back with something else,” said Sofomo’s Morey, who graduated from the University of Pune. Such an approach is critical for the development of a strong startup ecosystem -- even in Silicon Valley about 80% of companies fail. “Don’t take the VC’s word as gospel, it is one person’s opinion about how the world is,” said Shamim.
What sets back entrepreneurs in India are the multiple operational hurdles. For one, Kannan took three months to launch her company in India, she took just two days to establish the office in the US.
“One element that I find difficult and which emotionally drains me are the number of government dealings,” said Anil Gupta, cofounder of Bangalorebased energy conservation technology firm SmartBuildings.
Gupta, who relocated to India seven years ago, after a two-decade long stint in the US, said he engages consultants to deal with this problem.
Through the discussion, the issues that participants agreed on was the negative impact on Indian startup ecosystem due to lack of healthy exits for investors and the attendant low valuation for Indian startups.
Earlier this year, when Facebook bought Bangalore-based tech startup Little Eye Labs, it paid an estimated $10 million. Months later, it snapped up mobile messaging firm WhatsApp for $19 billion. “It spreads like a virus, if 100 million people are subscribed to that I can guarantee you that you can get the same valuation,” said BV Jagadeesh, managing partner at Silicon Valley-based venture capital fund KAAJ Ventures.
Anil Gupta of SmartBuildings was of the view that valuation is dependent on the pedigree of the investors and that overseas firms offer far friendlier terms when it comes to investment and valuations.
“We had buyout offers from traditional Indian companies, they are so miserly,” he pointed out.
This niggardly attitude, according to entrepreneurs, is due to the fact that there are very few role models of investors who have gained from the startup boom. Only recently has this begun to change.
“The guys who sold redBus,(the online ticketing firm bought by South Africa’s Naspers) immediately invested in five startups I know. This happens prominently in the Valley,” said Morey of Sofomo.
Pallav Nadhani, who cofounded enterprise software venture FusionCharts while still a teenager, said discovering hot startups is still a problem in India.
In addition, regulatory constraints with regard to cross-border transactions hold back multinationals keen to buy an Indian company, while local players are unwilling to wager a bet.
“(Since) there are no exits, valuations will be lower and investors will want a more stringent share of the pie,” said Nadhani, an angel investor who has backed technology startups like iDubba and agriculture technology provider CropIn Technology Solutions.
It is because of such issues that Aakrit Vaish, cofounder of Haptik, a customer support app, has set up a corporate office in the United States. “If and when there is an opportunity, we don’t want to miss it,” he said. If these are issues borne by Indian entrepreneurs others such as the difficulty in hiring top talent were seen as common across geographies.
Nadhani of FusionCharts was of the view that in India the problem is exacerbated by the absence of incentives for students to build products or launch their own startups.
Despite the challenges, Sanjay Parthasarathy, founder of big data startup Indix said he is beginning to see a lot of Indian entrepreneurs coming up with big ideas.
“I mean the next Tesla, the next SpaceX, It is just starting to happen, people have just started to say, yeah, we can do world class stuff,” he said. There was a note of envy from the Silicon Valley entrepreneurs with regard to one aspect of starting up in India – the support from family.
“It (family support) is one of the biggest advantages for entrepreneurs in India compared to the Silicon Valley. In the US there is no such thing,” said Kaushik of hiring firm PeopleCo.
“If you shut down a company in the United Kingdom, your mother will disown you. In Silicon Valley if you fail, people will say, good! What did you learn from it? I am seeing a lot of that here,’ said Shaukat Shamim, founder of Silicon Valley-based YouPlus who rates this attitudinal shift as an advantage that India holds over China.
With nearly 800 startups launched every year, the country ranks as the third-largest hub for startups worldwide. But it has much to imbibe from mature markets even as it offers insights on how best to start up in an emerging market.
At a recent interaction curated by ET in collaboration with trade body Nasscom, entrepreneurs from Silicon Valley and India debated the challenges they face in both markets and the lessons that each can draw from the other.
India offers many unique opportunities for startups that developed markets do not have. Testing her technology under harsh Indian conditions has enabled Rajeswari Kannan, cofounder of imaging technology startup LensBricks, to make her product rugged, which can work anywhere in the world. In Pune, Gautam Morey, founder of Sofomo Embedded Solutions is enabling healthcare devices to connect with the internet for instant delivery of data to doctors at much lower costs than in developed markets.
Self-belief, which several experts consider a pre-requisite for starting up, is taking root in India, as stories of successful entrepreneurs become part of household chatter. Vekrum Kaushik, chief executive at US-based staffing solutions firm for local businesses, PeopleCo, said in the past he would lose engineers in India because the perception was that there is higher risk of failure in small companies. “But now they know there will be other opportunities.”
This sense of fearlessness is being fuelled by local role-models. Most urban Indians are aware of the billions of dollars in funding that ecommerce firms like Flipkart and Snapdeal have received. A whole generation of fearless students are passing out of campuses.
“These guys are not looking at the VCs. They are looking at their own ideas, failing, then coming back with something else,” said Sofomo’s Morey, who graduated from the University of Pune. Such an approach is critical for the development of a strong startup ecosystem -- even in Silicon Valley about 80% of companies fail. “Don’t take the VC’s word as gospel, it is one person’s opinion about how the world is,” said Shamim.
What sets back entrepreneurs in India are the multiple operational hurdles. For one, Kannan took three months to launch her company in India, she took just two days to establish the office in the US.
“One element that I find difficult and which emotionally drains me are the number of government dealings,” said Anil Gupta, cofounder of Bangalorebased energy conservation technology firm SmartBuildings.
Gupta, who relocated to India seven years ago, after a two-decade long stint in the US, said he engages consultants to deal with this problem.
Through the discussion, the issues that participants agreed on was the negative impact on Indian startup ecosystem due to lack of healthy exits for investors and the attendant low valuation for Indian startups.
Earlier this year, when Facebook bought Bangalore-based tech startup Little Eye Labs, it paid an estimated $10 million. Months later, it snapped up mobile messaging firm WhatsApp for $19 billion. “It spreads like a virus, if 100 million people are subscribed to that I can guarantee you that you can get the same valuation,” said BV Jagadeesh, managing partner at Silicon Valley-based venture capital fund KAAJ Ventures.
Anil Gupta of SmartBuildings was of the view that valuation is dependent on the pedigree of the investors and that overseas firms offer far friendlier terms when it comes to investment and valuations.
“We had buyout offers from traditional Indian companies, they are so miserly,” he pointed out.
This niggardly attitude, according to entrepreneurs, is due to the fact that there are very few role models of investors who have gained from the startup boom. Only recently has this begun to change.
“The guys who sold redBus,(the online ticketing firm bought by South Africa’s Naspers) immediately invested in five startups I know. This happens prominently in the Valley,” said Morey of Sofomo.
Pallav Nadhani, who cofounded enterprise software venture FusionCharts while still a teenager, said discovering hot startups is still a problem in India.
In addition, regulatory constraints with regard to cross-border transactions hold back multinationals keen to buy an Indian company, while local players are unwilling to wager a bet.
“(Since) there are no exits, valuations will be lower and investors will want a more stringent share of the pie,” said Nadhani, an angel investor who has backed technology startups like iDubba and agriculture technology provider CropIn Technology Solutions.
It is because of such issues that Aakrit Vaish, cofounder of Haptik, a customer support app, has set up a corporate office in the United States. “If and when there is an opportunity, we don’t want to miss it,” he said. If these are issues borne by Indian entrepreneurs others such as the difficulty in hiring top talent were seen as common across geographies.
Nadhani of FusionCharts was of the view that in India the problem is exacerbated by the absence of incentives for students to build products or launch their own startups.
Despite the challenges, Sanjay Parthasarathy, founder of big data startup Indix said he is beginning to see a lot of Indian entrepreneurs coming up with big ideas.
“I mean the next Tesla, the next SpaceX, It is just starting to happen, people have just started to say, yeah, we can do world class stuff,” he said. There was a note of envy from the Silicon Valley entrepreneurs with regard to one aspect of starting up in India – the support from family.
“It (family support) is one of the biggest advantages for entrepreneurs in India compared to the Silicon Valley. In the US there is no such thing,” said Kaushik of hiring firm PeopleCo.
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