Bringing attention to Indian start-ups is a very good idea, says Vinod Khosla

With Prime Minister Narendra Modi enthralling technology companies at Silicon Valley, there are high hopes that global tech majors will invest more in India. Bloomberg TV India caught up with Vinod Khosla of Silicon Valley Technology Partner to discuss India’s initiatives in the digital space, and the way forward.

Prime Minister Narendra Modi is talking to start-ups, focusing on the attempt to create a Silicon Valley in India or replicating the success that Indians like you have had here. So back home in India how do you rate that mission?

Bringing the attention to start-ups in India is a very good idea. I think it is a big leverage tool that we can have and so I am glad that he is paying attention to it. People and media both paying attention to it can be very beneficial.

So if you were to meet him, what would you tell him in terms of priorities he should have in terms of the start-up ecosystem, which is clearly where he is focused on?

The start-ups ecosystem relies on doing things quickly, rapidly and at a low cost. So making India an easy place for business and its global ranking available — that’s a really important factor. It is also important to improve the electronic infrastructure. Just like the other infrastructures in the country there is also an electronic infrastructure. Aadhar is very good starting base per se — Aadhar-based payment systems having e-governance to make things easier. These are just some ideas.

How do you rate the attempts made by this government to ease doing business in India?

Well, I don’t live in India so I can’t tell you what is really happening underground there. I can tell you, I have seen in the last two years a dramatic change in the start-ups ecosystem in India. There are lots of start-ups, good role models and funding available for them. So that is encouraging.

But there are also concerns about the over-valuation, because with the space heating up, the valuation seems to be running ahead of sales?

I think valuation seems to be more of concern for the press. See, if you are a smart entrepreneur and somebody overvalues you then you take more money and you use it effectively. From the entrepreneur’s point of view there is nothing at all wrong with over-valuation but from the investor’s point of view if they are making a mistake of over-valuing something then they will pay for that mistake. So over-valuation is an investor’s problem, over-valuation is something the press likes to write about. But for the entrepreneur more money available is good for them.

How will you value the Indian start-up ecosystem, especially in the e-commerce space, right now?

I am not there so it is very hard for me to say if something is over-valued or under-valued because I am not looking at their detailed financials or growth rates and other factors. But what I can say is that if you take e-commerce the value created in five years will be substantially larger than the value that it existed at. So it is a large opportunity and somebody will win and somebody will lose. But it is hard for me to say who the winners are and who the losers are.

As far as telecom infrastructure is concerned, all the plans of the Indian government would be predicated on very good telecom infrastructure. We have 4G that is going to be rolled out. Have you had any occasion to look into that and how do you look into that space right now?

These domains have started increasing dramatically very recently. So if you look at smartphone penetration, that growth is only in the last two years or so and it will be pretty dramatic in the next five years.

So I would say those are the kind of changes the government would do to encourage more start-ups — more use of the internet especially from mobile devices. India has a huge advantage in in-built legacy infrastructure.

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