Last week I was at an interesting round-table organized by Welingkar’s Education on “Seeding Entrepreneurial Startups & Social Businesses in B School Campuses”. They had put together an interesting group together there were VCs, University Professors, Consultants, Entrepreneurs, Startups, representatives from IITs, IIMs, representatives from TiE & students pretty much the entire eco system was present in one room. The discussion and part interesting, part practical and part academic which was kind of expected given the room was full of people trying to figure out how we can teach MBA students to become entrepreneurs and now to ignite the passion etc. etc. Facebook, Google, Yahoo and a lot of other major companies came about as campus startups.
Folks from IIT and IIM very cheering up the fact they they now have 4-5 startups coming up every year to which i brought my point. Do you really think we should be happy with 4-5 startups coming from the Dozen IIT and IIMs and the thousands of MBA schools in the country ? NO WAY
According to me if we really have to be serious about startup space in India we need to have at-least a 1000 startups over the next 5 years. Here is the math if we have to aim for 200 startups a year for the next 5 years and these 200 startups are coming say from the
5 Metros Mumbai, Delhi, Bangalore, Hyderabad, Chennai @ 30 per year
5 Cities Kolkatta, Chandigarh, Indore-Bhopal, Jaipur, Ahmedabad doing 10 each year.
Other cities too can contribute say total 5-10 per year
Now based on established startup funding models it is clear that most western startups operate at a $25k to $50k seed funding level and therefore it is fair to assume that a typical seed round in India can easily be in the 10 Lakhs $20k range. Which make a total funding requirement over 5 years of 1000×10 Lakhs = 100 Crs. approx $20 million.
That’s not such a big sum in the funding world however the challenge is how to actively manage, guide and mentor these 1000 startups and what kind of an organization is actually equipped to do so. My answer is simple what about the local entrepreneurs. If corporate funding is able to combine with local ‘Angels’/ Entrepreneurs say 50:50 where 5 lakhs comes from central fund and 5 lakhs comes from a local angel who is the lead on the startup and takes active personal interest in developing the idea and mentor the startups. The startup get the advantage of personalized mentoring as well as access to the larger network of contacts and knowledge which can help take them to the next level
At the same time I may be totally wrong too maybe India just needs a 100 high quality startups ?? which much higher funding ?
While I am still working to develop this idea further taking inputs from friends, incubators and investors across the globe would be happy to get your ideas and how we can get to 1000 startups in India ?
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Comments (24)
Vishal, 100 crores is do-able from the govt. I can help you on that one, but yes the managing of the funds is where the trick comes in. Right now the govt trusts their established incubators to play this part, but we’ll have to find a way.
These mentors would have to be part of some forum where they can be vetted, let a mentor AND entrepreneur disappear with the taxpayers’ money.
The educated people of today are taking lesser risks. We just passed an industry boom - lucrative jobs for almost everyone (from IIT/IIM).
There are a lot more startups than we can imagine. And most formal panels would only reflect a very small percentage of these startups. Most of my class mates who never went to a business school or engineering college run very successful businesses with a turnover over $1mn.
I doubt funding is ever a starting problem. In a country like india starting up, getting business from your social circle and ability to bootstrap is fairly easy. I would say it is easy to beg/borrow/steal in India rather than convincing someone that your Idea will give returns.
awsm idea dis is...i’d like 2b a part as i hav quite a few ideas...within a yr i’ll b equipped i think!
Dear Vishal,
Don’t you think there are 200 startups coming per year. I think the quantity is there. Only the quality is missing. Quality ecosystem is required to take these startup’s to bigger level.
You should never look for a Startup in B-School, especially from IIM and IIT. Why should they leave 7 digit salary per year and take risk. We should not force them to change. Create the startup where people hungry to prove themselves.
With Regards
Kesava Reddy.M
I think creating fund pools and organizing a local angel or VC network is not really going to help. The basic reason why India doesn’t have enough startups or for that matter even businesses is that Indian Culture has traditionally never encouraged them. The perception towards businesses and businessmen who take the plunge must change. There is also the tendency among graduates to go for a safer option of going with on campus placements. A lot of my friends are pursuing MBA right now and each of them have only one motive and that is to get placed in a high paying position at a big MNC.
100 crore is not a big amount and I dont think we even need govt. help in this. It is completely doable by the entrepreneurs and the VC’s alone. The thing still remains that Indian youth doesn’t want to take risks and starting a venture is not even encouraged by our society.
Your perception of Indian culture is entirely wrong. Indian govt has taken some time for Economic liberalization policies, but Indians have entrepreneurial skill as any other country or maybe better. What we lack is willingness of Indian govt. to support them.
A very common word used in India is Jugaad - and that’s the very much startup point for any startup. I doubt if any Indian lack that. :)
I wont be surprised to see more and more young people taking the entrepreneur routes. We need more success stories and heroes to motivate them.
The first major issue with most ”entrepreneurs”. They dont know the value of money. 100 crores is a lot of money. And i’d like to see VCs cough up that money for a larger purpose. Not happening.
More than the money, I feel that we need more Mentors. Like Vijay, Sameer and You, who can encourage as well as make startups get real.
I guess, a hundred guys like you will make your idea real!
You hit the nail hard, Vishal.
I agree with Kesav, we have 200+ startups coming up every year but what really lacks is the quality of the business models so most of these startups either fail at prototype stage or early product stage. I was one of those techno entrepreneur who failed in bootstrapping my first startup.
While venture capital/angels play’s an important role (from capital & mentoring perspective) apart from funding needs we need to focus on building a strong ecosystem (we certainly have many players working at the grass root levels like OCC, Headstart, Proto.in, TiE, NEN etc) that helps entrepreneurs in converting their products to strong businesses.
You hit the nail hard, Vishal.
I agree with Kesav, we have 200+ startups coming up every year but what really lacks is the quality of the business models so most of these startups either fail at prototype stage or early product stage. I was one of those techno entrepreneur who failed in bootstrapping my first startup.
While venture capital/angels play’s an important role (from capital & mentoring perspective) apart from funding needs we need to focus on building a strong ecosystem (we certainly have many players working at the grass root levels like OCC, Headstart, Proto.in, TiE, NEN etc) that helps entrepreneurs in converting their products to strong businesses.
Vishal, Vijay,
How I wish there was a ”Y Combinator” in India :-)
Y Combinator primarily hand-holds, educates and gives confidence to first timers on things that are their non-core and that is an amazing value.
Somebody said ”startups dont die, they normally commit suicide due to unwarranted fear or by barking up the wrong tree”
Hey Vishal,
I agree. I’m sure India can easily churn out 200 startups a year. What I think is lacking is the right kind of marketing skills, and as Vijay rightly said, a proper guidance for creation of business models. I think forums like Proto.in need to provide boosters to struggling start-ups.
Keep up the wonderful writing!
Regards,
Shachii
We profile startup companies of India, we have already profiled more than 325+ start-up companies in one year of operations.
All these companies have been started up not earlier than 2007. So it might be that you are lacking the statistics, more than 200 start-ups are already happening in India per year.
The idea of 200 startups/year is a very simple thing to accomplish with the current resources in terms of quantity. But what lacks is quality. I see lot of startup profiling sites do a profiling of even some small ”discussion forums” as a startup. If those are called startups , then every general store (for that matter a barber shop) is also called a startup. So according to me, the real ”startups” have to be encouraged. The startups with that mind of entrepreneurship, great goals, plans, strategies etc.
I would all the more be happy to take part in your initiative if you would start one. Please (yeah please), don’t leave this idea just as an idea. With help from people like you, Vijay etc., we sure can make it a revolution of sorts.
Hi
I also agree with Kesav that statistics are focusing only on IIM’s and B schools. But there are many startups flourishing from other sectors as well. Quality is definetly an issue, along with mindset of people, most customers want references, strong client list. Instead of instead of trusting their ability people rely on ability of others, i.e if funded by strong VC or angel, and good client base from start.
These are some of issues faced by startups today. We should try and find possible ways to tackle them as well.
Hi
This is a good idea. While we wait for the government to get its act together and other investors to get in the market in their own small way, we should also work towards fostering the entrepreneurial spirit. Lot many people go for the safe job route.
Gentlemen, there are possibly 200+ something coming out of India every year, but most of them are not businesses. Mashups and every portal out there is defined as a startup.
200 quality startups. Still a problem.
And i wouldnt give up on the IITs and IIMs totally. If we are to expect some level of quality then we have to be agnostic to where they come from. But these folks also have better exposure to quality products and the means to deliver. The other option are the returning NRIs. I am still yearning to see a startup with a business model, a quality product, and a mentor and team to drive it. Thats a winning combination.
Very interesting discussion here. I would agree that 200+ quality startups is a good starting point. Aside from a foundation for angel investors there need to first be a number of well publicized startups that are successful. That will motivate others who have a drive and a passion for proving themselves. They’ll say ”Hey, I can do that too”. It’s a question of motivation as well as risk taking.
What a great info, thanks a lot.
Hi all,
According to me , 200 + quality startups are fairly good..!!
But there are few points I would love to pin point.
A.Well established IT companies doesn’t encourage employees for R&D
B.Educational Institutes are lame in trying new Projects and they always lacking in covering industrial aspects to students.
C.IT sector of India is overwhelmed by the income they are generating in OutSourcing and don’t want to risk there fucking single penny
D.Ideas of the students are not getting platforms
E.Many of the ideas are not given a tilt of Entrepreneur aspects
F. Country is fucking very busy in politics.
Still you will not find a man with balls who can commit on Internet , that we will organize the Startup meets ..!!
Great article Vishal,
What is also missing is the information on the investors. The commonly known ones are (IAN, MA etc). But largely the information and accessibility is the issue.
We have a startup idea and want to explore the funding options. But we dont seem to be getting anywhere apart from the obvious ones listed above.
Wish there were a common forum where people such as us could explore synergies.
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I dont have any idea at now,but thanks for your great post