The Evaluation of Indian Startup Ecosystem : Growth and the Future
Are you worried about your funding? Or how you will market your idea? What part of equity should you give to your investor? You’re still reading? You must be one of those still thinking “this idea will work”, or “let me quit my job in style and follow my dreams of a startup”. Or did your boss just tell you “you’re an asset to the organization”? . You might not fall into any of these categories. But, do you know where you are headed to?
The rise of Indian Startups with an increase of valuations are seeing some crazy monies all around in Bangalore these days. With Millions of dollars in funding and investments startups are offering joining bonuses, a hefty salary and a lots of other perks — Gym memberships, Uber credits and so on. But just a decade ago we were still not aware of what was on our way. With Flipkart opening offices in the Bay Area now, where do we all stand? What is the condition of Bangalore’s startup ecosystem? Is it ready to make another Flipkart of some other industry?
Where did all these start from?
Before the 2000s saw the rise of Technology and Software Engineers in a general, the United States Government had poured enormous amounts of money for defense needs which eventually led to the growth of the Silicon Valley.
With the on setting of the millennial year and mushrooming of software industry, demand of cheap work force increased, and lead to a brain drain to the west. But the crisis subsided and recession hit us bad, returning workforce to the country saw to it that things move beyond outsourcing and thus was formed the Indian Silicon Valley and its Startups.
But with the number of years added to the pocket, India’s startup capital Bangalore is still behind a lot of other places. It is growing but slow.
What is Bangalore’s startup ecosystem currently missing that could help it be more competitive globally?
With a little knowledge that I have gained in the past couple of months, what I have perceived is that there is not just a single factor that is keeping Bangalore to grow and sustain in the global competitions, rather it is a cluster of factors related to each other that could bring Bangalore in range of global competition like San Francisco, New York, LA or London.
The Huffing Post quotes that “Bangalore has risen four places in the latest Global Startup Ecosystem Ranking”, but still we know there are factors that are keeping us from making it up the ladder despite India being the topmost choice with talent-pool for outsourcing.
What are we missing to move forward?
While opportunities are present, we lack the right startup ecosystem. Budding and future entrepreneurs, while still studying are regulated on ideas and innovation, nipping their ideas at the bud as most education institutions do not encourage or support students to become entrepreneurs.
We are still looking up to the premier institutions of the country, while the fresh graduates from these Tier I colleges are seeing a heavy chunk of students moving to the west for further education or jobs. Growth of non accredited and Tier 3 engineering colleges is seeing a boom in the education business with a whopping 80% of the recent graduates being unemployable.
Are we lacking in originality?
One other major factor that young entrepreneurs are working upon is to make the X of India, like the Uber of India is Ola, while there are some great startups that are doing very well for a few quarters now but is not a very good model for everyone to follow. Quoting Mahesh Murthy “If you want to build a large Internet business in India — then do it out of the way of the globals” The Indian market allows global companies to thrive and generate hefty chunks of revenue here. Instead of a startup that attacks the global market, attacking the local market and then spreading out globally can be one way to have an edge and move up the global ladder.
We should focus on building something that the global giants aren’t, like RedBus,Chumbak which is less risky. Else there will be times when we will eventually give way to the original companies, the actual X products.
Hence a better way should be having a good hold and focus on a one kind of market, and then expand it to other 2nd and 3rd world countries, rather than focusing on the first. It is because the nature and kind of market needed for thriving those products is more suited to those economies rather than the first world.
How are we evaluating the market for the product?
While India might be one of the toughest countries in the world for a startup to flourish, by having one of the biggest global markets, it sets a foundation in which a startup scene could prosper. Sustainability of businesses is something that needs to be considered while building something, an enabling ecosystem will of course act as an accelerator, be a place that allows ideas to flourish.
The current market seems good with funding & growth opportunities, but are lagging behind with market reach, which can be dealt with if instead of following global giants and business models, we rather focus on the kind of market the product will be launched in and kind of location the market is in.
Investors are pouring in millions in seed stage with little or no thoughts about the mid level. As put by Shrija about hedge fund type venture capitalists is that “they distorted the market without much local know-how of where some of these companies stand, the market opportunity, the risk-rewards ratio associated with them and so on. “
Where are we winning? What do these big numbers suggest?
Even with workforce being so cheap, Bangalore is a step ahead than most of the other cities in exit valuations. Although it ranks at 15 , but the exit valuation numbers are a much higher up the ladder. Not only but also Bangalore is the only Asian city apart from Singapore to figure in the top 20. Bangalore has seen a good hike in the prices with five times more valuation than 3 years ago. Venture capitalists like Blume Ventures, Kalaari Advisors, Sequoia Capital, Intel Capital & many more are favoring the city for its easy work culture and mass talent pool.
What is the future looking like?
Indian startup ecosystem is still maturing and needs a lot of polish to compete in the global market . With the GST coming up ahead it will get smoother for business to thrive and grow.It will bring transparency helping logistics and warehousing, retail or residential real estate. In the long term,eventually, the ecosystem should benefit from an unified tax regime.
All this apart, with better hopes in future startups, what more can be done to move forward? With young people leaving their jobs and getting their hands dirty to live their dreams, how soon will we climb up the ladder?
This post was originally published in LinkedIn.