It’s not that Indian start-ups don’t know the value of the India market, except they do it from the outside-in. Some of the more successful Indian start-ups are now incorporated outside—Flipkart and Practo are both Singapore incorporated.
Here is something I find most amusing. Global start-ups have found gold in India, while Indian start-ups continue to either move out of India or target global markets instead of India.
The examples are plenty, the reality not so obvious. Look at WhatsApp, Facebook, Twitter, Amazon, Uber, or even a TrueCaller. And last week, Tinder announced its first office outside of the US, in India.
It’s not that Indian start-ups don’t know the value of the India market, except they do it from the outside-in. Some of the more successful Indian start-ups are now incorporated outside—Flipkart and Practo are both Singapore incorporated. Snapdeal and Paytm have significant non-Indian investors. Freshdesk is US-incorporated and focused on the US market.
All these are global giants (some with an Indian DNA) who see the opportunity in India and are investing here from their global valuations, which is (usually) an obscene multiple of an average Indian start-up.
It gets even more interesting. For the uninitiated, most of the consumer technology start-ups are targeting mobile Internet. And India will soon have more people using mobiles and/or the Internet than the entire US population!
A Silicon Valley company with significantly higher access to capital, better business environment, friendlier government policies (I dropped talent out from this list), is deploying that cash in India. So where is the level playing field? Why are Indian start-ups not being given a fair chance? Our tiny angel rounds are fighting the hedge funds!
(From one perspective, this is amazing and I will be damned to suggest that we stop this, protectionism is so 1990s.)
And this is not just true in technology. There may be many examples: Paper Boat has created as a brand out of a very Indian emotion, with what I am assuming, significantly lower marketing budgets than the multi-billion dollar marketing spends of large global fast-moving consumer goods, or FMCG, companies.
So, dear government of India, you have started very well. The Start-up India event is also in the right direction and we all have hopes on the announcements and, more importantly, the execution. In my own small interactions (via iSPIRT) with Ravi Shankar Prasad (minister of communications and information technology), Jayant Sinha (minister of state for finance) and Amitabh Kant (secretary, Department of Industrial Policy and Promotion), it’s apparent that there is intent.
I would like to offer some additional points for you to consider:
Make it easy to do business in India. And I mean beyond registering the company with the Registrar of Companies. I mean clarity on service tax versus value added tax, the need to submit reams of paperwork for small companies.
An average start-up spends a fair amount of time and money to work with a lawyer, a chartered accountant, a company secretary, a provident fund/Employees’ State Insurance Corp. consultant and almost everything needs to happen from day zero and without making your first rupee! And don’t even get me started on the board resolutions.
Facilitate the right capital. Eight of the top 10 venture funds in India are global funds. So, the relatively smaller amounts of money that are available to Indian start-ups still isn’t Indian! Therefore, can the upsides belong to us? Many start-ups are fleeing India, and iSPIRT has done a wonderful job of putting together 34 points that can stop this exodus.
Seek out India’s own solutions, not copy-paste innovations. A significant number of the top-valued start-ups in India are taking proven western business models and applying them to India, with a garnishing of some Indian innovation.
Flipkart’s ‘cash on delivery’ comes to mind.
Take a great global model, add Indian masala and you have an amazing business. But what about fundamental innovations?
Team Indus is literally doing rocket science (pun intended) by trying to land on the moon, but they have more global recognition than Indian. When Elon Musk ran out of money, NASA stepped in to give him projects so he could survive to innovate. He survived well and is now leading the world with SpaceX and Tesla Motors.
Don’t just fund the funds, ask them questions.
Why are they valuing a company lower than a similar one in a different country? What are their calculations? The arguments of pay parity, revenue per customer, market size, market maturity and distribution models have already surpassed the economics of India.
Finally, let them fail. And gracefully. India is not only a tough place to open a business, it gets much worse when you want to close it. Yes, when you are dreaming of that world domination idea, give a minute to what if that does not happen. (And the ones who just ignored this point, well… you are the real deal.)
Yes, we’re becoming better, but perhaps not as quickly as we should. ‘Start-up India Stand up India’ is much like a wisdom tooth—it’s a sign of progress but it fits awkwardly. We all know that evolution takes some time to catch up with us; but, as humans, we’ve always used our brains to get ahead of ourselves. When you are willing to split open the inside of your mouth and make way for the wisdom tooth, surely you’re willing to growth hack the start-up ecosystem, too?
Jasminder Singh Gulati (@GulatiSinghJ) worked at global companies for over 18 years, including 12 years at Microsoft Corp., before co-founding NowFloats in 2012 with Ronak Kumar Samantray, Nitin Jain and Neeraj Sabharwal. NowFloats helps local businesses get a meaningful digital presence that connects the business with local consumers, resulting in higher revenue and profits.