Startups awash in India
IT IS raining startups in Bengaluru, India. It is estimated that over 10,000 tech and non-tech units are in the startup phase, employing over 100,000 well qualified professionals. This is also the birthplace of new skills in areas such as artificial intelligence, machine learning, data science, smart community, blockchain, Internet of Things systems, user intelligence and interface etc. According to the national software body Nasscom, eight new Indian unicorn enterprises emerged in 2018.
This surge in the Indian startup activity leads to signicant unreported employment of highly skilled people - who could be co-promoters and early-stage employees not drawing a salary. There are several benign implications and some concerns. The country would see a number of new unicorns and globally successful ventures, as diligent entrepreneurs press on with their ideas. According to Nasscom, India already has the third largest number of unicorns - 18, after US and China - and ahead of other nations such as UK, Germany and Israel.
The epicentre of this is clearly in Bengaluru, even as other Indian cities jump on the bandwagon. The pool of new talent and experience in this area will swell as the ecosystem is still yet to reach a peak. The government has also played its part as it recently announced tax holidays for startups, enhancing the climate.
On the flip side, not all are expected to be successful. The burnout rates will have economic and psychological effects. Given that the default option for many engineering graduates is shifting from large tech companies to smaller startups, employees are likely to achieve inconsistent results, potentially jeopardising the entrepreneurial spirit in the long run. Some of the mega-sized startups such as Ola Cabs, Flipkart (owned by Walmart) and Oyo Rooms have reported huge losses, some exceeding their revenues. Everyone hopes that at some point, the flip towards profits will happen.
There are however, interesting implications for other countries such as Singapore, South Korea and Indonesia which also have high startup aspirations. Singapore, for instance, can tap into the talent pool with substantial experience in new tech fields on an instant basis. Nasscom estimates that 160,000 people are employed in tech startups in India (not counting a much larger indirect employee base). Singapore can also collaborate with the Bengaluru eco-system for sandboxing and testing new ideas as testing and development costs in India are cheaper.
There are powerful learning avenues too. The Indian Institute of Management (IIM) in Bangalore offers short-term programmes such as the Budding Entrepreneurs Programme with practical learning linkages to the thriving industry. The Asian countries can also adapt the products and services that have good traction to cross-nationalise the content suitable for home audiences. The venture capital and other investment communities will naturally gravitate to the Indian startup scene as more successful ones crop up. Indian startups received US$4.3 billion in the first nine months of 2018, registering a 100 per cent growth. India now allows 100 per cent foreign holding in startups - which should be salivating for venture capitalists.
STARTUP SUCCESS
Startup success has become much more complex than the Silicon Valley model of the 1990s. Being a pioneer is no longer sufficient. With development cycles crashing due to better coding efficiencies, any product or service can be copied and in fact, improved quickly. Startup entrepreneurs will need to be multi-talented in marketing, consumer understanding, fund-raising, intricate coding, patenting and attaining good visibility in the global eco system. The pure tech entrepreneur with mastery of coding and product design will need to augment the team for skills that he lacks.
This is where international collaborations could help. For example, a coder in India, a product-marketer (or a patent expert) in Israel and a venture capitalist in Asia would be a stronger entity on the global stage compared to a loner outfit.
The rules for such a transnational collaboration are still being written. That's the opportunity for countries like Singapore - with limited human resources but with better professional, organisational, financial capabilities and evolved cyber security and data privacy regimes. This combination can rival the Silicon Valley eco system. In this model may lie the genesis of the tech startup tsunami outside of the US and China.