Start-ups it is nurturing
At $100 billion-plus, India's IT-BPO industry is large. However, largely focused on the low-end services delivery, it neither has the heft nor the glamour that Silicon Valley in the US enjoys. That may be changing slowly.
A just-released report by IT consultancy firm Zinnov reveals that IT product start-ups in India have been growing steadily over the years. Since 1990, it is estimated that more than 3,400 product start-ups were seeded in India. Between now and 2015, Zinnov expects about 1,000 new start-ups to join in.
On many counts, India almost mirrors what is happening in Silicon Valley. A large percentage of founders of start-ups in the US are from pedigreed top-notch IT companies like Google and Apple, who quit their jobs to turn entrepreneurs. This is happening in India too. For example, Pratyush Prasanna, founder of Plustxt, a start-up focusing on mobile messaging, has honed his skills at Microsoft and Xerox.
Globally, online services occupy a big focus area for product start-ups. In India too, this is the biggest chunk, comprising 34% of start-ups. Further, globally, these start-ups are increasingly looking at having a ubiquitous presence across platforms — from Windows to Android and iOS. In India too this is clearly visible. In fact here, many start-ups are also looking at Java as there is a sizeable population using Java-based phones. Start-ups in India, like their global counterparts, are working on cloud, looking beyond the Web.
Surprisingly, India does comparatively well on the gender diversity front in these start-ups. In Silicon Valley, around 10% of the start-ups have women as co-founders. In India that stands at about 6%. There is an area where India has some catching up to do, says Kishan M Bhat, engagement manager, Zinnov Consulting: "About 20% of the founders in Silicon Valley are fresher’s straight out of college. In India, that figure stands at 7%."
Here's a flavor of India's fledgling Silicon Valley, the start-ups it is nurturing and the entrepreneurs who are making it all happen, from Zinnov's report.
The Start-Up Boom
The Rise: The number of product start-ups being seeded in India every year has been rising steadily. In the next three years, about 1,000 start-ups could get seeded in India:
Where is the Boom
There are 3,402 product companies. Bangalore and the National Capital Region remain the hub, accounting for over half of these start-ups. While Bangalore's dominant position is understandable, it is NCR's infrastructure that makes it such an attractive place for incubating product start-ups. The NCR, according to the report, includes Delhi, Gurgaon, Noida, Chandigarh and Mohali. Bangalore includes Bangalore city, Mysore, Belgaum, Gulbarga and Hubli.
Web vs Cloud
While almost half (47%) of the start-ups in India today are working on Web-based platforms, there is a shift to cloud. The latter allows start-ups to get started with very small capital and to scale up quickly.
Source of Funding: Early-stage funding in India is today looking brighter than ever before. It has gone up from $44 million in 2005 to $1.1 billion in 2011.
Best Cities to Get Funding for Your Start-up
During 2005-12, 446 (19%) of the total 2,407 companies got funded. Of these, 149 were in Bangalore and 117 in NCR — about 58%. About 66% of the companies obtained funding within three years. Interestingly, a sixth got funding in the year of inception.
Online services remain the biggest focus area for these start-ups, mirroring what is happening globally.
Start-Ups And Their Founders:
Experienced vs Freshers: Of the start-ups founded in 2009-12, more than 55% of the founders had less than 10 years of experience. The start-up itch is higher among executives with under 15 years of experience.
VC Funding: US attract about 70% of global VC investment. Canada, Europe and Israel are stagnating or contracting while India shows modest growth, and China is close to emerging as the No. 2 global hub.