ET ARTICLES

Techno-preneurs score big home runs here

Posted on January 21, 2011 | Author: Yusuf Motiwala | View 507

Indians returning from the US are recording big wins in the start-up space.Archana Rai finds out what is driving their rapid success 

artical Picture

This week,a mobile application that enables free calls by Blackberry users has set the blogosphere ablaze,clocking up 600,000 downloads in the first three days of its launch.For TringMe,the Bangalore-based start-up that launched the app,it is the latest in a string of successful product releases that has catapulted the three-year-old company to the global arena where it handles 35 million internet voice calls a month across four data centres worldwide.
In Hyderabad,Dimdim,a start-up that builds technology for corporate social networking,has just been acquired by global technology company SalesForce.com,providing an exit for early stage investors in less than four years of investment.
TringMe founder Yusuf Motiwala and DD Ganguly who co-founded Dimdim are part of a growing tribe of US-returned entrepreneurs who are energising the early stage start-up ecosystem in India and scoring big wins with their ventures.We are seeing a major shift in the start-up ecosystem.Entrepreneurs with overseas experience are relocating to India to build companies with cross-border models that leverage our technology skill while delivering to customers across the world, says Suvir Sujan,co-founder,Nexus Venture Partners,one of the early investors in Dimdim.

TOP-NOTCH TALENT 

Most of these big-ticket entrepreneurs relocating to India are from top-notch universities and blue chip corporates in the US.On this elite roster are Harvard Business School graduates Naveen Tewari who co-founded In-Mobi,a technology company for mobile advertising networks that is now the second largest network globally behind Googles AdMob;Ashwin Damera,founder of Travel Guru,an online hotel distribution portal bought by Travelocity Global;and Krishna Mahesh,scion of the TVS Sundaram family who has launched medical devices start-up Sundaram Medicals.
In the lifesciences space,a team of MIT-trained specialists have relocated to Bangalore to set up Mitra Biotech,a company that focuses on targeted research and clinical trials for cancer treatment.
Three years ago,such a start-up would not have happened in India, says Mohit Mathur of Neev Corporate Advisors,a boutique advisory firm focused on life sciences and healthcare industry in India that helped Mitra Biotech structure its business plan and operating model to raise capital from early stage investors such as Accel Partners.Apart from an ecosystem that provides early stage capital and consulting inputs,these hightech start-ups are also linking up with a growing network of research collaborators.
We are a team with experience of building a research-led company in the US,but the challenge was to bring down the cost of innovation and offer indigenous solutions in a market like India, says Mallikarjun Sundaram of Mitra Biotech Private Limited.The firm collaborates with the Mazumdar Shaw Cancer Hospital in Bangalore and the Stanley Medical Hospital.

LURE OF A BOOMING ECONOMY 

The most important factor in the return of such skilled technologists to India is the booming Indian economy and the huge opportunities that it provides for entrepreneurship.India is becoming a global R&D hub.Within five years,a series of Silicon Valley-class firms will emerge, says Vivek Wadhwa,director of research,Centre for Entrepreneurship and Research Commercialisation,Duke University.He tracks the US-India technology interface closely.
It is not just technology and lifesciences that offer opportunity.Sectors such as e-commerce and financial services too are ripe for new business.
India is at an interesting point where economy is growing at 9%.Banking goods can grow at three times the economy but mortgage products have reached just 4% of the economy,while it is 80% in the US, says Adhil Shetty,who relocated to India from a job at Deloitte Consulting in the US and teamed up with cofounders with work experience in retail major Amazon.Experts say that for many skilled workers,the decision to return is also influenced by the worsening situation with regard to visas for foreign nationals in the US.There is an estimated number of one million skilled workers and their families on temporary visas waiting for green cards.Of these,about 350-400,000 are Indians.People are getting fed up and returning.In the past,there were no opportunities for them back home.Now they have greater opportunities in India than in the US, says Wadhwa.

CROSS-BORDER SKILLS 

For many of the returnees,the US work experience is proving to be an advantage.We know how difficult it is to build a technology product.A defining experience for me was seeing a system administrator trying five times to install the first version of our product.It gave rise to easy being a key value at Dimdim, says Ganguly.
One of the benefits of building a start-up in India is the phenomenal work culture if the team is chosen with care,he says.On the flip side is the challenge of attracting and retaining key employees in a start-up.
The challenge is risk aversion amongst potential team members, says Ganguly,who agrees with industry experts who reckon India is today where Silicon valley was in early 1980 with people wanting to work at large companies as start-ups are seen as risky.

ECOSYSTEM SUPPORT 

The pace of change in the start-up ecosystem is something that most returning entrepreneurs are buoyed about.Ashwin Damera,who founded Travel Guru in 2005,has lived through the entire lifecycle of a start-up from early inception,build-out and sale of a venture aimed at the local market.When I started out,there were very few investors who would back a pre-revenue business model.Now that situation has changed completely.As a mature entrepreneur in a maturing ecosystem,I now have investors calling me to ask what my next venture will be, says Damera who is targeting a new business in the social education space.
Apart from the market opportunity,there is also the strong lure of extended family and a well developed informal support system that can help young entrepreneurs build up companies.For instance,Shetty received the first round funding from AVT Infotech,a strategic investor who was able to introduce the young start-up to potential collaborators and customers.
While the early stage ecosystem has grown in India,I still find that there is a smaller pool of investors,investment bankers and lawyers that young start-ups can turn to compared to the US, says Shetty.Strategic investors help fill this gap as they are more supportive and less punitive in their term sheets,compared to commercial investors,he says.

INDIAN CHALLENGE 

The Indian market also throws up unique challenges that most returning entrepreneurs will have to master.While labour cost is low,the cost of reagents and equipment that has to be imported from overseas can be a huge drain on the resources of a start-up, says Sundaram of Mitra Biotech.To keep costs low while still leveraging a research and hospital ambience,the start-up leased space from Bangalore-based Narayana Hospitals,which ensured steady infrastructure support at moderate rental costs.
There is also the bureaucracy to deal with.We are an IP-driven company,but whenever we have to register a patent I have to travel to Chennai and spend a week there, says Motiwala of TringMe,who also finds the distance from the customer a huge disadvantage.It costs 5-6 lakh to visit trade shows in the US and $150 for a ticket to enter these shows.This can be difficult for a start-up, he says.

INDIA ADVANTAGE 

But for every downside,the sheer market opportunity and the strong upside of building a company and providing solutions in a complex emerging market continues to lure entrepreneurs.There was never any doubt that I would return the challenge is now to build a company in a huge sector like healthcare, says Krishna Mahesh,who put in 4 crore to set up Sundaram Medical Devices in Madurai.To begin with,the start-up will design and manufacture hospital beds.The sheer size of the market opportunity is exciting, says Mahesh,whose goal is to see this fledgling business emerge as a major part in his familys multi-billion dollar business conglomerate,the TVS Group.

enterprising EXPATRIATES 

NUMBERS SPEAK 

One in four US engineering and technology companies set up between 1995 and 2005 had an immigrant founder.Indian immigrants founded more companies than the next four groups (from the United Kingdom,China,Taiwan,and Japan) combined World Intellectual Property Organisation (WIPO) data says the percentage of foreign nationals contributing to US international patent applications increased from an estimated 7.3% in 1998 to 24.2% in 2006 The contribution of patents from inventors with Indian-heritage names increased to 13.7% from 9.5% in 2006 

HARD FACTS 

The visa backlog is likely to increase substantially,given the limited number of visas available Approximately,one in five new legal immigrants and about one in three employment principals either plan to leave the United States or are uncertain about remaining Increasing numbers of skilled workers have begun to return home to countries like India and China where the economies are booming
 
THE INDIA ADVANTAGE COMES FROM THE ABILITY TO GET GOOD TALENT AT AN AFFORDABLE RATE BUT UNLESS THE TEAM DEVELOPS COMPETITIVE TECHNOLOGY THIS COST BENEFIT IS NULLIFIED 

YUSUF MOTIWALA FOUNDER,TRINGME 

Post Comment

Comment

User Picture Price pressures in vegetable soup The vegetable price sprial is largely artificial,and if the government does not take steps to reform.. Saumitra Chaudhuri Read full story

The art of strategy

Avinash Dixit

We begin with 10 tales of strategy from different aspects of life and offer preliminary thoughts on ..

Read full story

The breakdown of a good idea

Mukul Sharma

It's often said about communism that its a good idea in principle but a disaster in practice.Good be..

Read full story

The Economy Times

About Us | Terms & Conditions | Contact Us

Copyright © PeerPower.com 2010. All rights reserved.

powered by PeerPower