Kris Gopalakrishnan, co-founder of Indian information technology giant
Infosys, stares out from a wall-to-wall poster in a modern office
building near Kochi.
A caption reads "We started Infosys in a room about this size; it's your turn now."
message is directed at aspiring entrepreneurs at Startup Village, a
state-of-the-art glass and steel edifice tucked in a green corner of the
port city, who dream of creating the next billion-dollar tech giant.
even three decades after Infosys, India's second-largest software
service provider, was founded by middle-class engineers, the country has
failed to create an enabling environment for first-generation
Startup Village wants to break the logjam by
helping engineers develop 1,000 Internet and mobile companies in the
next 10 years. It provides its members with office space, guidance and a
chance to hobnob with the stars of the tech industry, including
Gopalakrishnan, the project's chief mentor.
But critics say this
may not even be the beginning of a game-changer unless India deals with a
host of other impediments from red tape to a lack of innovation and a
dearth of investors that are blocking entrepreneurship in Asia's
India ranks 74th out of 79 nations in the
Global Entrepreneurship and Development Index, making it one of the
worst places in the world to start a business.
A World Bank report
says it is easier to start a business in violence-afflicted Pakistan or
poverty-stricken Nepal than in their giant neighbour, where everything
from getting electricity to credit is time-consuming and fraught with
"Take Apple or take Google. If exactly the same company
had been started in India, its prospects would have been very
different," said Erkko Autio, chair in technology venturing and
entrepreneurship at Imperial College, London. "Basically, it would have
not reached the potential it has as a start-up."
entrepreneurs have been enormously successful in the United States,
where they have the highest number of tech-start-ups by any immigrant
group. But India has not been able to build itself a community like
Silicon Valley where there is easy access to equity, a pool of creative
talent and first-world infrastructure.
"We were alone. We had no
idea how to make a company, how to sell it. We tried, failed, tried,
failed," said Kallidil Kalidasan, a 23-year-old member who started a
mobile app venture in Kerala two years ago and could not find a single
He is now one of the entrepreneurs at Startup Village,
and is working on a product that could help the government detect
illegal abortions in a country plagued by female foeticide.
seven-month-old Startup Village provides would-be entrepreneurs with
workspace at rents about a tenth of anywhere else in Kochi, computers, a
high-speed Internet connection, legal and intellectual property
services and access to high-profile investors.
The village is
still to be completed, but 68 people, would-be entrepreneurs and their
teams, have already taken up two buildings at the site.
over 100,000 sq ft (9,250 sq m) - equivalent to 20 basketball courts -
Startup Village will be completed in 2014. India has 120 other
incubators, but they are mostly housed in academic institutions and have
not drawn a strong network of advisers from the private sector.
Village, the first such institution to be jointly funded by the
government and private sector, has Gopalakrishnan as its chief promoter
and has collaborations with companies such as BlackBerry maker Research
in Motion and IBM.
"One, the goal of this initiative is to create
new companies and create jobs. Second, this will create new solutions
and products," Gopalakrishnan told Reuters in an e-mail interview.
is excited about creating an ecosystem for entrepreneurs in his
home-state, Kerala, which is famous for its tropical coastline and
backwaters. The Village team says it chose Kerala because costs are
lower than New Delhi or Mumbai and it has 150 engineering colleges that
can provide start-up enthusiasts.
But for some, Startup Village will not work because it does not provide the right environment for a budding tech start-up.
does an entrepreneur need besides money? They need strong support in
terms of advice," said Mukund Mohan, who has founded and sold three
Silicon Valley start-ups and is CEO-in-residence at the Microsoft
Accelerator. The institution helps start-ups in Bangalore, the city most
associated with India's software industry that is about 550 km (340
miles) north of Kochi.
"There are not that many entrepreneurs in
India, and there are hardly any in Kerala who have the expertise to be
able to build, scale and sell strong software companies," said Mohan.
"If you have not been there and done that before, what advice will you
But Bangalore has not been able to nurture a start-up
culture of any significance either. It has many aspiring CEOs and
optimistic financiers, but they are also struggling with a maze of
regulations and half-hearted government support.
Lack of ingenuity
newer start-ups in Bangalore or Kerala are eying products not services.
Many bring ideas catering to the booming market of domestic online
shoppers, like Flipkart, the nation's most heavily financed e-commerce
company. But financial backers for such ventures are few and far
"We are a fixed-deposit country," said Rajesh Sawhney,
founder of GSF Superangels that provides angel and seed funding to
start-ups. "Our investors are risk-averse. They don't trust young people
with their money."
Fewer than 150 start-ups are promoted by
venture capital or angel investors annually in India. There are over
60,000 angel investments, made in the early stages of a start-up, alone
per year in the United States, according to an Indian government report.
believe India is handicapped by a lack of ingenuity. It ranks 64th on
the Global Innovation Index, much below other BRICS nations. Indian
graduates, largely trained in services, have difficulty innovating
beyond that approach.
Barely 700 technology product startups are
launched every year in India versus over 14,000 in the United States,
according to the Microsoft Accelerator database.
For India's risk-averse middle-class, entrepreneurship is the last recourse of the unemployed.
you go to a function, and someone asks you where you are working, and
if you don't say Infosys or Wipro, they say: 'Oh you did not get
placement (for a job)'," said Startup Village member Sreekumar Ravi.
is working on creating an affordable multi-touch computing surface that
could change the way people window shop in malls or place orders in
Startup Village aims to pluck innovators from college
campuses, and bring them into the fold after evaluating their business
ideas. Many of its in-house entrepreneurs are in their mid-twenties.
critics are sceptical if Startup Village would be able to launch the
next Infosys in India or even be successful in its goal of incubating
1,000 online companies.
"I will be thrilled if they do even a
quarter of that number. But do I think they will do more than 100?
No." said Mohan from Microsoft Accelarator. "I mean I hope they succeed.
But hope is not a strategy, hope is only a prayer."
© Thomson Reuters 2012