| Every year, Electronic Data Systems (EDS) Vice-President Jerry Rao gets
umpteen business plans from IIT and IIM graduates. "Almost one every
week," says Rao, admitting that he has only invested in two-three,
but looked at about a dozen seriously. In the past, they were mostly emails
from distant friends or cousins, college alumni or their friends asking
for help in getting jobs or interviews abroad. But of late, it has become
emails with massive attachments containing business plans, term sheets,
work etc "from people who conveniently claim to admire me and seek
'advice and guidance' with a hint thrown in about seed money," says
Interestingly, these are all young people with B.Techs and MBAs who
would rather live in India and start companies-that each one of them believes
will soon become a Wipro, an Infosys or a TCS-than go abroad and take
up a cushy job.
The plans cover an interesting range of subjects-from revolutionising
retail trade in Gujarat to transforming point-of-sale analytics, from
a new model for insurance intermediation to a theme restaurant that builds
on Indian history. But what is telling is the persistence. "They
never take a no for an answer... everyone wants 'five minutes' which invariably
go on to become two hours," adds Rao.
And every year, this number is increasing. Moreover, with 20 million
pc users (growing at 25 per cent yearly) and 142 million mobile users
(adding 6.5 million new users every month), India is today a hotbed for
innovation in the wireless infrastructure or mobile content space. And
people are taking note.
"We have already reached a certain level of maturity in providing
services. Now the next level of growth and profitability has to come from
innovations," says Kiran Karnik, president, NASSCOM. In short, it's
boom time in India and entrepreneurs are scouting for opportunities everywhere.
This is not restricted to students only. Buoyed by the success of Google
and more recently YouTube and MySpace, even professionals and middle-aged
businessmen are looking at starting their own company. Of course, for
some, there is the lure of being your own boss before you turn 35. Even
venture capital (VC) money into the country is on the rise. According
to the Securities and Exchange Board of India (SEBI), in 2006, domestic
and foreign VC funds invested Rs 13,480 crore in Indian companies-an increase
of over 100 per cent over the previous year-and are now looking at investing
in startups. "The new trend is no longer the big company," says
Hemant Sachdeva, corporate director, Bharti Airtel. It is now an ecosystem,
where everyone has an equal role to play and it is quite ready for the
next 10 years now. Adds Nandan Nilekani, CEO, Infosys Technologies, "We
are at a stage where the companies are ready to take off."
However, it may still be early days for innovative startups, suggests
a report by Stanford University research scholar Rafiq Dossani and The
Indus Entrepreneurs (TiE) director Asawari Desai. According to the report,
over 90 per cent of the VC funds in India got invested in late-stage mature
service providers and most of the remaining went into new firms which
were merely replicating proven business ideas. Some innovative startups
are being funded in India mostly by small Silicon Valley-based VCs. Their
success may be important in demonstrating to India-based VCs how to fund
product companies. Today everybody wants to be a Google or a YouTube.
Many even end up looking like them. Social networking sites such as Orkut
and Friendster have spawned a host of me-toos. And if that wasn't enough,
YouTube, Myspace, Flickr, Kodak Photo Gallery, Google have their "Indian
versions" today. Even VCs admit that many of the ideas they get are
copycats-such as yet another online travel agency or social networking
site or online DVD library. Often the business plans are ill-defined.
The flip side is that VCs are rushing to fund what has already been
invested in-the online travel space is one such example. The big three
in this space have already got two rounds of funding each, leading analysts
to feel that it is "overfunded". But Sandeep Murthy, partner,
Sherpalo Ventures, counters: "How to assess whether or not companies
are being innovative? You have to consider that the market is early in
terms of creating new companies and so one has to take into account how
companies actually meet the existing customer needs."
ARE YOU BEING SERVED?
Agrawal (left) with Baragi
Rajeev Agrawal, Kaushal Singh and Ashok Baragi
|Payezee, a wireless credit card swiping
machine, will come to the guest's table instead of the card
being sent away. The device, which costs $89, is popular in
China, Philippines, Malaysia, Singapore, Indonesia and Nepal.
In India, it's being used in restaurants like Dumpukht (Bangalore)
and Monza (Mumbai).
avoids credits card frauds and cuts down waiting time in restaurants."
FOR WIZDOM: Kannan
(left) with Lavanis
Anand Kannan and Yogish Lavanis
|Wizdom, a mobile phone software, helps you
study for your GRE or GMAT while on the move. The GRE package
costs Rs 6,000 and can even evaluate the student's level of
preparedness. The cost of using GPRS is Rs 1.5-Rs 2 for an hour-long
session, so a course of 60 lessons will be less than Rs 200.
A coaching class could cost Rs 8,000.
is interactive and provides a personalised learning experience."
Vice-president Arvind Jha
(front) with Radstone
Graham Radstone, Vadim Dagman and Prabhat Jain
$5.5 m (founders, angel)
|Now you can watch TV channels of any country
in India or Indian channels in another country. Hava works by
connecting it to your Internet and video source, like a TV,
DVD player or set top box. So if you're travelling, you can
call a family member back home to play your favourite programme
for you which you can watch on your laptop or Smartphone. Hava
is available in the US for $249 but will only be here in the
first quarter of 2008.
"Our USP is our simplicity. Hava installs in seven minutes."
Sankaran (sitting) with Rajani
Nirmala Sankaran and Harsh Rajan
$3.5 m (non-institutional)
|Heymath! is a software that promises to
transform those boring math classes into fun with the use of
animation, graphics and quizzes. What would take teachers 4-5
lessons to teach, would now take one. Schools in the US and
Singapore are already using it. The India numbers are small,
but with prices as low as $13 (Rs 600) per student annually,
many schools are showing interest. There is also a home version,
for $99 (Rs 4,500) a year.
"Parents can now avoid tuitions, children can learn at
their own pace."
REMAKE: Shan Appajodu
Shan Appajodu, Mike Larkin and Kiran Kamity
Self, then $4 m from VC
|It allows you to turn any USB 2.0 compliant
portable storage device, such as flash or hard drives-even an
iPod-into a PC. So plug in your MojoPac device into a Windows
XP computer and recreate your PC- complete with your desktop,
shortcuts, applications and preferences. Slated for launch in
India in the next three months, it will support English, Hindi,
Telugu, Tamil and Kannada.
can take your PC anywhere without actually carrying it."
Over $5 m in Series B from Norwest Venture Partners
|You can use M to listen to music directly
from the web, for free. There's also a mobile/wireless service
for your Windows Mobile 5.0 smartphone. Plus access online music
libraries of five of your friends anywhere in the world. It
costs $14.99 (Rs 690) for the download and $5 (Rs 230) per month.
To be launched in India in the second quarter of 2007.
"Sharing music here allows much greater width and depth
Therefore, principal sources of finance for seed and small enterprises-not
just in India but globally- remain informal methods whereas 50-60 per
cent startups do without external funding. Dossani attributes this to
a mismatch between the skills of the investor and the entrepreneur's needs.
This again could be due to a lack of technical skills or market awareness
as well as the absence of a wide-enough professional network for the early-stage
entrepreneur. Says Dossani, "One of the reasons for Silicon Valley's
success is its vibrant network of 'weak ties', that is, opportunities
for would-be entrepreneurs to interact with financiers, potential co-founders
and fellow employees through professional networks. Entrepreneurs or inventors
are more connected to their colleagues in other companies and this allows
more experimentation in combining ideas from disparate sources and diffuse
them in all directions. These are more useful than the 'strong ties' typically
found in India, such as family, close business associates and friends,
because they enable access to wider networks of people."
What needs to be done, says Karnik, is to create an environment that
can foster innovation. For instance, educational institutes like the IITs
and IIMs encourage entrepreneurship and even have incubators to promote
them, but many other universities frown upon them. That needs to change.
"An industry-academic link is needed," he says. To foster innovation,
nasscom has started an award for 'Product Model Innovations' that honours
Indian it companies which have created new ideas, products, processes
or technologies. The idea is to build innovation as the key differentiator
for the Indian it and BPO industry. Shortlisted companies-emerging as
well as multinationals-will present their product to a panel of judges,
who will then decide on the winners.
Some industry-watchers feel that funding by entrepreneurs like Azim
Premji of Wipro, N.R. Narayana Murthy and Nilekani of Infosys will encourage
other entrepreneurs to invest in seed companies. Says Arvind Jha, vice-president,
Monsoon Multimedia, "They are thought leaders. If they set the trend,
others will follow."
What is truly encouraging is the emergence of casual, 'unconference'
kind of platforms for new enterprises. These 'geek meetups' are in the
form of Bar Camps, Code Camps, Foo Camps, Tech Cocktails, Mobile Mondays,
social networking sites like Techtribe.com and the recently-launched Proto,
the Indian version of Demo, which has been described as the 'Sundance
Film Festival of technology startups' and has served as a launchpad for
many in the Silicon Valley. These are, in fact, informal meetings where
entrepreneurs, VCs, the media and industry professionals gather and companies
demonstrate their business models. And the lucky ones get funded.
In our pages, we have identified six product companies that have been
innovative. Since most of them are startups, few are currently making
money, and some may even fail. But it's equally likely that somewhere
within this group waits the next Infosys. What's important, though, is
that we have the opening notes of a new theme song. As the music builds
up with mentorship and funding, it could build into a great opera.