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By Diksha Madhok
KOCHI, India Dec 4 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, in the southern state of Kerala.
A caption reads: "We started Infosys in a room about this
size; it's your turn now."
His 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.
But 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 entrepreneurs.
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 paperwork.
"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."
Indian-born 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
"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 investor.
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.
The 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
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.
Spread 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.
Startup 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.
He 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.
"What 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
"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 give?"
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
The 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 between.
"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
Experts 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.
"If 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.
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 restaurants.
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
But 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."
(Additional reporting by Mark Bergen in BANGALORE; Editing by
Ross Colvin and Raju Gopalakrishnan)