Indian start-up – Can it look BIG?
Posted by endiya on August 20, 2007
India is not new to entrepreneurialism. In fact, Indians always had the entrepreneurial streak what with higher education not being sought after in the yesteryears, and the ideal way ahead for many being setting up their own business.
Things, however, have changed today. Pay-packets have been increasing at a fast clip and competition has become global. The young, therefore, cannot be blamed when they look at other professional avenues instead of setting up businesses from scratch. Besides, in spite of the eco-system for entrepreneurship development improving, the fact remains that Indian start-ups cannot look as big as their counterparts in the US. There are multiple reasons for that.
For a start-up, it is important that at least the founding members (if not all the employees) understand the value of equity. The concept of sweat equity is well-ingrained in the US, what with even accounting firms willing to go for it. In India, however, it has just managed to take baby steps. Finding partnering accounting firms who are willing to accept it is unfathomable at present in India. Entrepreneurs here either have to pay big bucks or be satisfied with small ones that don’t have sufficient experience.
Funding is another reason why US-based start-ups can scale up more quickly than Indian ones. Angel fund or seed capital is relatively easy to get in the US than in India. With time, however, things have improved in India as well, what with venture capitalists bringing Indian companies on their radar and educational institutions setting up incubation centers.
Operations wise, in the US, there are plug-n-play facilities for entrepreneurs to set up their base. On the other hand, Indian companies have to set up their own infrastructure. This takes time as well as money what with real estate prices soaring across regions.
Power and Internet are more reliable in the US while in India we still have a long way to go in these respects. What’s more? In the US, even additional facilities like conference rooms, recreation centers and gym can be shared. So it is easier to attract and retain employees, courtesy good infrastructure and ambience.
In India, all of that is difficult. This in turn makes it tough to attract and retain employees who may prefer working in a “big” company because of great infrastructure and facilities rather than a start-up where adjustable nature and contentment with what’s available are assets. These issues in turn get inflated if operations need to be set up across multiple cities.
All of the above affect productivity levels of Indian start-ups thus making it difficult for them to look big in front of their US counterparts. This may even be in spite of them putting in equivalent effort, time and money. In fact, they may have to expend more, on all the counts.
Farhan said
I would think that a startup’s founders need to have a technology leader among themselves. too often I see businesses that are an ‘idea’ with no clue about its technical feasability. This means that in India we lack technology leadership among entrepreneurs. A charismatic technology leader is enough of an incentive to get people to work for a start up. I have personally never faced a problem of getting the right person into the team. They are smart enough to understand that a startup means more work, less perks and more excitement. But on the whole I agree that we don’t have the rest of the infrastructure in play. For instance, we don’t a single, modestly priced hosting facility. Nor a professional incubator or a business hotel.