Mon, Dec 10, 2012 - Page 12 News List

The village that might...

Startup Village plans to establish 1,000 tech-related companies over the next 10 years, but the goal is fraught with problems such as a lack of innovation and a dearth of investors

By Diksha Madhok  /  Reuters, KOCHI, India

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 550km 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 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.


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 report.

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.

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