Vijay Anand | The Startup Guy.

The Gap in the Indian Innovation Ecosystem.

Posted on: November 19, 2007

“There is a definite lack in the number of fundable ideas in the ecosystem. What we need is more incubation funds.”

I am not sure if that’s so. Fundable ideas, in most cases denotes a team that is mature enough and has the market valuation and the credibility to be looked seriously by a VC firm, not random thought processes that spew out of high school students.

I am even more not sure as to how more funds can help. We don’t need more funds. We need a way for most of the already existing funds to engage in a meaningful way in the life cycle of the entrepreneurship ecosystem.

For some reason, it feels that the stages that an entrepreneur goes through here in India, is in the best form, jerky. There are no proper transitions and the environment is still a little too harsh on young entrepreneurs to foster themselves in the wild. Though there are quite a few incubation centres across the country, very few of them have success stories in their pockets. Most of them are academic institutes, and they run to understand and gain experience – as an insight into the lifecycle of an entrepreneur – and in most cases, a helpless spectator when the startup hits some obvious mistakes along the way. It could have been avoided, if there was an experienced mentor at the helm. In most cases, that term is still so very underrated or a misnomer for a poor substitute of something else. That’s one of the major issues.

The main gap that i would point out is the transition that a startup makes from putting a team together and having their first prototype ready, and then getting to a point where a VC is ready to fund them. I do have a better perspective on this aspect of companies – about 200 of them, thanks to Proto, and I think there is a definite Gap here.

The biggest asset right now, in terms of valuation has become the team and the market/product positioning of the team. If both of these are there then the company, is relatively in very good terms. Considering that the market is yet maturing, and there are very few players offering products, most of these companies have yet to decipher the art of market capturing and all, but for now, it is not a much critical skill. Alliances with the media – because of the spurge and growth in that sector – makes getting a slot much easier and joint advertisement campaigns arent that tough as they are in more matured, saturated markets.

Let me put it this way: If a team and product positioning is what is crucial, and i believe it is, most of the companies that do come to proto have that. Or they have that within a timeline of about 6 months. What does it take, to take that company from there, to a point where a full-fledged VC firm could sit down and work out their financials? That’s the gap, I am talking about. There is absolutely no one as of now – except for the likes of Mentor Partners, and a few other firms who are looking at such a niche gap.

I personally think there should be more of those.

I hear talks of Angel investment funds trying to setup incubation centres and a couple of VC firms wanting to establish incubation centres or linkages with incubation centres to get their creme de la crop. I am not sure if thats the best strategy to go about. Spot potential and nurture it. We cant get into this vicious game of spotting the one in a million anamoly and positioning ourselves to pounce on it at first sight. There is a responsibility for a lot of VC firms, to invest in this gap, and do something about it.

I do have some thoughts. Actually, quite a few long nights of being awake and scribbling have gone into it. In the true style of a blog, and what the comments section is meant for, we shall discuss it there, as the occasion arises.

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2 Responses to "The Gap in the Indian Innovation Ecosystem."

Vijay,

I agree with you totally. I believe being an entrepreneur is a “state of mind”. What we need in the Indian ecosystem is strong base of business support services of Mentors,Consultants,Coaches.

To give you a simple example of differences:

– A “Mentor” will show you how it’s done.
– A “Consultant” will tell you what you should do.
– A “Business Coach” will ask questions until you are doing what you need to be doing to increase the success of your business

Cheers

Bala

Agree with you Bala.

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