Two cheers for India’s startup boom, not three | authors | Hindustan Times
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Two cheers for India’s startup boom, not three

India has emerged as the fastest growing startup hub worldwide, and is among the top five in the world with 4,200 startups estimated by end of 2015, up 40% over the previous year. As many as 80,000 jobs have been created in startups. As much as 72% of the founders are less than 35 years of age writes N Madhavan

authors Updated: Oct 19, 2015 01:26 IST
N Madhavan
Startup Village in Kochi. It aims to launch 1,000 startups over the next 10 years and search for the next billion-dollar Indian company.
Startup Village in Kochi. It aims to launch 1,000 startups over the next 10 years and search for the next billion-dollar Indian company. (HT File Photo)

It is raining startups and venture capital in India – not bad for a not-so-good monsoon year. Should we be celebrating? The answer is yes. But I am tempted to add some other words. Such as “err…” “ummm..” and “but….”. Startups are like that and we in India have to be more careful.

First, the good news. Industry association Nasscom gave us solid numbers last week as it released its startup ecosystem report for the year. As much as $5 billion per year — almost $100 million a week (Rs 600 crore!) — is the estimated funding that startups are going to get in 2015, 125% above 2014. As many 1,200 technology startups have been born in 2015 so far.

India has emerged as the fastest growing startup hub worldwide, and is among the top five in the world with 4,200 startups estimated by end of 2015, up 40% over the previous year. As many as 80,000 jobs have been created in startups. As much as 72% of the founders are less than 35 years of age.

As someone who watched the 1998-2000 startup frenzy crash and burn, I want to add some notes of caution: Startups everywhere have a high failure rate; a lot of new startups are just glorified apps or websites doing pretty much predictable stuff; funding may be part of the venture capitalist bandwagon. Bandwagons often result in bubbles. Some valuation rules are very dubious.

There’s room for measured optimism, however. Emerging areas such as big data analytics, Internet of Things, robotics and renewable energy are so rich in long-term potential, and India is so rich in talent, that there is no way India cannot have a piece of the growing new cakes.

Also heartening is the fact that unlike in 2000, the new startups have discovered some procedures to build partnerships, and early warnings from investors are building a culture of “fail fast” that could minimise damages. One can also sense that like in the Silicon Valley, failures may become badges of honour for learning than be associated with a traditional Indian stigma.

Above all, mentors, lawyers and accelerators have emerged to help plug-and-play innovators so they can focus on the real work and not get caught in India’s famous web of red tapes.

All said and done, I would still say two cheers rather than three for the startup boom. The picture is rosy, but no harm in looking out for red signals.