The Billion-Dollar Baby Boomers – The Economic Times – 21-Dec-2014
December 27, 2014 - Uncategorized
Jyoti Pande Lavakare
A discussion at an entrepreneurship conference a few months ago revolved around missionary versus mercenary internet entrepreneurs, a concept that John Doerr immortalised in a Wharton essay almost 15 years ago. The American venture capitalist described Silicon Valley as “a state of mind” and that it had succeeded in unleashing the power of entrepreneurs, whom he called “provocateurs, risk-takers and innovators”.
Now, in what appears to be a tentative intersection between the missionaries and the mercenaries, a cohort of Indian-American entrepreneurs and angel investors who straddle two worlds is trying to build billion-dollar companies that are born of Indian founders in India. They’re calling these the “Billion Dollar Babies” (B$Bs).
“These are angel or venture-funded product companies that have some traction and show signs of early success. These are small companies that have already validated their product in India and have global ambitions — and they have been founded by Indians in India,” says Venktesh Shukla, who is leading the charge, describing what a B$B would look like.
Access to the Best
Shukla is president of the Silicon Valley chapter of The Indus Entrepreneurs (TiE), a not-for-profit global network of entrepreneurs and professionals with origins in India. He is currently in India along with fellow Indian-American entrepreneurs BV Jagadeesh and Raju Reddy from the Valley, leveraging the network’s contacts for all they’re worth. The trio is travelling from New Delhi to Hyderabad, Bengaluru and finally to Mumbai, where they will announce the names of the first three B$Bs on Monday. According to them, initial feedback has been “awesome”.
“Government representatives have offered all policy support to create Indian B$Bs. They said they’re willing to do what it takes to create B$Bs out of Hyderabad,” said Shukla from Bengaluru. Also, eight-year-young Indian Angel Network, a New Delhi-based offline platform of high networth individuals who invest in startups from India, is partnering with TiE Silicon Valley (TiE SV) to create B$Bs and, at a recent meeting with some angel investors in New Delhi, there was a buzz as investors and VCs asked for more details. “It’s like taking a sturdy sapling and transplanting it in a rich, fertile environment that will accelerate its growth,” said an Indian investor in New Delhi.
Indian startups will get access to Silicon Valley’s rich (in more ways than one!) ecosystem of bright minds, successful entrepreneurs, VCs, talented executives as well as potential customers. “This initiative will encourage entrepreneurship in India by creating successful role models with a global outlook and reach,” Shukla said. India will be the anchor market and product technology hub for these startups in their journey to become billion-dollar companies.
“Basically, the only differentiator between talent here [in India] and there [the Valley] is the environment. People in both places are equally talented. But let’s face it — all the big [potential] acquirers are still located there. It definitely helps to be a stone’s throw away from your buyers and investors,” said another VC of Indian origin who didn’t want to be named.
Shukla and his team believe that they can help create two to three B$Bs out of India each year. “There’s no reason not to expect that — the size of the talent pool in India is next only to that in Silicon Valley. If the Valley can come up with five to ten companies valued at a billion dollars every year, then India can easily come up with two to three,” says Shukla from Hyderabad. His cohorts at TiE SV believe that given the size and complex nature of the Indian market, startups that validate their technology, ideas and proof of concept here would also thrive in a world market; and he has the support of almost 300 charter members to build this next generation of enterprise.
“We have already identified three companies and have to find another two till December 31,” said Shukla, noting that the criterion for choosing which companies to support will be based on three factors. They must already have either significant revenues or customers, should be solving problems of global appeal and at least one of the founders must be willing to relocate to the Bay Area.
The India Advantage
And what will the B$B programme offer these companies? “From providing office space, good lawyers and accountants, helping find clients, employees, to the most crucial point of connecting them with the right mentors and VCs and plugging them into the local ecosystem…we’ll handhold them through it all,” said Shukla. Already, 36 angel investors from among the 120-member TiE Angels platform Shukla created in 2011 have offered to give their time to mentor Indian startups through this program.
Indian startups could look to their Israeli counterparts for inspiration. “There are several Israeli companies that are in the billion-dollar league. They know how to leverage their networks and contacts. They have a great support network in the Valley — and because they have no domestic market to speak of, they have the ability to think globally from day one,” said Shukla, who left the Indian Revenue Service in 1987 to move to the US.
On the other hand, India provides a large domestic market where startups can validate and refine their products before entering the global arena. That companies such as Flipkart and Snapdeal have demonstrated that Indian startups can multiply value quickly has fuelled the B$B dream. “There are only 5% Indians [people of Indian origin] in the Valley, but currently more than 50% of enterprise-oriented startups in the Valley have an Indian-origin co-founder. In fact, the joke right now in the Valley is that you can’t get funded unless you have an Indian co-founder,” says Shukla.
He firmly believes that there is an advantage to the proximity to the Valley. “It’s the quality of people you could run into at your local cafe. There are many more risk-takers in a more concentrated area, people who have gone through the experience, willing to help others — it’s a special place,” said Shukla, adding that ideas that sound crazy are most likely to find support in Silicon Valley than anywhere else.