Three Significant Reasons Why the Indian Start-up Scene Sucks

Vineet is the founder and CEO of Teliportme, the India-based start-up behind the 360 app for Android that we reviewed last month. This is his first guest post. He’ll follow this up with three posts detailing the main issues. You can follow him on Twitter.

A lot has been written by pundits on how India is a great place for technology start-ups. I have to agree and disagree at the same time. While India is a great place to start companies that sell products (though mostly lower-end gadgets and items), it’s not too hot in terms of fostering technology innovation and taking big risks.

I can sit and argue on the exact definition of the terms technology innovation and big risks – but I won’t get into all that. Instead I’ll state the fact that the most “hot” company in India right now is someone like Snapdeal, or Flipkart – which are more like business innovations than new technology.

Why is this happening? I’d identify three issues for start-ups in India. The two biggest problems that we entrepreneurs face here are access to mentors, and capital; an additional one is poor PR.

1. Bad Mentors

I have met a lot of famous and true entrepreneurs who have built multimillion dollar companies; but none are in the Internet space. The ones who pose as mentors in this web industry just don’t get it. True story: one certain mentor from a very famous mentoring organization actually told me that, “Any business that doesn’t make money on the first day is not a business.” Imagine if Google had gotten his advice! He also happens to be an early stage VC.

2. Lack of Capital

Getting access to capital is another story. The so-called best VC firms here in India will straight up ask for 35 to 40 percent of your company irrespective of your progress or the amount invested. I once asked a VC what he would bring to the table if I let him invest in the company, and he had nothing to tell me. Indeed, he seemed actually offended by that question. I am not saying that all entrepreneurs need to be funded; some can self-finance, while there is also a lot of crap out there.

But then the VCs are not getting paid to sit on their asses. Indian VC’s have not gone through their first cycle of VC exits so it will be interesting to see how these funds have fared in the past couple of years. In general, though, I am pretty sure all VCs will blame the entrepreneurs and vice versa.

3. Poor PR

Another big problem we have is access to good PR – or rather, a lack of it. PR doesn’t make great companies, but it does help. We need the hype machine. Yes, it can also have the opposite effect – but nothing grows without hype, keeping people interested, and drumming up the FOMO [Fear of Missing Out] effect. I don’t remember the last Indian company I had that feeling about. PR helps create these effects. Without it, it’s left to the product to really work its own magic, without the spin

We need these things to fundamentally change and evolve in India so that we are able to build successful technology companies. When things do change, I am sure there will be Indian entrepreneurs who will take advantage of that – and then we shall have great technology companies.

[Image source: BusinessToday]