Indian startups: What has the past shaped and the future beget?

With the Budget announced and the beckoning of the financial year end, this post reviews India's startup ecosystem and shares some "bytes" from entrepreneurs and investors about what's ahead.
Written by Srinivas Kulkarni, Contributor

How does it feel like working for a tech startup? Especially in India? Especially now?

The answer isn't that simple, neither is it too complex. It's not something you'll get in a heartbeat nor will you need to describe it with a long narrative. Ironically, not so much of binary reference here.

For those who've been part of the startup community from the very early stages, or for those who've joined in the recent years it is all about knowing and being part of a dream that is ever changing and ever evolving, dynamically and rapidly. Makes it all the more exciting especially now!

With many startups being funded rapidly, a lot who were employed with major MNCs or IT firms are taking the plunge into the startup world--one created by many illustrious entrepreneurs, venture capitalists and investors who are rising every day--striving hard to make that huge dent in the universe.

There is certainly an element of geekdom that has a notorious glamour to it and is becoming a religion for many in India. Every day is an exciting experience for most of them.

Sampad Swain, founder of Instamojo, said: "Every year it's slightly easy to start a company and much harder to get traction. More so, after launching Instamojo, we have got amazing reviews and feedback from our users. They love us!"

Exactly why all the hardwork, the struggle is truly worth it. Yes there have been some really talked about developments in the last month itself, one is of the famed announcement of Dave McClure's 500 Startups incubator coming to India and GSF India announcing its plans to fund 40 to 50 compaines by 2014. The growth within the startup ecosystem is emminent and denotes the fact that we have truly arrived!

In fact, Mike Lebius of Angel Investment Network had an interesting insight to share. He said that Indian Investment Network, the Indian branch of their angelgroup, received 30 percent more funding applications in 2012 than in 2011 showing the rising growth of entrepreneurship in India at the moment.

Interestingly, Peter Claridge of Unmetric, has a unique perspective as he's a foreigner living and working in India.

"With the product startup eco-system blossoming, I'm seeing people realize that there is far more to life than Java or C++. Finally, engineers by degree can shake off their shackles and have the opportunity to find good paying jobs as something more creative," said Claridge.

He also stresses on the "bit of a bubble" the startup industry seen in the e-commerce sector started by SnapDeal and hopefully now ended with the recent round of funding from Flipkart. Claridge is of the opinion that these companies can't continue to bleed cash, hence consumer prices will then have to rise.

If you ask me, the startup industry has been growing steadily for a quite a while now, with maybe a slightly higher upward curve in the last few years. What's notable is an allround development with rapid growth opportunities and shaping of work environments each and every day within the startup community of India.

But for some of those who have seen the ups and downs of this ecosystem for a much longer period have slightly different perspectives too.

When asked about the growth of the startup eco-system, Mahesh Murthy, managing partner at Seedfund and founder of Pinstorm, highlighted the positive trend of the growth in seed-stage funds from just one or two, to eight or nine.

This brings forth the growth of effective incubators from a handful to a dozen. But he also points out the other side of the coin and said: "There is a not-so-positive trend of certain incubators who don't have much money, have created dozens of startups who have a name, some idea, but no team or funding to take their ideas forward. So many are sadly falling by the wayside at this stage.

"The new Budget allowing corporates to put 2 percent of their revenues in incubators towards 'CSR' will make it even worse. But I guess it's part of the evolution of the ecosystem--growth is followed by culls, and followed by growth and so on. All we have to do is learn to survive the bad times."

On the other hand, Neil Patel of Kissmetrics, is positive about the fact that there are more investors coming to India to invest and more entrepreneurs who are creating companies solving real problems in India.

It's quite interesting to see this array of various sentiments across the startup ecosystem and a vibrant approach that has driven this community especially now, in the wake of  the recent announcements of the Budget 2013 and the beginning of the new financial year for many startups and investors.

So, I decided to ask some of the entrepreneurs and investors within the startup community in India about their insights and here's what they had to say about the budget and the year that is ahead of us for startups.

Mike Lebus, Angel Investment Network:

"There were positives and negatives to come out the recent budget. On the positive side, the finance minister has said that SEBI will prescribe requirements for angel investor pools, by which they could be recognised as category I AIF venture capital funds. The tax benefits this scheme would offer are a step in the right direction. However, my main concern is that this may leave out those individual angel investors, who are not part of a group and makeinvestments in their own personal capacity. Investments of this nature make up a huge part of currentangel activity in India and are a very important factor in helping the Indian start-up ecosystem continue to grow."

Mahesh Murthy, managing partner at Seedfund:

"The budget has made one difference - and it is a philosophical one more than anything concrete. For decades, the philosophy behind our budgets has been to further license raj (regime) and then support the big companies to make them even bigger. For the first time ever in this budget there seemed to be a realization that an economy doesn't truly grow when you make the big bigger, or the rich richer - and that the economy really grows when you allow the small to become big. It was the first budget which featured the word 'entrepreneur' - and that's the good thing."

He also highlighted that the the ideas and SOPs presented for supporting entrepreneurs were not so interesting. And said that it's now up to the community to lobby the politicians in North Block and South Block and tell them what makes the world go round ending with a witty "because, for sure, Sharad Pawar doesn't" remark.

Sanjay Mehta, founder and joint CEO at Social Wavelength:

"Year after year, the startup movement is India is only getting stronger. There are major improvements over the years, in the startup ecosystem, be it in form of events and support systems, to incubators, accelerators, mentors, finance sources, etc. All in all, these have contributed to encourage entrepreneurs and build the momentum on startup growth.

As far as the budget goes, we have now grown to maturity as a country, where the budget does not make such a difference. There are usually no drastic changes in policy, and due to which reason, business and life goes on, even as a budget comes and goes. Minor changes are usually coped with, by people and businesses, and they end up benefiting few a bit, hurting few others a bit, and not making much difference to most!"

Vijay Anand, entrepreneur and founder of The Startup Centre:

"I'm quite happy with the way the Indian Startup Ecosystem is doing. We are growing in terms of the absolute number of startup that are coming up - the number of long term success candidates that we can name - and its not restricted to any one city, but spawning across the various hubs, be it Chennai, Bangalore, Delhi, Hyderabad, Pune, and etc. As far as the Budget he says that the investment tax is a bit worrisome."

Overall many sentiments, positive or negative showcase a lot of vigor and a vibrant drive to make a difference, not only to the lives of the entrepreneurs, investors but also to those of people around, solving real problems of people and changing lives of many in the country and across the globe. That's what the Indian startup scene is hopefully trying to establish.

Now the real question is whether this voice resonates only amongst the esoteric group of passionate folks within this industry or is this something that will be recognized by the entire nation and help boost this source of economic growth with a focus on broader spectrum of technology within the country.

What are your thoughts on this one?

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