Weighing up Start-up Ecosystems Beyond India Entrepreneur's Editor-in-Chief, Ritu Marya, caught up with entrepreneurs at IIT Bombay's Entrepreneurship Summit to elaborate more.
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Most start-ups today are reliant on technology and if it is the nucleus of their businesses then the entrepreneurs no more have to stick to a single sector or close themselves in the Indian market. They need to look outside, not only for ideas but also to see the global money, talent and expats.
Entrepreneur's Editor-in-Chief, Ritu Marya, caught up with Netanel Raisch, CEO, Lishtot; Neel Cross, Chief Innovation Officer, DBS Bank; Daniel Ramamoorthy, Founder and CEO, Treehouse; and Chirag Kulkarni, Cofounder, Taco at IIT Bombay's Entrepreneurship Summit to elaborate more.
How do you see Ireland as the start-up ecosystem?
Daniel Ramamoorthy: We think of starting business in the US or Israel but we hardly think of Ireland as a prospective market. Ireland's economy is tiny, so it forces you to think outside your boundaries because, if you move to Silicon Valley, it will take years for you to take over the Silicon Valley, then to the western part of the US and then the entire country. But, within six to eight months you can dominate entire Ireland. It is a very small economy and a very receptive country, so it a good place to test and pilot.
So, any special initiative taken by the Irish government?
Daniel: There is more money in Ireland than there are ideas. The government there is very supportive and you can start a business in seven days, by getting yourself registered and starting a bank account. From the funding point of view, there is a lot of money. You can actually get the first $100,000 for free from the government without giving any equity. I don't know if there are countries as supportive or liberal. When Indian start-ups look outside India, they look at Singapore other than the US.
What other ecosystems you think are good for starting up?
Neel Cross: In Singapore, for every single start-up there is a government agency. But, I won't really go there to do business in Singapore because the population is very small. I think Indonesia, Thailand, and Philippines are easy place to start. As far as China is concerned, don't go there since it is so vibrant and vast, and it is really hard to succeed there.
Our prime minister was candid enough to acknowledge that start-up ecosystem in Israel inspired him to push for a similar environment in India. How does the Irish government treat its failed entrepreneurs?
Netanel Raisch: In Israel, it is easier to raise money if your start-up failed. This is really unique about Israel. Many of the investors there are looking for second time founders. It is strange but founders there feel that it is okay to fail, because if you have failed once then you learn much more than any fresh founder. The government tries to protect the founders who have failed once, so that they don't get de-motivated. Since, there is a sense of security; they are willing to take risks. Every start-up is given $150,000. Though you need to return it but only after you have achieved success.
What is the failure rate for start-ups in Israel? Does the government tracks spending by start-ups?
Netanel: I don't know the exact ratio. But it is actually a place which is motivated by success but not afraid to fail. If someone just take the money and try to use it for personal needs, then the government will understand. The government is not that foolish. There are enquiries where you have to show that you have used the money in a proper way. You can also take a certain portion for salary. The government gives the entrepreneurs option to think big.
Silicon Valley always had this attitude to change the world but unfortunately, India is yet to get there. You being an Indian yourself, where do you see a gap?
Chirag Kulkarni: Other than having huge money and everything, the biggest thing about the US is that people there are very hardworking and they are very helpful. I think that is very important because when you are building a company you are building with help of other people.Secondly, they wear failures on their sleeves. I am not saying start-ups in India or anywhere in the world don't work hard but, I think it is embedded in American start-up culture that they work till they reach there.
If Indian start-ups are to go global what would your suggestions be?
Neel: They should stay in India. There are loads of opportunities here. Don't chase the Silicon Valley dream because it is no more a fancy little dream, it's the land of the old. A lot of good things are coming out of India now. Some amazing stuff is coming out of Vietnam and Korea too. So, can't say go east or west but just stay in India. This is what Chinese did, they stayed in China.
Where should Indian start-up begin with to raise funds from a Singapore-based VC?
Neel: He can write an e-mail to start. You can setup the company at the hub. In Singapore, you will get good funds and valuation. But, your market should be in India.
When you say there is more money than start-ups in Ireland, it reminds me of first quarter of 2011 in India. The money here dried up by the end of 2015. So Ireland seems a good place to look for money but are Irish investors willing to invest in foreign start-ups?
Daniel: I will say the opposite thing. Come to Ireland. It is a small country, it does not have too many start-ups with ideas, so it actually imports ideas. But, it's not only about funding, funds are available everywhere. Thinking international, if you are an Indian company then you are perceived in a certain way. So, you can have your market in India but one office in Ireland. On your website, it would show offices in Ireland and London as well. This will change the perception about the start-up.
So when does the VC tells start-up that no more money is coming till you build something sustainable?
Neel: It completely depends on VC and the company equation. VCs are interested in making companies and money. But at the end of the day, it has to be sustainable and feed itself. Amazon made 25 cents last year and Uber made nothing, so, if I knew the answer I would be a very wealthy man.
(This article was first published in the March issue of Entrepreneur Magazine. To subscribe, click here)