Vikas Bajaj has a story on NYT about India’s slow pace of innovation. Nothing new and nothing most of you all didnt know already. Even the ubiquitous Sujai Karampuri gets a mention as is normally the case on stories based on this theme (no offense to Sujai – I love his blog and admire how outspoken he is).
This topic – call it ‘lack of innovation in India’ or ‘why no product companies in India’ or ‘where are Indian startups’ – has been touched upon umpteen times by media, bloggers (yes – I’m guilty too) and startup conferences and panels.
So, there’s absolutely no contest that there’s no or very little innovation happening in the Indian tech scene. I think we should move beyond the obvious and try to focus more on how to resolve the issue.
For starters, I’d like to point to a recent post by Fred Wilson who captured the essence of building a startup ecosystem quite well. By far, its one of the best and most lucid pieces I’ve seen on startup ecosystems. I’d say we’re still early in the first decade and have a long way to go yet.
Meanwhile, I also wanted to talk briefly about the oft quoted ‘not enough angels’ issue. The way I see it — the lack of angel funding is a classic chicken & egg problem in the Indian market. Lets say that hypothetically speaking, I have some extra money lying around that I’d want to invest somewhere. Lets say a startup pitches me for angel funding. Now, without any significant M&A activity or IPO’s, what is the probability of getting good returns on my investment ? Indian Internet, in its current form, is not a very viable market. So, what are the odds that I see more concrete returns in other sectors – be it stocks / real estate etc. and opt to invest in those sectors as opposed to tech startups ?
But some you may argue – arent angels supposed to be true risk takers ? Isnt angel investing more like – invest and forget (assuming you lost the investment). And I agree – thats the reason I say its a classic chicken and egg problem. Without some returns on investment, the sector might not attract a lot of angels and without the angels, there might not be a lot of startups.
Would love to hear your thoughts about it.