A&Is are giving a big push to India’s startup dreams

In 2013, Khadim Batti, 41, was a small entrepreneur staring at a big problem.He and a colleague from Huawei, Vara Kumar Namburu, had founded Whatfix, a startup that helped enterprises build and improve product usage for customers. Using clever and interactive walkthroughs, their solution was able to improve adoption and usage significantly. “We saw a big market in the US,” says Batti. But for the first-generation cofounders with little exposure to the US, cracking that market proved a challenge. “We had no idea how to get there,” he says.Going through an accelerator programme for startups seemed like the easiest route. They applied to two — Silicon Valley-based Y Combinator (YC) and GSF, one of the early Indian accelerators. “We picked accelerators that offered US exposure,” he says. They made it to GSF’s 2014 cohort. GSF mentors young Indian startups while giving them a two-month stint in Silicon Valley, offering learning and networking opportunities. “GSF opened multiple doors. That’s where we found our first customer and our first investor. We gained a resourceful peer group and also landed our first big recruit,” says Batti, with evident pride on a phone call.Vispi Daver was among those who Batti and gang met in Silicon Valley and left an impression on. The Silicon Valley-based investor, who had previously invested in companies such as Makemytrip and Carwale, became Whatif’s first angel investor in 2014.Later, he invested again, joined Whatif’s board and, in 2018, became senior vice-president to help grow the US business. Whatif today has over 100 employees, 350-plus customers (including BMC Software, Heineken, Flipkart and Wipro) in 40 countries, with 70% of its business in the US.

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Batti’s ambitions have surged. Already cash positive, he expects to treble both customer and revenue base in 2019. Operating in a market pegged at $8-10 billion, with competitors such as Israeli startup WalkMe, Batti is digging deeper and dreaming big.“Future? I don’t want to sell out. Someday, we will be a billion-dollar MNC,” he says.Stories such as Batti’s are commonplace across India’s startup ecosystem. For firsttime founders coming from professional backgrounds, accelerators, incubators and mentorship programmes can mean the difference between a bust and a billion-dollar startup. Oyo founder Ritesh Agarwal was famously picked for the two-year Thiel Fellowship when he was 19. With India becoming one of the world’s great nurseries for startups, incubators and accelerators have also doubled down on their activities here, setting up local units. These include incubation outposts by large tech companies and venture capital funds, independent accelerator programmes, initiatives and exchange programmes run by institutions and governments. They offer a range of benefits — combinations of investment, mentorship, office space, networks for elite talent and investors, exposure trips and suchlike — usually in exchange for a small equity stake in the company. These programmes are helping propel many Indian startups into a stable orbit of scale and sustainability.

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Set up in 2012, Gurgaon-based GSF accelerator has nurtured over 50 startups, including Little Eye Labs (acquired by Facebook) and Zapr Media Labs (acquired by Star India). “India’s startup ecosystem has come a long way. Its accelerator and incubator (A&I) landscape mirrors the change,” says Rajesh Sawhney, chairman of GSF. In 2012, GSF invested $25,000 in a startup with a two-month Silicon Valley exposure. It now invests $250,000 and has added stints in China and Japan on its global immersion programme.A&Is are finishing schools of sorts for aspiring entrepreneurs and early-stage ventures. A&Is mostly run fixed-term (3-12 months), cohort-based, mentorship-driven programmes, culminating in graduation or “demo day” and help turn promising ideas into sustainable businesses.Getting through a reputed accelerator involves a rigorous selection process. At YC, it entails a detailed application form, followed by a 10-minute video interview if selected and then a face-to-face interview in Silicon Valley. Every year, YC selects two batches of startups that receive seed money ($120,000), advice and gain entry into the hallowed world of YC alumni in exchange for 7% equity.

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India’s A&I club is growing bigger. While the old ones such as Microsoft Accelerator are digging their heels deeper, some like Google Angelpad are pivoting their models even as a flurry of new ones — from YC to Techstars, Entrepreneur First and Sequoia — are placing their bets on India. “India is the biggest opportunity in the startup world outside of the US. We have big plans here,” says Matt Clifford, cofounder of Entrepreneur First (LinkedIn cofounder Reid Hoffman is among its investors), an accelerator programme for founders that will debut in Bengaluru in February.

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Rising tideAs a trend, A&I isn’t new in India. The first big wave showed up after 2008 with the likes of Morpheus, Kyron, The Hatch, Microsoft and 500 Startups setting up India accelerators. Amid startup fever and funding frenzy, the A&I count in India, at its peak crossed 60, industry insiders say. A shakeout followed. Reckless copycat players, driven by irrational optimism and undifferentiated strategy, were to blame, in parts. It also signalled a tactical retreat to prepare, as India’s startup ecosystem plotted its next growth phase.That wave has begun. “Multiple indicators point that the Indian startup ecosystem is approaching escape velocity. In both quality and quantity, Startup India is entering a new growth orbit,” says Atit Danak, engagement lead at Zinnov, who worked on the Nasscom-Zinnov report on Indian Startup Ecosystem (edition 2018).The report concludes that a sharp rise in unicorns, resurgence in investments, founders and investors with a clear vision and rapid growth in the adoption of new technologies amid a healthy growth in startup base — 7,500-plus in 2018 — make India the third largest startup ecosystem in the world. A&Is have been keeping pace.After 2015, 35-plus corporate accelerators have been set up in India. Since 2016, more than 14 bilateral exchange missions have been set up.

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In February, besides Entrepreneur First, US-based accelerator Techstars will debut in India. Since 2014, the global pioneer Y Combinator has been scaling up its India intake. Its India alumni network today has 100 founders. Its winter 2019 batch funded eight Indian startups. “Our alum network here is growing rapidly. We are very bullish on India,” says Adora Cheung, partner, Y Combinator.Cheung’s optimism echoes far and wide. VC firm Sequoia just announced its India accelerator.In 2017, NetApp rolled out its Excellerator Programme.In 2016, German MNC SAP started SAP Startup Studio accelerator with seven startups, and now graduates 16. From Barclays to Google, IBM to GE and PayPal to Ikea, MNCs of all shades have an A&I programme. Some, like PayPal, have evolved with time. PayPal’s director Sathish Vaidyanathan says its incubator, which was broadbased at inception, now focuses only on fintech startups.

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Homegrown Indian firms, from Yes Bank to Reliance Jio and Airtel, are joining the wave, too. There are also specialists who will launch or run an incubator or accelerator for a partner. ANSR and Zone Startups India are two such outfits. “Over the last decade, India’s startup ecosystem has matured. The fluff is out. The real journey begins now,” says Lalit Ahuja, cofounder, ANSR, which is partnering Techstars in its India plans.Zone Startups is helping firms such as Lodha Developers, Axis Bank and Viacom18 set up their A&I programmes. AutoNebula is India’s only A&I focused on startups looking at connected, autonomous mobility.Governments at multiple levels are also joining the bandwagon. In 2018, Zone Startups helped Kerala Startup Mission launch one. From T-Hub in Telangana to 36 Inc in Chhattisgarh, state governments are funding their own A&Is. Atal Innovation Mission is setting up 101 incubators, of which 30 are already operational.In the last two years, there has been a big push for bilateral A&I missions, from South Korea to France, Israel to the UK. The European Commission’s Soft Landing programme aspires to build stronger ties between Indian and European startup ecosystems. In 2018, A&I’s networks in EU and India (10 European and 11 Indian) kicked off their partnership in Bengaluru. “India’s vibrant startup ecosystem is impressive. Europe has a lot to learn from India,” says Maria Lopez de Bayas Alcantara, who was in India as part of the Soft Landing programme. In 2018, the Indian government-run C-CAMP was selected by CARB-X Accelerator for projects funded by CARB-X, the world’s largest PPP devoted to startups focused on anti-bacterial R&D to combat drug-resistant bacteria.67705470

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India rideAs A&I shifts gears to grow in India, the stakeholders are mindful of ground realities. “India offers massive scale. It doesn’t take much for average startups to survive here for long without failing.Hence, there is a long tail,” says Bala Girisaballa, president, Techstars India. This often means plenty of quantity but poor quality. Unlike China, India’s diversity amplifies the range of issues that fledgling startups must negotiate even to survive.Not to forget India’s open digital ecosystems where global giants hold sway, as against China, which has ring-fenced its internet market for homegrown companies.

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Among the biggest challenges that Indian A&Is have faced is weak and shallow mentor ecosystem.“There are many mentors, but with insufficient depth, who are advising startups, says Paul Ravindranath G, programme manager, Google Launchpad Accelerator in India.Unsurprisingly, India bustles with startups in number but with relatively low success rate.Alex N Prather, cofounder of Capria VentureBasecamp, says they conducted a global study of 200 accelerators and found that while the top global funding success rate was 75%-plus, the average stood at 35-40%, and India’s was a measly 5-8%.Many welcome changes are afoot. As startup careers have become socially aspirational, governments across the board are embracing it.Large Indian corporations, too, have entered the fray, adding to the momentum of A&Is.Alongside these external shifts, India’s startup ecosystem is undergoing significant internal shifts. A growing number of startups — some 40%, guesstimates Girisaballa — are business-to-business, of which a large number think global markets from day one. Instead of being copycats, more and more startups today are based on deep-tech original ideas. B2B online marketplace Udaan, set up by former Flipkart executives in 2016, has become the fastest Indian startup to achieve unicorn status (valuation of $1 billion).“There’s a fantastic confidence that I haven’t seen in Indian entrepreneurs in the past. Success stories like Flipkart’s help,” says Girisaballa.Many are discovering India’s advantages.

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The country offers scale like no other, with a big pool of English-speaking talent. Its millions of mobile-first users, young demography and rising adoption of new technologies like digital payments make it an interesting playground for startups to test and validate business models on new technologies. Moreover, India is unique in that virtually all digital ecosystem giants — from MNCs (like Google, Cisco) to IT services (like Wipro, Accenture and TCS) — are present. This makes it a rare and rich breeding ground for startups looking at both products and services. Predictably, many like Google Launchpad and Techstars want India to be a key hub for focusing on emerging market problems. “We want to work with startups that are solving for the next billion, the emerging market problems,” says Ravindranath.Success begets success. Infosys cofounder Kris Gopalakrishnan, who is also chairman of the accelerator Axilor Ventures, says: “India lacked role models and seasoned mentors. More and more exits like Flipkart’s and founder money coming in will create a virtuous cycle for mentor and investor landscape.”All this is making India an attractive playground for a new breed of A&Is to innovate in.Learning curveMore than a decade since YC pioneered the idea of accelerators in 2005, many new experiments are afoot. “Earlier, we saw this tendency of isomorphic mimicry,” says Prather. Many used A&I constructs in the US as a template for markets like India. “That’s just not how startups are built. Innovation ecosystems of the Bay Area are hard to replicate anywhere,” she says. This meant that A&Is were using mentor-driven models without access to a robust mentor ecosystem. “India doesn’t have the rich, deep mentor ecosystem of the Valley. So, people built A&I hardware without the crucial software,” she adds.In 2016, they set up VentureBasecamp. “We wanted to experiment and see if we could take 80% of what early-stage mentors do and productise it. And if we could enhance the capabilities of young A&I managers (who aren’t very well equipped). This model has global relevance,” says Prather.

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Entrepreneur First is innovating on a new accelerator model where instead of startups, the thrust is on grooming and nurturing entrepreneurs. Its cofounder Clifford says that while selecting, they are vetting for skills, intelligence and character and not so much their business ideas.Already present in London and Singapore, they will debut in India next month with a cohort of six aspiring entrepreneurs who will go through 12 weeks of grooming programme.Deepak Menon, regional director (emerging markets)) of the nonprofit Village Capital, an early-stage VC firm, has rolled out an innovative model. It brings together a cohort of 12-14 noncompeting founders, puts them through workshops and then leans on peer selection to do the due diligence before picking out startups to invest and mentor. Last year, it worked with Omidyar Network to launch Civic Tech India 2018 accelerator.While these are doubtless interesting experiments, it’s as yet too early to forecast how they will play out. What is certain, though, is that the boom-and-bust cycle — an integral part of any startup ecosystem — will continue.

Read more: economictimes.indiatimes.com

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