Actionable Insights into the World of Indian Startups

Chile is a very small country in South America with a population of ~17M.    Chile like India was a colony of the Spanish and went through a freedom movement and became independent in early 1800s and became a democracy in 1891 after a civil war.   Fast forward 200 years and Chile is a very vibrant country which has overcome a lot of issues and is now trying to make a mark in the new world order.     I specifically want to draw your attention to a program launched by the Chilean government to promote startup culture called the Startup Chile program.   Entrepreneurship is the single largest contributor to the progress of many nations around the world.   In the 6 years that I have spent in India I have not seen one organized initiative that promotes this culture.   There are attempts by NASSCOM and some private companies to attempt to promote entrepreneurship but they all amount to nothing but “fancy dress” contests for startups and do nothing to provide an organized  support system and hard cash to entrepreneurs who want to go and change the world.

Here is a direct quote from the Minister of Economy of Chile J. A. Fontaine

“Instead of changing the world through revolution, we can change the world through #innovation”

This one statement sums up the attitude of the Chilean Government to promote the Startup culture and set them on a course of development and economic progress.

What is interesting about this program?

1. Partnership with Silicon Valley –  The board of the program is comprised of folks from Silicon Valley and Stanford.  The government realized that they need to have Silicon Valley mentors to make this program successful.    Most of the Indian startup programs are filled with folks from the services industry or execs from the Indian industry who do not have any context to IP/tech based wealth creation.
2. Open to the world –   The program allows anyone from the world who wants to start a company to apply for the program – note it is not just limited to Chileans, to come and setup shop in Chile.   Here is where I think the Indian government can do a lot more.   I know two young very dynamic european founders in Pune who decided to make India their home and setup their services startup.  However the Indian government has dished out nothing but red tape and bureaucracy to these founders instead of embracing them and providing them all the support they need to succeed.   These two young founders have setup a company that grew to 30 employees (all Indians) in just a year and are bringing in significant $$ from mostly european customers.   These young entrepreneurs have faced all kinds of government redtape all the way from having to pay bribes to immigration issues.
3. Provides tangible support –  The program picks 25 startups and gives them $40K for 6 months (no equity), airfare to travel to Chile and a temporary 1 year visa to work in Chile and build the company.
4. Very clear goals –   In the first year (2010) called the pilot phase the program brought in 25 teams.   In 2011, they want to scale the program to 300 participants and in 2014 they would like a 1000  participants.   A little ambitious but not hard to execute if done well.

I believe the Indian Government needs to step up if they want India to be competitive in the new world order.   We cannot be complacent and point to our growth in the Outsourced Services business and not do anything about promoting entrepreneurship and startup culture.   The VCs in India are all mostly doing pipe deals and are not doing early stage deals.   In a way they have abandoned early stage companies entirely and are leaving it up to the best entrepreneurs to create tangible businesses that they can get into in later stages.     On the other hand, in Silicon Valley young kids just out of college can raise $100K to $1M from angels, super angels and now VCs at the idea stage.   Sure, the investors are faced with huge amounts of risk but this approach of the valley has ensured a steady funnel of startups that is so very vital to creating the next Google or Facebook.

We are one of the more fortunate startups to have found a VC that just believed in our capabilities and wrote us a check.  But , I know hundreds of founders in India who are all very smart and capable who are struggling to raise money and go work on their dreams.

I strongly believe that the Indian Government needs to start a program like Startup Chile and offer support to the many *young* entrepreneurs in India who want to shun the secure path of getting a Job and building career and instead can dream big and create big businesses and employ a lot of people.  Without a vibrant early stage program, we will not be able to produce great companies that will make India relevant in the future.