Building a Robust Startup Ecosystem

After Independence, the Indian economy started growing with the main focus on jobs in the Government sectors, with very few Business houses like TATA, Birla etc in the play to support the economy.

Then came the watershed year of the IT revolution in India i.e. 1998. In Y2K, India transformed from a ‘techno-coolie’ operation into a software centre that offered solutions to a range of computer problems fighting the millennium bug.

The stakeholders were the Indian companies like Infosys and Satyam who emerged as world players The Hyderabad Information Technology Engineering Consultancy (Hi-Tec City) in Hyderabad powered the growth of this computer mecca, nicknamed Cyberabad, companies such as Oracle, Texas Instruments, IBM Microsoft, Oracle, GE Capital and Motorola established operations and software-development centres in India.

At the nucleus of the computer revolution were the major metropolitan cities, notably Mumbai (Bombay) and Chennai (Madras), and the silicon triangle of Bangalore, Pune, and Hyderabad. Though the revolution was in India, it was limited to a few companies and areas because of the lack of startup ecosystems in major parts of India. This was the time when North India, especially Punjab, had no ecosystem for startups, especially in the IT sector.

The young population of the region that was less than 35 years old, were job seekers only. Then came an era of startups like Flipkart, Uber etc that provided the stimuli to excite young minds to be entrepreneurs.

The technology and Internet boom were now becoming dormant and easily accessible to young budding entrepreneurs, thus laying the seeds of the startup ecosystem.

Now, India is recognized and acclaimed globally, as an economy with a respectable business environment. With the shift of jobs from the Government sector to the private sector, there has been tremendous growth of startups over the last few years where metro cities are seeing a new, vibrant startup culture.

The Indian government’s policies have put the focus squarely on making India a preferred startup destination. Prime Minister Narendra Modi’s call for ‘Startup India, Standup India’ has become a facilitator of entrepreneurship in the country that could provide employment for our large young population.

These building blocks will encourage many young entrepreneurs to come forward with innovative ideas to contribute to the growth of India. But it torments me every time I see a press release from the government to invest in the areas with no startup ecosystem and dumps crores of funds into shiny facilities to “Boost local startup innovation.”

More often than not, these initiatives end up providing a great photo opportunity for local freelancers to discuss and debate while sitting on beanbags, but with little else. 

Similarly, I see a lot of government venture funds investing in the best companies in their locales, whether these companies have found product-market fit or not. Not only do these efforts provide improper validation to businesses before they are ready, but they are also an egregious waste of taxpayer money.

I feel that this the right time and right opportunity for the people of this region to innovate and invest energies to build up a strong Startup Ecosystem, there is now a race between the states to prove and be on the top in the startup space; and adding further, the IT hubs like Bangalore, Hyderabad and Pune are now saturated.

This region is the best place now in India to establish a strong Ecosystem as not only because the governments are proactive, but the geographical and the climatic conditions are very congenial to live in as well.

This is one more opportunity for the people of this region to explore and organize all the stakeholders of the startup ecosystem to work and explore synergies.

Some of the best lessons that can be practised are:

In order to develop an interpersonal relationship with the top startup entrepreneurs in your city, no matter what type of startup market you are in; you need to host startup events where local entrepreneurs share their challenges and lessons learnt to provide feedback on startup ideas.

My point is that governments cannot create a startup ecosystem out of thin air but their crucial role is supporting the startups once they are organically formed and the roots of an authentic startup ecosystem have been seeded. Policy and incentives can be used to create a strong nucleus of activity which can generate its own momentum and become self-sustaining.

Connecting and involving various bodies like Startup Accelerator Chamber of Commerce, Chandigarh Angel Network, Punjab Chamber of Commerce and Industries, TiE, ASSOCHAM, PHD Chamber, CII, Entrepreneur Organization (EO) to see what they have to offer and get local government officials and organizations involved in the events organized by the Startup’s would even work better.

The government must set up special risk-free loans to promising starts ups. If the companies fail, then they do not need to pay back the loan but if they succeed, they pay back as per the laid terms. The open data policy, city-funded co-working spaces, free public wi-fi and strong relationships with global partners are also enabling factors for a vibrant ecosystem.

It is one of the foremost examples of the rich collaboration between companies, university researchers and entrepreneurs. The technology transfer from universities will help in creating new enterprises.

The strong presence of educational infrastructures in the Tricity, R&D activities should be given TOP priority and the researchers must be strongly encouraged to liaise with professionals from the industry to deal with real-life challenges and opportunities.

The best ideas and the best talent are useless without the capital to fund the venture. Big pocket investors like to invest close to home. If that capital is located in another city the investors are usually reluctant to invest. It is critical that the capital be available to support each stage of development of the Startup.

I can authenticate from experience that strong companies with great metrics and digits will get funded no matter where they are based, but if the local startup ecosystem creates a strong company, the funding will follow – whether from international investors or through the increasing viability of online funding networks.

Israel is often known as the Startup Nation. Through its vibrant ecosystem and human capital, Israel generates more startup companies than large, industrial nations like Japan, China, Korea, Canada, Germany and the UK. There are nearly 6,000 active start-ups, with 1,300 start-ups being founded every year.

It’s all because of the strong Startup Ecosystem. The focus must be on first creating a strong startup ecosystem with a bottom-up mentality. Then, when great companies are formed, the capital will follow, and a sustainable startup ecosystem will be formed.

Innovative businesses are the bedrock of any city’s success, as they embrace new ideas and new enterprises. Startups are a crucial feature of this ecosystem.

– Manipal Dhariwal
Founder & CEO Netsmartz LLC
President SACC India (profile)