2012 a heady year for tech start-ups

Dec 23 2012, 00:29 IST
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SummarySustained angel funding ensured boost to Indian software product cos.

A battery of 400-odd active angel investors has tripled their seed funding for software product firms over the past 24-30 months, giving a huge boost to technology entrepreneurs from India. Their combined investment, which rose from $177 million across 72 deals in 2009 to $578 million across 158 deals by the end of last year, is a huge pointer to how funds are backing youngsters with bright ideas. Year 2012 has also shown a similar trend, with 157 deals at last count valued at a total of $430 million.

Bharat Kumar Mohan, a former Google Finance employee, is one such entrepreneur who is riding this wave. Mohan’s venture Pugmarks, which was started only late last year, helps users identify articles based on their interests, websites they follow on social networks, or their own browsing history. The trick, for him, was to convince funds that the start-up was catering to a global audience. He feels that his primary market is the US since more people access the net there. “The product was developed with a problem in mind,” says Mohan, whose company is funded by a seed fund, Blume Ventures. Early stage funding is generally less than $20 million.

Rajan Anandan, vice-president and managing director of Google India, an angel investor for more than 20 start-ups in the country, including Capillary Technologies and WebEngage, feels that increasing number of incubators and accelerators across the country are striving to get business ideas to an investment-ready stage. “Now we have a dozen private incubators and accelerators that have emerged in the past couple of years, making the big difference at the early stage,” says Anandan.

Investors feel that while the first wave was largely services oriented, the new generation entrepreneurs are focusing on products. Services have now become a big boy’s game and hence everyone is focusing on developing products with usually a global market in sight. They are also helped by the fact that there is increased acceptance of entrepreneurship as a “first-class citizen". Nasscom president Som Mittal feels the change as compared to a decade ago is that the new wave of tech entrepreneurs are ready to start a venture out of college, unlike in the past when entrepreneurs were born out of a mid-career crisis. “These youngsters seem to be fearless and look certainly more confident about their talent and products,” Mittal tells FE.

Deepak Ravindran, the 25-year-old founder of Innoz,

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