Start-ups: Indian entrepreneurs’ focus on short-term gains turns them into laggards

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New Delhi | Updated: October 17, 2016 4:38:16 PM

Indian entrepreneurs’ focus on short-term gains has led to a rise in the number of start-ups that simply mirror the technology of mature, established companies

Many Indian start-ups, including Altizon and Axiom Research Labs, have created world-class, unique, unreplicable technologies, known as ‘deep tech’, which have been showcased globally (Representative Image)Many Indian start-ups, including Altizon and Axiom Research Labs, have created world-class, unique, unreplicable technologies, known as ‘deep tech’, which have been showcased globally (Representative Image)

Only 26,164 patents were granted in India between 2010 and 2014 compared to a staggering 1,275,787 patents in the USA (WIPO, 2015). In 2012, 15.5% of the startups in Silicon Valley (Inc., 2012) had an Indian founder and this number is growing. This highlights a substantial loss of intellectual human resource to India resulting from the celebrated ideology of finding careers and building businesses in the United States. Has the lauded career path of getting accepted into one of the IITs and consequently joining an Ivy League institute in the US lost India the incredible opportunity to create Indian innovation at a global scale?

Many Indian startups including Altizon and Axiom Research Labs, have created world class, unique, unreplicatable technologies, known as ‘Deep Tech’, which have been showcased globally. However, commonly, the Indian entrepreneur creates ideas that are either limited to solving a domestic challenge or adopts and mirrors an existing technology for implementation in the Indian context.

Innovate locally, sell globally!

Do entrepreneurs believe that a local market within India’s 1.2 billion population is large enough to serve their business growth aspirations, or do they fear the unknown, preventing the creation of global, scalable companies? Naturally, Deep Tech innovations require the early support of investors, investors who have an appetite for risk and patience to witness the rewards of their investment. First time entrepreneurs, Druva and Inmobi are positive examples of successful Indian global product innovation.

The Indian entrepreneurs’ focus on short term gains has led to a rise in the number of startups which mirror the technology of mature, established companies. Unsurprisingly, the high failure rate of these ‘me too’ companies (PepperTap, TinyOwl) mean that they are a less attractive option for investment. With world class universities like Indian Institute of Science (IISc), the potential to build great, innovative technology is available however India lags behind due to their talent pool supporting the growth of global companies outside of India. An alarming 78% of the patents filed in India in 2015 were by non-residents (Times of India, 2015). A lack of awareness of the advantages of owning a patent and using it for wealth creation is likely inhibiting the growth of Deep Tech in India.

So, what is Deep Tech?

Deep Tech has put startup ecosystems around the world on the tech radar. Global startup ecosystems like the US, the UK, and Israel have grown and are expanding because of their ability to commercialise Deep Tech. Startups in Deep Technologies focus on R&D to build unique, disruptive technologies that is often difficult to replicate unlike the majority of tech startups who function on commonly available technology. Deep Tech is based on invention and IP creation of a new product or process that uncovers new market opportunities across industries with different applications of the same underlying technology. It could be a combination of hardware and/or software such as drones, IoT, robotics and AR/VR, among others.

From an investor standpoint, Deep Tech offers the opportunity to disrupt an existing industry to even spawn an entirely new industry. For example, Sergey Brin and Larry Page invented Google as a part of their PhD research project at Stanford University. Within one year, Andy Bechtolsheim invested US$100,000 in Google even though it was just a year old. Why would an investor take such a risk by investing in a company that hasn’t made any money? The answer is his foresightedness about the technology and its future possibilities. The ability and appetite of investors to take a risk on an innovative technology and an inexperienced team has led to the growth of some successful companies including Apple.

Crossing the chasm

The growth rate of the Indian R&D market is burgeoning and was valued at US$20 billion in 2015 (IBEF, 2016). MNCs like Walmart, Microsoft, and BMW moved their R&D into India because of the enormous potential India has (Economic Times). The Indian education system has produced world class leaders like Sundar Pichai and Satya Nadella and it is a clear indication that India is not lacking in quality of education, technical acumen or leadership talent.

An entrepreneur looking to build a Deep Tech startup will need to interact and collaborate with multiple elements of the startup ecosystem. A savvy investor who is willing to bet on the technology and the team, the scientific research talent needed to invent and develop a world class technology, clubbed with a large company that takes the innovation to market or becomes a customer are all crucial to the growth of Deep Tech startups. All these components are necessary to enable each other to complete the process of crossing the chasm of taking a deep technology from the lab to the market. Working in isolation will not suffice.

Collaboration is essential to to take a technology from the lab to the market. Building a strong and supportive ecosystem for stakeholders to participate, add value and exchange ideas is necessary to balance the strengths and opportunities that each of them bring to the table.

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