Geography becoming history for start-ups

Feb 17 2013, 02:12 IST
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SummaryAsk early stage investor Sasha Mirchandani how promising entrepreneurs in small towns of India are, and the answer lies in the excitement in his voice.

For once, location does not matter as budding entrepreneurs in small towns give the big city guys a tough contest

Ask early stage investor Sasha Mirchandani how promising entrepreneurs in small towns of India are, and the answer lies in the excitement in his voice. Part of the jury that judged a recent contest for student start-ups, which saw almost half of the entries come from small towns, Mirchandani has visited umpteen campuses across the country. And, he is pleasantly surprised with what he has seen. “The quality of start-ups has improved dramatically since I have been observing them over the years. The teams are far more savvy, their plans far more precise and concise, and business models much better.”

But is it still a disadvantage to be in little India? “To some extent it is important where you are, but more important is the entrepreneur’s ability to sell his plan to a venture capitalist, which can be done from anywhere,” says Mirchandani.

He also dismisses concerns if VC funds, angel investors and seed funds are reaching out to small town entrepreneurs. “The savvier and smarter VC firms are looking at deals beyond metros because those deals will be less competitive, but still high on quality,” says Mirchandani, adding that funds such as Kae Capital do small-ticket investing ranging from $50,000 to $2.5 million.

While funds are gung-ho about start-ups, industry experts believe a lot more needs to be done to create a good ecosystem in the country. Commodore Anand Khandekar (retd), former mentor and director of Nvidia Graphic Pvt Ltd and IT evangelist, says it takes around 10-15 years to build an ecosystems, especially in the IT industry.

He says it is here that large Indian IT companies could have played a role. “They have not done anything. Indian IT companies are sitting on piles of cash and have not helped create an ecosystem. Real transformation has to start from these iconic companies,” says Khandekar.

What is also helping build the ecosystem is emergence of support organisations like NEN, which spruces up youngsters and gets them to a level where they can present their ideas in boardrooms of venture capital firms.

Mirchandani hopes for small angel clubs in towns where entrepreneurs can meet and role models can emerge. “People look up to role models. Sunil Mittal coming out of Ludhiana makes other people there feel if he can do it, so can we,”

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