BANGALORE: A number of Indian technology start-ups are turning to overseas accelerators in search of mentoring and access to capital despite a plethora of domestic choices.
These companies, with businesses ranging from personal healthcare services to specialised networking platforms, are joining Singapore and US-based accelerators that offer assured fundingand links to global customers.
“Sitting in Mumbai, you can only think about going global, not feel it happening,” said Kranti Agrawal, cofounder of Tushky Events & Entertainment, an online service that lists fun things to do around a city. Last week, the Mumbai-based venture was chosen to join the latest batch at 500 Startups, a US-based accelerator.
Agrawal, 29, a software engineer from Orissa’s Utkal University, expects to raise venture funding of $3 million (Rs 16 crore) at the end of the four-month programme, and expand his business across India while also catering to inbound tourists. Along with Tushky, four other Indian start-ups are being incubated by 500 Startups, set up by global investor Dave McClure. The Silicon Valley accelerator, which provides initial seed funding of $50,000 (Rs 27.5 lakh) has picked a total of 20 ventures from around the world for its Spring 2013 batch.
Last September, four of the 11 startups chosen for ‘Unreasonable at Sea’, a US-based accelerator programme aboard a ship, were from India. In November, Start-Up Chile, an accelerator run by the Chilean government, shortlisted 105 companies for its accelerator programme, out of which eight were from India.
Accelerators in demand: 500 Startups, YCombinator, JFDI.Asia, Start-up Chile
Why go foreign: Besides seed money, startups get to meet global firms, and are mentored by leading investors. So have a better chance of follow-on funding
Chosen start-ups: Tushky, PriceBaba, MyFitnessWallet, School Admissions, AskAbt
Pankaj Jain, venture partner at 500 Startups, believes Indian startups will continue to dominate the international intake at the Valley-based incubator.
“Entrepreneurship is growing rapidly in India. We have just tapped a small percentage,” he said Singapore’s Joyful Frog Digital Incubator, commonly referred to as JFDI.Asia, received over 40 applications from Indian startups for its current batch. The threeyear-old incubator has picked three ventures, including Askabt, a community networking platform, healthcare services provider MyFitnessWallet and medical practice software maker DocTree.
“We get startups to where they want to go far quicker and with more certainty,” said Hugh Mason, CEO of JFDI which focuses on Asian ventures building solutions for local markets. Chosen companies enter a 100-day programme out of which 60% manage to secure follow-on funding. Mason said most startups record a valuation of about $1 million by the time they exit JFDI. This outcome-based process contrasts with what is on offer at India-based accelerators, say entrepreneurs.
Gaurav Srivastava, founder of Bangalore-based AskAbt , spent more than three months seeking incubation and funding at a number of on-campus incubators in India before he applied to the Singapore firm. “The process feels so bureaucratic that most startups won’t survive the effort,” 30-year-old Srivastava, whose venture provides crowd-sourced answers to queries by college applicants and students.
In the last two years, over 35 private accelerators and incubators have been set up across India. Experts say there are only a handful of good accelerators while the rest provide only physical space. “Though there is an increase in the number of accelerators in the country, I don’t know how effective they are,” said Rishikesha Krishnan, professor of corporate strategy and policy at the Indian Institute of Management in Bangalore, who is also a part of iSpirt, a think-tank for software product companies.
“Money is not the only thing that startups require. Incubators or accelerators need to also provide good networks to get customers and suppliers.” At 500 Startups, incubated ventures get field trips to companies like Google, Facebook, YouTube, and Twitter, mentoring from hundreds of global investors and entrepreneurs in addition to a workspace in Silicon Valley.
“We take a 5% stake in the company in return,” said Jain. It is for such extensive support that Indian ventures which have already been incubated at some of India’s best-known accelerators (among them The Morpheus in Chandigarh, multi-city accelerator GSF and MicrosoftAccelerator) still choose to enter overseas programmes. Tushky, for example, was first incubated at GSF. Skill-testing platform ‘Interview Street’, mentored by The Morpheus, was picked by iconic Valley incubator Y Combinator in 2011 and now has a customer roster that includes Facebookand game-maker Zynga.
Harishankaran K, cofounder of InterviewStreet, said investors in India expect start-ups to first generate a revenue stream while globally there is more support for pre-revenue companies. “The race is very fast there and you compete with some of the best companies. If you are not top of the game, you will not survive,” said Harishankaran, whose company began as an idea in a hostel room at the National Institute of Technology in Tiruchirapalli four years ago.
Abhinav Krishna, 26, who is on the JFDI programme, said finding good mentors and infrastructure were his biggest challenges. Krishna, who first tried to launch a consulting venture in India, found that most mentors expected to be paid first. “That is very different here (in Singapore). The mentors don’t have any expectations; they are happy if I am successful,” said Krishna, whose firm MyFitness-Wallet offers a platform to book and pay for health checkups for family and friends remotely and also receive feedback.
Reva GU 