India’s startup scene is on a winning streak this year. In March, online learning platform BYJU’s became the latest addition to the coveted unicorn club — firms valued at $1 billion or higher — after raising $100 million from General Atlantic, a US growth fund. More recently, in September, Indian hotel branding and booking site OYO announced $1 billion of financing, led by Japan’s SoftBank Vision Fund.
In the media, news reports abound, portraying the India market as the battleground for behemoths such as Walmart and Amazon for the country’s e-commerce market. Retailer Walmart acquired a majority stake in one of India’s most successful startups, online marketplace Flipkart, for $16 billion this year. It was the largest e-commerce deal the world has ever seen, according to Bloomberg.
This new backing from international investors is happening against the backdrop of Indian Prime Minister Narendra Modi’s ambitious push to put India’s startup scene on the world map through billions of dollars in funding support, tax exemptions, and simplification of company registration and patent filings.
Funding is the lifeline of startups, but as India’s startup ecosystem matures, insiders are asking: What about organisational culture, talent, and mentors? Now that the house is built, how can startups keep it from collapsing?
Underneath the frenzy of cash injections, the world’s third-largest startup ecosystem by number of companies suffers from employee complaints about working conditions and high employee attrition rates.
Generally, “there is still a tendency to underestimate the centrality of talent to success and therefore under hire”, said Ravi Venkatesan, a venture partner at Unitus Ventures and former chairman of Microsoft India, via an interview over social media.
Venkatesan added that the “calibre and depth of leadership to scale beyond $100 million” is one of the biggest differences between Indian and Silicon Valley startups.
India’s technology companies are at an inflection point. The country has outsourced a wealth of IT talent to multinational firms, but India’s startups are now charting a new course in advanced manufacturing and fintech, making employees with technical and management know-how even more crucial for a company’s survival.
“Indian startups have to get a lot better and faster at assembling the leadership strength and functional depth to scale to the full potential of the business,” Venkatesan said. “To a certain extent this is simply a function of the maturity of the ecosystem, and you can see the change over time.”
India’s job-seekers do see improvements, and interest in working for startups is not waning. A recent LinkedIn list of the top 25 startups in the country revealed that thriving startups managed to lure talent away from established companies with worker-friendly incentives. For instance, Cure.Fit, a health and wellness company that ranked second on the list, promises employees a flat hierarchy, flexible working hours, and the freedom to choose projects they want to work on.
Another startup, Digit Insurance, tries to attract prospective employees by offering them the opportunity to be involved in the evolution of India’s insurance sector. In an industry that has long been complex and boring, Digit is “a breath of fresh air” for workers, Amrit Jaidka Arora, Digit’s head of human resources, said via an email interview. Technology is challenging old standards, “which is a good space to be in from a career point of view”, she said.
However, ensuring that the startup ecosystem matures will require more than the willingness of young professionals to work for these firms, according to Siddharth Pai, founder of Siana Capital, a venture capital fund investing in deep science startups. The discussion on talent hiring and development must involve equipping founders and senior management with know-how, too.
Getting mentors onboard
In an article commenting on India’s startup ecosystem, Pai wrote that venture capital is merely one part of what it takes to build a healthy startup scene. Other factors include friendly legislation, a favourable tax climate, and hard infrastructure such as incubators and network connectivity, and by virtue of the Indian government’s foresight, these needs are being addressed. What Indian startups need now is a “soft infrastructure”, he noted.
“Soft infrastructure includes a variety of things: corporate alliances, university participation ... but most importantly, it needs the active participation of successful founders who give back to the ecosystem by becoming investors, mentors, and advisers to a new crop of startups,” he wrote.
Mentoring is the “absolutely critical” ingredient, Pai said in an interview. He added that while there are platforms for angel investors to get involved in companies, what’s missing are mentors.
In China, Alibaba founder Jack Ma frequently doles out advice to young entrepreneurs. In the US, entrepreneurs such as Netscape co-founder Marc Andreessen and Hotmail creator Sabeer Bhatia give back to the startup ecosystem by serving as mentors.
“They go down to startups and offer money, time, and effort. That hasn’t yet happened in India,” Pai said. India’s need for mentors is not a criticism, he said, but an observation. “It’s partly because of the age of the industry. India’s startup ecosystem is, at best, seven or eight years old.”
The Global Startup Ecosystem Report 2018 by San Francisco-based Startup Genome highlighted that startups with founders who are more connected to the local startup scene through relationships with other founders, experts, and investors report higher revenue.
Certainly, the correlation does not mean that a startup founder’s relationships with experts or mentors cause higher sales, but personal experiences of startup founders do confirm the often indispensable role of a mentor or coach. Ritesh Agarwal, the 24-year-old founder of OYO, cited his mentorship under PayPal co-founder Peter Thiel as a key reason for his startup’s success.
As Indian startups look to keep their momentum, drawing in the best talents through attractive organisational culture and mentoring for the leadership team are two essential ingredients that founders cannot afford to overlook.
— Alexis See Tho is an FM magazine associate editor based in Malaysia. To comment on this article or to suggest an idea for another article, contact her at Alexis.SeeTho@aicpa-cima.com.