Representatives from over a dozen start-ups travelled to Silicon Valley last year, shepherded by the Indian consulate in San Francisco, with funding assistance from the Electronics & Computer Software Export Promotion Council, the Indian government’s IT industry trade promotion body. The goal was to find the “next unicorn”. Not a single start-up received funding from the trip, even after meeting investors there. Government-led startup funding is now refocusing amid a global funding winter to focus on more basic issues facing entrepreneurs. The first sign of this came from the Software Technology Park of India (STPI), a government-established body that was part of the next unicorn effort.
“The spirit that something isn’t as successful as we wanted it to be, but we have the resilience to bounce back and adapt is at the core of entrepreneurship,” Alok Mittal, president of the Delhi chapter of The Indus Entrepreneurs (TiE), a body founded by South Asian Silicon Valley executives, said. Mr. Mittal was launching a programme to help entrepreneurs scale up, in collaboration with the STPI. Efforts were announced to bring mentorship and modest funding away from India’s tech capitals to cities like Vijayawada, Chandigarh, and Bhubaneswar.
Arvind Kumar, the director general of STPI, said that this was an important focus area, especially for entrepreneurs from tier-2 and tier-3 cities. This is why STPI was running “mentorship and co-investment” programmes, shifting the focus from launching startups into stratospheric heights to getting fundamentals right for more entrepreneurs, and leveraging an existing base of accomplished founders as potential guides to a new batch of startups.
“70% of [Indian] unicorns have been added in three years,” Sushil Pal, a joint secretary at the IT Ministry, said. The reduction in new unicorns in recent years doesn’t discount smaller start-ups establishing base successfully, Mr. Pal said. “As they say, for every Mozart that comes out with a big splash early, there are a hundred Bachs ascending slowly. They’re blooming a bit late, but they’ll bloom for sure.”
“Our focus or success story from tier-2 and tier-3 is yet to emerge completely,” Mr. Pal warned. “This ecosystem has faced challenges, such as access to funding, mentorship, regulatory challenges, product market fit, customer identification…” Mr. Pal cited efforts to address these challenges, such as the Startup India Seed Fund Scheme, which provides lakhs in government funding to start-ups that are going to market.
While worries about funding drying up across key sectors has emerged, IT Secretary S. Krishnan remained optimistic that India’s size would help more startups go global. “Sometimes we don’t realize the scale that is India,” Mr. Krishnan said. “Each state is the size of a large European country … so the opportunities are also endless.”
Mr. Krishnan noted that while tech startup operators can come from any part of the country, they tend to gravitate to IT hubs like Bengaluru to be noticed by investors. “If the providers of capital fan out throughout the territory of India, look at different destinations, look at the energy, hunger and enterprises that come up there, not only will you find far better opportunities … it is [also] on the one hand a great investment opportunity, and a larger service to not just India but the rest of the world,” Mr. Krishnan said.
An STPI report launched at the event suggested expanding investors’ dragnet not just by geography, but in sectors: leveraging rural populations, emerging demand for cybersecurity, and ‘workforce enablement.’ Mr. Krishnan said that it would also be important for more women to join startups, on top of people from tier-2 and tier-3 cities.
