Taslima Khan Edition: March 4, 2012
Rudhir Sharan, founder of the startup, Secpanel, created a software product to improve server security. He was no stranger to marketing new products, but still hesitated, seeking to fine-tune his business model before he took the plunge.
Both Shashank and Sharan have since participated in a programme at The Morpheus, a start-up 'accelerator' which conducts four to six month long programmes - two per year - to guide entrepreneurs like them. Started in early 2008 by former entrepreneurs Sameer Guglani and Nandini Hirianniah, it also provides seed funding of Rs 5 lakh per start-up in return for a less than 10 per cent share in the project. "We are not looking for great ideas but for people who are really passionate about starting up, come what may," says Hirianniah.
While running Madhouse Media, a movie rentals start-up he began in 2004, Guglani had many wannabe entrepreneurs dropping in for advice. Having also worked in Silicon Valley in the United States earlier, Guglani felt he could put his expertise to business use. The Morpheus has so far helped around 40 start-ups to get going. Shashank's product, Practo, for instance, is now used by around 20,000 doctors across India.
The Morpheus is not the only one. A number of similar outfits have come up in recent years. There is The Startup Centre, started by Vijay Anand in May 2011. Yet another is Angel Prime, started in October, which specialises in start-ups involving mobile-based payments and e-commerce. Founders Bala Parthasarathy and Sanjay Swamy prefer to concentrate on the niches they have expertise in. "We are not just advisors to start-ups," says Swamy, a cofounder of ZipDial, an interactive platform aimed at mobile phone users. "We work as intensively as co-founders. Since we invest in these companies, our success is tied to the companies' success."
Accelerators, though akin to incubators, are a separate category (see How They Differ) inspired by similar efforts in the US where accelerators like Y Combinator, Plug n Play and 500 Startups have been very successful. The main difference is that accelerators confine themselves to mentoring businesses leveraging the Internet, spread of mobile phones, or new technologies, where typically, start-ups can progress much faster than in other sectors. They thus keep start-ups under their wings for much shorter periods than incubators do.
"The idea is to get technology-based businesses off the ground faster," says Anand of The Startup Centre. "Tech companies can do so in six to eight months, while a retail or renewable energy venture could take that many years." Again, most of the 120-odd incubators in the country are part of educational institutions. Some sceptics maintain that these are just not up to the task. "None of our incubators has the experience and expertise required to groom today's hi-tech start-ups," says Krishna Tanuku, Executive Director, Wadhwani Centre for Entrepreneurship Development, Indian School of Business, Hyderabad. Others believe the world of sheltered academia does not provide the right environment for start-ups to learn to compete. "Start-ups being mentored in any academic setting are cushioned," says Anand, who earlier set up an incubator at Indian Institute of Technology Madras. "Market reality is a bit harsh. When entrepreneurs learn from other entrepreneurs, they confront more of reality." Some institutions have been proactive - Indian Institute of Management Ahmedabad, for instance, began a three-month accelerator programme in 2009.
Some accelerators organise meetings with all participants. At the end of each, the start-up teams have to showcase their products before potential investors, who are also invited. There is often an atmosphere of friendly rivalry. "Everyone wants to talk about the progress of his own startup since the last meeting," says Shashank. "You want to be better than the others."
The culmination is the networking dinner, at which the start-ups get another chance to seal deals.
Q&A Dave McClure|
'Indian start-up ecosystem is still developing'
Dave Mcclure, founder of 500 Startups, a leading Silicon Valley-based accelerator, was in India in December. Excerpts from an interview:
Start-ups and entrepreneurs. I want to build strong connections with India. We are looking to hire people or get into partnerships with angel investors and seed funds here. We intend to do at least five to 10 investments every year.
How many Indian start-ups have you invested in?
We are more focused on e-commerce. Education is a new area we are looking at. I am a personal investor in online media start-up Slideshare in Delhi, and travel portal Mygola in Bangalore.
How do you find the start-up ecosystem here?
There is definitely a lot going on. We have spent some time in Asia - China and Japan, in South America - Brazil and Argentina, and in Europe. The Indian start-up ecosystem is still developing, but I would say we are as interested in India as we are in Brazil.
What kind of value do accelerators add to start-ups as compared to incubators?
Incubators are more about theory and less about labs. Accelerators are more about building the company, creating a facilitating environment and giving access to mentors.