71 number of early stage companies that got funding in 2011On a Saturday in November, Paul Singh, a 500 Startups partner, landed in Delhi - his second trip to India in a month. "India is the third most interesting country after Mexico and Brazil for writing the cheque. The start-up community here looks like what America did 15 years back," he says. Only Mexico, with 17 deals, outnumbers India on the 500 Startups list of companies funded in the last six months; the seed fund has backed 10 in Brazil, the same number as in India. 500 Startups is just one among the many, many start-up funders in India. In fact, the Californian accelerator - accelerators handhold early stage start-ups in honing their business models or building prototypes - is late to the Great Indian Entrepreneur boom. In the past few years, start-ups have been popping up all around India. Most of them are in the big Indian cities but steadily the wave is sweeping over small cities, business schools and engineering colleges.
There have been perk-ups in entrepreneurial interest, to be sure, in the past, but what is different this time is the easier access start-ups have to venture funding and angel investors, besides the growing spread of an avuncular set of funders called "friends, families and fools". The number of early stage companies funded was 71 in calendar 2011, nearly 2.5 times from the year before, says deal tracker VCCEdge. A more accurate number could be a few times higher as most such deals, especially those with funding from friends and families, go unreported.
Only mexico, with 17 deals, outnumbers India (10) on the number of companies funded by 500 startups in the last six monthsThe surge of entrepreneurship also means higher expectations. "We believe that India and Asia will produce the next $200 million to $300 million tech companies. These will be products and services that can scale very well," says Amit Anand, Founder, Jungle Ventures, a pan-Asian venture fund that is keen on spotting start-ups with globally competitive products. "Indian entrepreneurs are becoming much more operationally savvy than elsewhere and there is a big change in mindset that is happening in terms of trying out new business models."
As this change takes root, says Anand's colleague and Managing Partner Jayesh Parekh, the next step will be to help Indian start-ups get to other emerging markets like Singapore, Malaysia, Indonesia, China, Korea and Japan. What excites him about India is the opportunity to build digital media and consumer Internet businesses collaboratively with low start-up capital. "There is more collaborative energy than competitive. Local VCs and angel networks all want to work with us," he says.