India Inc India Inc: Monday, 18 August 2014 07:15

Tech Speak with Nitin Dahad - Hyderabad aims high as tech startup capital

by Nitin Dahad

Technology is a wonderful sector to be in today.  When I first started working in this sector in 1985, the ‘Mecca’ for the electronics industry was Silicon Valley in the US – if you were a new graduate in tech, you would aspire to either working in Silicon Valley, or work for one of the big tech companies that had headquarters or offices in Silicon Valley.  There were many reasons for this, but one of the biggest ones was that the greater opportunities to be successful would be in the Bay Area – and also because engineers in the USA were better valued than engineers in the UK.

But now the scenario has completely changed. There’s no longer a need to go only to Silicon Valley to make your tech business a success, or to be valued.

The world has become one big playground for the tech sector, where governments, large corporates and investors are nurturing, encouraging and supporting start-ups, entrepreneurship and innovation in their own back yard. And you can connect with or collaborate with any other tech cluster in the world, thanks to the easy availability of information and global connectivity.

In the UK, we witnessed this government desire to nurture tech entrepreneurship back in 2000 under the previous Labour government, and continued under the present government.  In 2002this prompted a team of us to co-found a magazine to provide practical support to tech entrepreneurs, investors and advisors – some readers of this column may remember The Chilli, as it was called, which became influential at the time. In the UK back then, we had several tech successes in the hardware sector, including ARM Holdings, ARC International (of which I was one of the early team that took it to a billion dollar listing on the stock exchange) and Bookham Technologies.

As I mentioned, now things are different, not just in the UK or in India, but in all parts of the world. As a snapshot to illustrate this, in the last two years, my travels have taken me to the US, Brazil, India, Egypt and Libya. In Brazil, government is now putting money into programs like Startup Rio, and tech incubators and accelerators are popping up everywhere. In Libya, although not much is happening at the moment due to the troubles, during my three visits there I witnessed a huge ambition to grow its own techstartup parks, with some serious government backing. In Egypt, the tech scene there is also emerging as a challenger to some of the top electronics and IT clusters in the world.

And in the US every state is trying to create its own innovation ecosystem with the same amount or vigour as you’d see in many other countries – for example, in the state of Arizona alone there are some 50 incubators and accelerators, with many high growth companies emerging from them.

Hyderabad

This might have seemed a long introduction, but the point is that wherever you go in the world, there is a serious ambition to grow tech startup ecosystems – this is what prompted us to co-create The Next Silicon Valley magazine, to illustrate places around the world that are trying to emulate the success of Silicon Valley.

For a long time, India could claim Bangalore as the ‘next Silicon Valley’.  But now, we are seeing many other clusters that are emerging in India as vibrant tech startup clusters that could challenge its position.This month, the Telangana information technology minister K.Taraka Rama Rao said that the first phase of what is claimed to be India’s biggest technology incubation centre, spread over 80,000 square feet at the IIIT (International Institute of Information Technology - Hyderabad) campus is expected to be ready by the end of this year. The ‘Technology Hub’ will be spread over 80,000 square feet where over 400 startups will be based.

The second phase will move it out of the IIIT campus to its own standalone built-up 300,000 sq ft. space, where several different entities as well as the NASSCOM 10,000 start-ups will be based.  The minister said there are a lot of incubators in various academic institutions across the country and city as well, which he wants to bring under one roof so that they can enjoy common facilities, be able to network with each other, and also get support from government and VCs and investors.

The project is part of the minister’s ambition to make Hyderabad the startup capital of India. The Technology Hub project is being developed in collaboration with the Indian School of Business (ISB), the International Institute of Information Technology (IIIT-Hyderabad) and NALSAR University of Law, as well as various other organisations.

This comes soon after the Indian Institute of Technology – Hyderabad (IIT-H) announced it received approval for a centre of excellence in sustainable development. The initial funding for the centre is Indian Rs40 million, and in addition there will be separate funding for two projects in cloud converged communication and cyber physical systems, which will each receive Indian Rs200million.

Funding the startups in India – not a problem

Broadly in India, funding doesn’t seem to be an issue. As long as startups are able to articulate their value proposition and take it beyond just a technology product sell, investor money seems to be readily available. According to a report in YourStory, the first half of 2014 was ‘an action-packed 6 monthswhen we saw a lot of private investments in the startup ecosystem’ – a total of US$1.26billion was invested in Indian tech startup companies. The lion’s share of this, at $602 million, was in e-commerce companies, followed by service companies (such as payment enablement) and consumer web.

As expected, Bangalore leads the investments, followed by NCR (Delhi, Gurgaon and Noida) – according to the magazine, NCR is becoming an attractive startup destination, citing companies like Snapdeal and Zomato being headquartered there.  Coming next in the league table of investment into tech startups is Chennai followed by Hyderabad–  the latter has seen some big investments in healthcare technology and wearable technology. The report also lists several smaller towns such as Nasik, Bhubaneshwar, Coimbatore, Jaipur, Lucknow and Nagpur, which are attracting investments in specific sectors such as agri-tech, healthcare, clean tech and food.

What’s clear is that India’s tech startup ecosystem is expected to grow significantly. According to Tech Mahindra’s global head of engineering, Karthikeyan Natarajan, speaking in an interview with E&T in the UK, he said India has a reputation for being relied on to do the legwork needed to support western firms' innovation. But he adds that with new leaders focused on R&D and cutting red tape, growing entrepreneurialism and a rapidly developing domestic market could see India’s tech industry flourish in the coming decades.

This coupled with the new government’s drive for growth means this will really encourage more R&D around products that can meet the needs of around half a billion Indian middle class consumers, he says. “I think that is really going to drive the most significant demand over the next ten years.”

So consumer demand for tech-based products, applications and services combined with an industry drive for growth through innovation, supported by a growing, confident tech startup ecosystem will indeed see India put its mark on the global tech startup map.

Nitin Dahad is a consultant and advisor to the technology, industrial and media sector, and to government agencies and trade organisations, to develop global market strategies and programs based on nearly 30 years’ experience across Europe, US, Asia and Latin America

 

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