India, boasting excellent software developers, a local market which is highly suitable for testing a product or service before it goes global, and that also reflects emerging country requirements, has what it takes to be a ‘startup nation’.
Arnaud Auger is a Bangalore-based partner at StartupBRICS. Interviewed for a L’Atelier numérique (L’Atelier Digital) broadcast, he points out the reasons for the success of Indian startups, and explains why French startups would do well to establish a presence in India.
L’Atelier: In late June you ran a StartupBRICS event for Indian startups. Looking at the situation the other way round, why should a French startup go and set up shop in India?
Arnaud Auger: At French Tech [an ‘ecosystem’ comprising everyone working for or with French startups, in France or abroad] we talk a lot about French firms needing to expand into international markets. This is even more vital now that we’re living in a digital economy where there’s only one rule: winner takes all. Either French startups aspire to be world leaders, like BlaBlaCar – which has set up in India – or they’ll be eaten up by the US, Chinese or Indian startups entering the market. That’s the first thing: to have the ambition to grow. And nowadays you can’t be a world leader unless you’re present in India.
There’s a lot of talk about the high quality of Indian software developers…
Yes, when you talk about India, you’re thinking first and foremost about a potential market of 1.2 billion people. But we mustn’t forget the upper middle class. India has 300 million consumers who live in households with $3,000 per month to spend in terms of purchasing power parity. And the country has resources, which include close to two million people working in the IT sector whose skills are highly regarded. For example 30% of all engineers at Apple come from India. If Apple were known for making low-cost products, that would make sense. Plenty of engineers have moved to Silicon Valley, but many have stayed in India. A lot of talented people stay in India to seize the potential of the local market. The country is posting over 8% annual growth.
Is there the equivalent of a Silicon Valley in India? Is there any particular city that stands out?
Yes, close to 50% of all Indian startups are in Bangalore. This city has seen real growth due to its IT sector. Practically half the residents of Bangalore work directly or indirectly with the IT sector. It’s a real Silicon Valley, stretching all the way to Chennai and Hyderabad.
From your observations, what do you see as the strengths and weaknesses of Indian startups?
I think that at the moment the disadvantage is the low maturity level of the startup ecosystem in India. It’s certainly not as advanced as the United States or France. The level of business in India in this field is about the same as in France in the early 2000s. On the other hand, their great strength lies in their speed in developing software, thanks to their software developers and also those tens of thousands of people who agree to try out their apps. The local market is large enough for that. The strength of US startups lies in the fact that they can start by focusing on a national market of 300 million consumers before going global. And Indian firms can do the same thing. Only the United States, China and India have a large enough domestic market to enable firms to concentrate on a single market and build up their business there. Indian startups also have the advantage of being able to adapt to the specific requirements and limitations of emerging countries, especially when it comes to connectivity.