A wish list from Indian entrepreneurs ahead of Modi’s Silicon Valley visit

Quartz india
Quartz india

Can Narendra Modi’s visit to Silicon Valley lead to more mergers and acquisitions (M&As) and better funding for Indian startups?

Entrepreneurs in Bengaluru are hopeful that Indian prime minister’s tour later this month would be a game changer for India’s startup ecosystem. They hope that it would finally change the world’s perception of their city, which is known globally for its low-cost IT services capabilities.

“This trip will help a lot in communicating the key message that there is a rapidly rising global impact of the tech innovation from India,” R Chandrasekhar, president of IT industry body Nasscom, told Quartz.

Modi is scheduled to visit California end of September, becoming the first Indian prime minister to visit America’s West Coast in three decades. This is Modi’s second trip to the US in a year. Last September, he had visited New York and invited businesses to manufacture in India. On his upcoming trip, he might promote his “Digital India” campaign—the government’s ambitious plans to strengthen the country’s digital infrastructure.

Modi will also visit Facebook’s office and interact with CEO and founder Mark Zuckerberg. The two will discuss “how communities can work together to address social and economic challenges,” Zuckerberg said in a post on Facebook on Sept. 12.

Modi will also meet Apple CEO Tim Cook, and visit facilities of some major technology companies like Tesla, Google and Adobe.

More mergers

Over the last few years, some of the top US-based VCs—such as Sequoia Capital and Accel Partners—have invested in several marquee Indians startups.

However, there have only been a handful of M&A deals with US technology companies in India. Some of the notable ones in 2014 include Facebook’s acquisition of Bengaluru-based Little Eye Labs and Yahoo’s purchase of Bookpad, makers of online file-editing service called Docspad. In January 2015, Twitter had acquired Bengaluru-based “missed call” marketing platform, ZipDial.

India sees much fewer M&As compared to other startup destinations in the world, mainly because Asia’s third largest economy is not known for technology innovation and is notorious for unwieldy business policies.

Between 2011 and 2014, India saw M&As of just 173 startups, in comparison to 4,177 in the US, according to software industry think tank iSPIRT. In terms of deal value, India lagged far behind the US and Israel. The average M&A value in India between 2011 and 2014 was $11.3 million, while in the US and Israel it was $57.4 million and $113.8 million, respectively.

Entrepreneurs feel that once Indian startups get more visibility in Silicon Valley, the M&A climate in the country will improve drastically.

“We hope that Modi’s visit will help create an innovation bridge between Silicon Valley and India,” Sharad Sharma, co-founder of software industry think-tank iSPIRT, told Quartz. “Silicon Valley does an admirable job of innovating for the first billion. India is moving to innovate for the next 6 billion.”

Ravi Narayan, director of Microsoft Ventures in India, wants Modi to explore an “outpost” in Silicon Valley that can help Indian startups enter the US market. “This outpost can get the startups a soft landing in the market and access to the basics, such as paperwork, connections, temporary workspace in the Valley and in New York, etc,” Narayan told Quartz.

Business-friendly India

Indian entrepreneurs are hopeful that the visit will help Modi understand some of the US’ startup-friendly policies that could be implemented in the country to support innovation.

“Silicon Valley illustrates the stark difference between what Indians can accomplish outside India versus inside,” Beerud Sheth, co-founder and CEO of enterprise messaging app startup Teamchat, told Quartz. According to a 2014 study, 15% of startups in Silicon Valley are founded by Indians.

“Modi’s trip to Silicon Valley is a great opportunity to take back a few important lessons on streamlining regulations and fostering entrepreneurship,” Sheth said.

Naveen Tewari, founder and CEO of InMobi, also believes that Modi’s trip will help him “imbibe the culture that stirs the spirit of entrepreneurship in Silicon Valley.”

“He can then aim to create a stronger (startup) culture in India. Ten years down the line, a simple job might not be enough for these ambitious Indians,” Tewari told Quartz.

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