After seeing the challenges that Explara founder Santosh Panda faces as an entrepreneur, his wife often jokes that she wants their sons (aged six and four) to study at an Indian Institute of Technology (IIT).
After all, IIT alumni are leading the pack in India’s red-hot technology startup space. Five of the seven Indian companies that have recently entered the unicorn club—startups valued over $1 billion (Rs6,400 crore)—were founded by entrepreneurs who were trained at an IIT.
Here are some of the large Indian startups that were founded by IIT alumni:
|Gaurav Singh Kushwaha|
|Krishna Mehra, Aneesh Reddy and Ajay Modani|
|Sachin Bansal and Binny Bansal|
|Rahul Yadav and 11 others|
|Naveen Tewari, Abhay Singhal and Amit Gupta|
|Aloke Bajpai and Rajnish Kumar|
|Ambarish Gupta and Pallav Pandey|
|Ketan Kapoor and Tonmoy Shingal|
|Bipin Preet Singh|
|Bhavish Aggarwal and Ankit Bhati|
|Deepinder Goyal and Pankaj Chaddah|
Is it a coincidence that so many successful entrepreneurs have their academic roots in IITs?
Or, does having attended an IIT contribute to an entrepreneur’s success, especially in the technology sector?
“Unfortunately it is true that an IIT tag helps you pass through a lot of hurdles, especially during the initial phases of your startup,” Laxman Papineni, co-founder of Hyderabad-based startup AppVirality, told Quartz.
“Investors and incubators bet on people and not necessarily on ideas. So, being an IIT graduate gives you a certain validation. Non-IIT entrepreneurs often have to prove themselves for a while before winning the same confidence,” said Papineni, who did not study at an IIT.
There are three things, according to Ritesh Banglani, partner at Helion Ventures and an alumnus of IIT-Delhi, that work in favour of entrepreneurs from the IITs—the presence of role models, the confidence of getting a job even if the venture fails, and access to a strong network of alumni.
Cream of the top crop
The IITs, of course, are incredibly selective.
In 2014, only 27,152 students made it to the IITs, out of some 119,000 students who appeared for the Joint Entrance Exam (JEE), considered one of the toughest entrance exams in the world.
Such a tough process to select students—followed by a rigorous programme—ensures that the IITs consistently produce top-quality engineers.
“There is heavy engineering required for a startup to succeed and so there is a need for engineers with a strong pedigree,” Rehan Yar Khan, venture capitalist and founder of tech-focused Orios Venture Partners, told Quartz. “And it’s not just about the knowledge one may have, it is also about the network that you have access to. Being from a premium institute can help you attract great talent.”
IIT alumi, according to a 2013 study by research firm PitchBook, were among the leading founders of startups in the US. In fact, the IITs collectively were the only non-US colleges among the top 10 higher educational institutions that have produced founders of American startups that raised venture capital funding between 2010 and 2013.
The IIT alumni, according to Pitchbook, accounted for 77 startup founders raising VC money, while Stanford topped the list with 190 alumni receiving their first round of VC funding, followed by UC Berkeley and the University of Pennsylvania.
Around two years ago when Amit Kumar Agarwal set out to start NoBroker.in, a broker-free property search portal, it was “the most natural thing” for him to reach out to connections from his alma mater IIT-Kanpur.
“There were so many things that we needed to work on, like technology, marketing, finance, etc. So I would often browse through my connections on LinkedIn, and ask my friends from IITs to connect me to the right people. It would be a matter of a couple of phone calls and I could reach the right person,” Agarwal told Quartz.
NoBroker.in has attracted talent not only from IIT-Kanpur, but also from IIT-Bombay, where the company’s other co-founder, Akhil Gupta, studied.
“We just ask the candidate tumhaari hawa kitni thi (how much air did you get) – referring to the all India ranking (AIR) in the JEE?,” Agarwal said. “Truth be told, the moment you know that a candidate is from an IIT, you are sure of the quality of his skills. There is an immediate bonding, and then the only conversation left to make is which IIT and which batch.”
While a degree from any of the elite engineering schools, like Birla Institute of Technology & Science (BITS), National Institute of Technology, or Delhi Technological University, carry an edge—IIT alumni are first among equals.
The network of IIT alumni—that traces its roots back to 1951 when the first IIT was set up in Kharagpur—allows young entrepreneurs wider access to mentors and individuals with strong global and technical experience.
Atit Jain, an engineer from BITS and co-founder of Gigstart, a startup backed up by the founders of Snapdeal, believes that IIT alumni have a much wider and stronger network in comparison to his alma mater.
“The brand value of the IITs is very high, plus their network is very strong since there are so many IITs and there are thousands of successful professionals who have come out from there,” Jain said. “There’s only one BITS and so the number of alumni is much smaller.”
Banglani of Helion Ventures argues that the IITs themselves don’t do a great job of connecting alumni, the informal network works very well. ”At any point if you want to reach out to an IIT alumni, you’ll probably be only two degrees away from him,” Banglani said.
The trend is not unique to India. In the US, for instance, Stanford University—located in the heart of Silicon Valley—is a hotbed for entrepreneurs. According to a 2012 study, companies formed by Stanford entrepreneurs annually generate revenues of $2.7 trillion globally, and have created 5.4 million jobs since the 1930s. These include Larry Page and Sergey Brin, the founders of Google; Leonard Bosack and Sandy Lerner, the co-founders of Cisco Systems; Peter Thiel and Ken Howery, who co-founded PayPal along with others; and Bill Hewlett and Dave Packard of Hewlett Packard.
Risk appetite and proven examples
With a degree that is valued globally, graduates from the IITs are typically confident of landing a well-paying job early in their careers. This frees IIT-alumni to take risks, which is integral to being an entrepreneur.
“IIT graduates have far more job security than graduates of other colleges,” said Panda of event platform Explara. “We non-IITians run the risk of not getting another opportunity if our startup fails. But an IITian knows that he will definitely find a well-paying job whenever he wants. So his risk appetite is far more.” Panda studied engineering at Utkal University and holds an MBA degree from Manchester Business School.
Another major factor that adds to the confidence of IIT graduates who want to turn entrepreneurs is the proven track record of alumni who made it big in the space. Some examples of successful entrepreneurs from the IITs date back to the 1980s—like Vinod Khosla, co-founder of Sun Microsystems and an alumnus of IIT-Delhi.
The likes of Sachin Bansal and Deepinder Goyal have in recent times further strengthened that belief.
“The presence of role models plays a big role,” said Banglani from Helion Ventures. “Role models give a sense of confidence. Perhaps that is why some IITs —like IIT-Bombay and IIT-Delhi—that have had more successful entrepreneurs, churn out many more entrepreneurs compared to the other IITs.”
What the investors say
For investors, a degree from an elite institute does make a difference. However, most investors who were approached for this story said that they rank engineers from IITs and BITS equally.
“We ideally like to have at least one person in the team (of the startup that we invest in) from a premium institute like IIT or BITS. NITs are ranked one step lower,” Khan of Orios Venture Partners said.
Banglani of Helion agrees. “There is a connection between a good educational pedigree and entrepreneurial success. So, we do look for entrepreneurs who come from good colleges,” he said.
Getting exposure to entrepreneurship during college is one of the strengths for IIT alumni as against engineers from other colleges, according to angel investor Sharad Sharma. “There are only a few colleges in India that support entrepreneurship, and the IITs are one of those,” he said, but was quick to add that an entrepreneur’s alma mater has no bearing on his investment decision.
According to Sharma, IIT-Bombay is a perfect example of one college where “several professors have turned entrepreneurs,” which inspires students to pursue the same path.
“Every college has a different ecosystem to support entrepreneurship and the IITs and a few other colleges have over the years developed a social network that supports entrepreneurs,” Sharma said.
Banglani, however, feels that the idea of learning entrepreneurship in college is “overblown”.
“If you know of a good entrepreneur who is looking for funding and has not learnt any entrepreneurship at college, send him to me,” Banglani said. “We will be glad to look at his idea.”