The Indian startup ecosystem needs more angel investors. While there has been a surge in startup count, I doubt if there is a proportional increase on the angel investment side. Having said that, putting money in an early-stage startup is a high-risk game as there is no customer validation at that stage.
Excitement of Entrepreneurship
There is lot of buzz around becoming an entrepreneur today. Even in colleges, 20 per cent of the students either want to work at a young firm or start a venture themselves. Therefore, one can expect a shortage of investors. In a country that is expected to clock 7-8 per cent annual growth consistently, the medium-to-long term opportunities for an angel investor are really good. The government could play a role to stimulate angel investments.
Investment Mantra
I have invested in about 15 startups after retiring from Infosys. While the tech sector interests me, I have also put money in startups that build innovative solutions around products, education, hyperlocal services and other areas. For me, the profile of the founders and the idea driving the team are key components. Since all my investments are early-stage ones, I do lay impetus on who recommends the startup to me.
Failures: Part of the Journey
The Indian startup ecosystem should be more forgiving towards ventures that do not succeed. Failures are an integral part of a dynamic ecosystem. Seven out of 10 startups will eventually fail. However, good ideas would always get funded. That is the way to look at it. The current lull in the investment scenario is just a cycle. Eventually, market forces will lead to self-correction. New funds will emerge and a fresh wave of investment will follow. The sectors that are hot today may lose sheen in the future and new investment bastions will emerge. That is how it should be. As an investor, I would not really worry about these things.
Inefficiencies and Innovation
It is only in the last 2-3 years that startups have started targeting inefficiencies in the system. Inefficiencies pave the way for opportunities to innovate and disrupt. This is what we see in last mile delivery, logistics, hyperlocal services and other emerging areas. Clearly, innovation is never going to stop.
Even for micro segments, the opportunity is huge, thanks to the sheer numbers that we have in India. Multiple dominant players can emerge and eventually become large players if they are addressing a population range of 10-20 million, which is the average population of Indian metros. The population of several Indian cities is higher than that of many small countries. Therein lies the opportunity.
IT and Brain Studies
The transformational effect of information technology will be more profound in the decades to come. As an enabler, IT has already given rise to new business models. The disruptions in the hotel industry and taxi hailing space are examples. The next 30 years will be more exciting with the emergence of IoT (internet of things), Artificial Intelligence and the next level of Machine Learning. IT would impact and propel every business on this planet.
For heightening innovation in the computing space, I believe that one has to deeply understand the brain. This would give us more insight on how humans can build better computers and devices. I am very fascinated by how the brain works and it how it evolves with age. Conditions like Alzheimer’s, Parkinson’s and dementia are big problems for a developing country like India. Thus, I collaborate with IIT Madras and have chosen brain studies as an area of research and investment.
Kris Gopalakrishnan is co-founder and former CEO of Infosys. He has invested in about 15 startups including NinetyNine Tests Software, FreshWorld and Uniphore Software. Gopalakrishnan supports several angel communities and is chief mentor at Startup Village, a public-private partnership undertaken by the Kerala government. He recently joined IDG Ventures India as an adviser. He has also co-founded Axilor Ventures, a startup incubator, along with Infosys co-founder SD Shibulal and company veteran Srinath Batni. Through his trust Pratiksha, Gopalakrishnan supports research in the field of brain studies.
(As told to principal correspondent Vijayakumar Pitchiah)