At a recent conference in Mumbai, Kunal Bahl, Co-founder and CEO of Snapdeal and Rajan Anandan, VP and MD of Google (South East Asia and India) spoke about the challenges and opportunities of the start-up ecosystem in India.
The two were part of a panel discussion at the CNN Asia Business Forum 2016 held on the sidelines of Make In India week and moderated by CNN's Asia-Pacific Editor Andrew Stevens. The other panelists included Charlotte Brogren, Director General of Vinnova and Michael Perry, Director of Strategic Partnerships at DJI.
On being asked about his experience as an entrepreneur with Snapdeal, Bahl said that the lack of role models made it more difficult to be an entrepreneur in India. He also said that the underlying infrastructure needs to be improved, however, he added, that for companies like Snapdeal, this was an advantage.
Anandan opined that the entire start-up ecosystem has completely changed in the last decade. He attributed this change to the development of a large addressable market, a new set of role models for budding entrepreneurs and the emergence of a funding ecosystem.
Brogren, as part of the Swedish government's agency for start-up development, Vinnova, was of the opinion that the government's role is to facilitate innovation by providing the different types of support required by start-ups. This, she said, included financial support, but also included getting entrepreneurs to meet to foster new ideas.
"There is a bigger role for the state to play in the start-up ecosystem and I think our current administration is playing that role of evangelizing and celebrating entrepreneurship in the country. I keep saying that our country needs more entrepreneurs to increase employment," said Bahl.
Anandan pointed out the government’s initiative of ‘Startup India’ and said the government needs to make it easier for entrepreneurs to start companies. "About 90 per cent of start-ups fail, so it should also be easy to exit from a failure and do something else. In India, shutting down a business is almost impossible so that needs to change. We need more incubators, especially in our engineering colleges, so the government can play a role. The main thing is; make it easier to do business. The mantra of making it easier to do business is for all the companies but it applies more so to start-ups," he further added.
Stevens pointed out the fact that China has 26 unicorns, while India has just seven. He queried Michael Perry from DJI; a Chinese unicorn, about the reason behind this. Perry said that Chinese unicorns do not receive state support in the traditional sense. "State support in China used to mean direct support, direct investment but now you have a second generation of companies that are able to take advantage of the wide variety of environmental practice. We have a very sure manufacturing base, an e-commerce system that reaches out globally and, in Hong Kong, a world-class logistics hub," he explained.
He also noted that China being a strong manufacturing hub gives Chinese companies critical advantage over others, including Silicon Valley, France, etc., which, he said, were struggling with hardware innovation.
Speaking about the challenges towards connecting India to the internet, Anandan said that Google views the challenge in two parts. "The first part is how to get from the current 350 million users to 1.2 billion. The second part is how to ensure that people are not just connected but have affordable broadband," he said. He further added that moving from 350 million to 600 million users was easy but the next phase, viz. moving from 600 million to 1.2 billion would need disruptive technologies. He also mentioned that Wi-fi could play a big role in bringing about this connectivity.
All panelists agreed that laying down the infrastructure should be driven by the government but some form of PPP could be an option.
Meanwhile, Bahl opined that the next disruptions in the industry would come in the areas of supply chain and online payments. Speaking about fears that the current phase of start-up expansion is a bubble, Bahl said, "It is okay for 100 companies to think they can solve the food delivery problem. Many times, you hear media and VCs speak about it being a bubble. Of course it is a bubble. But out of every bubble comes 1-3 companies that change the game and the way consumers use a particular service."
Both Anandan and Bahl disagreed with the idea that Indian start-ups are aping Western counterparts. "Innovations around multi-lingual, supply chain, payments, even HR are very India-specific, local innovations," said Bahl. Anandan pointed out that 50 per cent content driven products are building platforms to address the intermittent connectivity issues. He gave the example of YouTube Offline, which he informed was the fastest growing product in India and now introduced in 77 countries, a product that was developed to solve a real-life problem in India, basically bad internet connectivity.
"India will lead the disruption model for the next set of 2 billion internet users globally," he said.
Bahl also said that there was a need for simplification of regulations as a lot of old regulations are out of sync with the new generation of entrepreneurs.