India’s Deep Tech Startups — Taking on the World
India does holds the promise of leading the global deep tech start-up story. However, there will be challenges in terms of competition from corporate giants and the start-ups will need to constantly keep pace with innovations while taking care of factors like the Team, Funding, Revenue, and Industry regulations in order to continue to scale.
The Indian economic growth story really began in the early 90s when US-based IT companies began to outsource work to the low-cost and skilled talent pool in India. Since then India has become one of the most prominent offshoring destinations for IT organizations across the world. Later on, firms in India became multinational companies with delivery centers across the globe. In the early 21st century, it was Business Process Outsourcing that took center-stage by becoming the fastest-growing segment of the ITES industry, creating thousands of jobs each year in India. Around the same time, India’s local e-commerce potential took off driven by the rise in Internet and smartphone penetration and since then, it has been growing at break-neck speed.
Across these growth stories, the common driver of disruptive change has been Technology and will continue to be as India is now looking at its Deep Tech start-ups to take on the world. As per the 2017 edition of the NASSCOM-Zinnov report, India ranks third among global start-up ecosystems with more than 5000 start-ups with 1000+ new additions in 2017.
The sectors of Healthcare, Semiconductors, Mobile and SaaS are witnessing the application of advanced technologies like AI/ML, Big Data, IoT and AR/VR. Investor interest in these start-ups is on the rise and even the big corporates are offering acceleration, collaboration and investment programs to catalyze and support the Deep Tech industry. Being flooded with innovative ideas and support from the ecosystem, India does holds the promise of leading the global deep tech start-up story. However, there will be challenges in terms of competition from corporate giants and the start-ups will need to constantly keep pace with innovations while taking care of factors like the Team, Funding, Revenue, and Industry regulations in order to continue to scale.
While the world recognizes that the opportunity exists in India, the real question is whether Indian tech start-ups will be able to compete with the money and the brain-power of established corporates of the Valley, Europe, and China, or will they fall by the wayside.
At the TiE Global Summit, 2018, a panel was put together to explore this further. The Discussion was moderated by Sateesh Andra, MD, Endiya Partners and the other panelists were Rohit Kumar Pandey — Co-Founder & CEO, SigTuple, Nagendra Nagaraja — Co-Founder & CEO, Alphaics and Arihant Patni — MD, Patni Financial Advisors
Four key points emerged from this insightful discussion: -
1. Competitor analysis is key for deep tech startups to find the right product-market fit. Understanding the competition from established corporates as well as existing startups will allow entrepreneurs to identify the niche they can cater to and deliver breakthrough products in that area while leveraging emerging technologies. The analysis must lead to a thorough understanding of their differentiation in the market and what their customer requirement is. Although agility in product development is important, comprehending exactly what their potential customers are trying to achieve, their pain points and strategic objectives, early on, will help startups incorporate specific opportunities that their product needs to address and gradually build barriers to entry for a competition.
2. As deep tech startups are building products that are totally new, they need a focused product engineering effort along with customer validation. Since truly disruptive tech products require considerable development time, they do require a strong R&D function with the right infrastructural and financial support in place. However, the more pressing questions to ask when competing with the tech giants are how can startups attract the right tech talent including software engineers and data scientists, and how can they then be assimilated into the company culture that percolates down from the core strengths of the founding team. Further, deep tech startups need to find employees with unique skills that will help them build a scalable product in order to compete with global players. While the goals of millennials seem to be shifting from working for the world’s largest tech companies to working for new ventures that offer the potential to be part of disruptive change, it remains a challenge to contend with the deeper pockets and bigger influence.
3. The third significant area of focus for advanced tech startups is defining a clear Go-to-market strategy and achieving the credibility to get the first few customers. Winning the first customer(s) requires them to be nimble and flexible, with all the right marketing materials in place to make the sale happen. Although the initial sales are made by the founders themselves, gradually startups need to start assembling their sales and business development teams, the right tools and marketing platforms. Even at this point, gathering support and building a customer base, requires a certain level of trust to be put into a new product and business. Hence for building that level of credibility, it is imperative to constantly stay in touch with the customer, elicit user feedback, be responsive and communicative and earn that trust to the extent that your early customers become your advocates.
4. Another key point to consider is whether the Location/HQ of the startup and the investors matters to the success of the venture. In the early stages, it is important to be in close proximity to the investors for face-to-face mentorship and for getting access to their local network of contacts along with helpful introductions, which further strengthens the local start-up community. However, as most tech startups today aim at building global businesses, it may be beneficial for some of them to consider setting up shop where they have better access to talent and growth capital.