IT startups in India: From IT workbench to global competing IT players
IT industry outgrew most other sectors in India over the past years. The sector has increased its contribution to India’s GDP from 1.2% in 1998 to 7.5% in 2012. According to NASSCOM (National Association of Software and Services Companies), the IT–Business Proceess Outsourcing sector in India aggregated revenues of US$100 billion in 2012, where export and domestic revenue stood at US$69.1 billion and US$31.7 billion respectively, growing by over 9%.
Part of this growth are nearly 5000 startups every year just in the IT sector. What is slowly changing is that the latest generation of start-ups are moving away from services and developing products, i.e. no longer are they development centres for companies in the developed markets like US and Europe. It is heartening to note that there is an enormous wealth of globally competing business ideas popping up. With India having built the competence over the last two decades, the bright startuppers are in the right country at the right time.
Typically, these start-ups grow to a certain size until they need funding to expand more and grow outside of India. Some of the new age fund houses and super angels (read as small ticket investments) find it easier to invest in a entity based in USA, ask the startups to have their holding entities, which is the wealth creating entity, in the USA. It appears that India will now have outsourced the startups and the bright founders and continue to remain development centres. This new tendency bears the risk that India will remain an emerging country as the most valuable asset the intellectual property is sold.
Sharda Balaji, a seasoned lawyer and mother of a 17 year old teenage daughter with a lot of business law accumen is the founder of a law firm called NovoJuris. She and her team of 12 people is helping these start ups to get them off the ground fast and be their legal partners in their growth story. Being the founder of a start-up herself 4 years ago, she and her team of 12 people deliver all needed legal services needed for corporations, especially start-ups in the tech industry from ideation, private equity investments, corporate governance and exits. One of her major concerns is the fact that can the Indian venture firms and angel networks act quickly to be the first choice for the Indian startups and can the venture firms who believe in the Indian startups invest and keep the IP in India.
I am here with Kathrin Hettel and Nace Sapundziev (two colleagues from Walldorf, Germany and Sofia, Bulgaria) to help NovoJuris look into ways of how Sharda and her team can grow and at the same time keep the NovoJuris spirit that their customers praise them for. So far, we are experiencing a very enthusiastic team that really carries a lot of start-up spirit themselves. In fact we are blessed to have the opportunity to work on this program together with the team and will enjoy developing the deliverables over the next three remaining weeks in Bangalore.
Sharda Baraji presenting at CDC / SAP Social Sabbatical kick-off meeting
Can the Indian venture firms and angel networks act quickly to be the first choice for the Indian startups and can the venture firms who believe in the Indian startups invest and keep the IP in India.