Silicon Valley is home to many of the world's
largest technology corporations as well as thousands of small start-ups. It is the leading hub for high-tech innovation and
development, accounting for one-third of all of the venture capital investment in the United States. It was in Silicon Valley
that the silicon-based integrated circuit, the microprocessor, the microcomputer,
among other key technologies, were developed. The region employs about a
quarter of a million information
technology workers.
Bangalore has for long been known
as India’s answer to Silicon Valley, and this is the city where most large
software companies have set up their state-of-the-art facilities. The
Government of Karnataka has also been extremely positive about the software and services marketplace, and has
helped create the relevant telecom and policy infrastructure conducive to the
growth of this sector. The high efficiency and reliability of the IT companies
in Bangalore soon earned a name for themselves among giant IT companies in the world
and Bangalore has emerged as an important IT hub.
Start-up
ecosystem
Start-ups are the backbone to any
growing economy and America’s Silicon Valley has the tailor-made environment to
promote and foster them. The access to
capital, presence of angel investors, mentors, availability of talented
workforce and more importantly liberal rules and regulations to stimulate
entrepreneurship are some of the remarkable asset an entrepreneur will have at
his disposal here.
Back home in India, although the
1991 economic reforms had greatly opened up the economy and provided a great
degree of manoeuvrability and
flexibility to the Indian entrepreneur, the environment was no way near to that
of America’s. The bureaucratic system and red tape in India meant that one had
to run from pillar to post to complete the necessary formalities and cumbersome
documentation. However, the Indian
entrepreneurship ecosystem has come a long way since then. Enhanced awareness
regarding entrepreneurship and its lucrative advantages is the key reason.
Moreover, the innovation
ecosystem in India has improved immensely with the greater availability of
resources at optimal costs, government concessions, ease of starting, scaling
and even winding up; and most importantly, the rapidly improving image of the
‘made in India’ tag.
SEZs
With a
view to overcome the shortcomings experienced on account of the multiplicity of
controls and clearances; absence of world-class infrastructure, and with a view
to attract larger foreign investments in India, Special Economic Zones (SEZs)
were allowed to be set up. SEZs are hubs for economic growth supported by quality
infrastructure complemented by an attractive fiscal package, both at the Centre
and the State level, with the minimum possible regulations. Besides, until recently many American IT
companies were given tax breaks for outsourcing which further encouraged them
to invest in developing nations like India.
Conservative
and risk averse Indians
American start-ups and companies
are more energetic, imaginative and agile than those in India, could be attributed
to their risk taking attitude. Indians are more conservative and risk averse, Indian entrepreneurs are
cost-conscious and sometimes this makes them compromise on the quality of input
and, consequentially, this reflects on the output quality too. The risk
averseness is also due to the fact that the Indian banks and financial
intuitions are unwilling to lend to an earlier failed business, however in US
for an entrepreneur’s start-up to fail and return with a successful ideas is
considered as an asset and looked positively.
Capital availability
Big ideas usually require a lot of investment
however the amount available for investment in India is still relatively small.
Furthermore, there is much more information available in the US on markets,
clients, and other related information. The legal system for making venture
investments is much more streamlined in the US, especially for US investors.
Further, potential return valuations remain stubbornly high in India . All of
which makes the US a much more favourable place for investing.
The other challenge that innovators in India face is
the lack of private funding. This becomes pronounced when it comes to tech start-ups.
Since the Indian IT sector is dominated by service-oriented companies like
Wipro and Infosys, it becomes difficult for product-oriented start-ups to
either get funded or acquired. Thus raising funding for technology start-up
remains a big challenge for Indian start-ups.
Broad-mindedness of American entrepreneurs
The companies and entrepreneurs in
Silicon Valley are more open than their counterparts in Bangalore. They are of
the opinion that to recruit best talent and to attract top investors it is
necessary for their company to be open rather than closed. This is how they
create a buzz about their products and services. Indian companies are on the
other hand closed in the sense that there is not much information about their
latest projects as they are not available on their website and not being talked
about in the media. The ventures in
Silicon Valley are much more aggressive with press releases, blogs write ups,
invitation to join beta versions and many other activities to inform and engage
potential customers.
In times
of failure….
Another vital point that must be mentioned is Silicon
Valley’s reassurance-provision in times of failure. In the case of many
successful start-ups, failure has proved to be the stepping stone for success
and this attitude has to be attributed to the relative ease at which one can
dust oneself off and start afresh.
However, in India, along with failure comes the very
daunting task of rebuilding from scratch. Hence, Indian entrepreneurs are much
more conservative.
Role of mentors
Besides, in Silicon Valley, most of the mentors or
entrepreneurship experts have a direct relationship with the ecosystem which
enables them a better vantage point to impart wisdom to their colleagues and at
the same time, directly utilise their intellectual resources in their start-ups.
On the contrary, in India, mentors only play an outside ‘guide’ role. Most of
them have no direct relationship with any start up and are hence limited to
passive roles.
To sum up, one must express great appreciation at
the rate at which the entrepreneurship ecosystem is growing in India. One must
not get demotivated by comparing ours with Silicon Valley’s …after all, Silicon
Valley culture is much mature than ours. The rising enthusiasm to
entrepreneurship coupled by our dedicated work force and the fact that we are
one of the fastest growing economies in the world means that the start-up
ecosystem in India has a promising future and who knows….one day, it might
surpass America’s Silicon Valley.
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