Venture Capital in India: Ashish Gupta (Part 7)

SM: I think the individual-led incubator model is the best one for India.

AG: A lot of these education institutions are hampered by the fact that the quality of mentors to the entrepreneurs is not high. They continue to labor under serious delusions as to what constitutes a business. That has really been a major challenge to institutional incubators. There is no easy answer to sort that out.

SM: Business is very complicated. Incubators must provide experienced people to help entrepreneurs sort through all of it.

AG: Technologist have a way of falling in love with what they build.

SM: A solution looking for a problem. That’s the story of my life in consulting.

AG: And if it does not work, they will just put on more features as opposed to finding an actual problem to solve.

SM: Where do you see the innovation story going?

AG: The innovation story needs to be looked at from a slightly different model. Here, innovation is more in process and business models. It is not so much about technology yet. Technology innovation will come once the local market has gotten to a stage at which the efficiencies that innovation delivers begin to be more important.

A retail company today has enough risk and opportunity around plain old growth. Such as company is not dependent on the efficiency of its solutions just yet for it to be worried about the rewards of market cap and so on. Technology innovation will come in once the retail company has reached a point at which technology innovation indeed delivers to the company its next marginal value proposition from a market cap perspective. Right now, these companies are squarely in a growth stage. People would rather buy a solution from Oracle and deploy that as opposed to encouraging entrepreneurs.

The technology entrepreneurs are beginning to emerge at the level of telecom companies. They are asking for next-generation solutions for architectures, because the first generation has reached a point of maturity.

How do you lick process-oriented problems? How do you lick business model pricing-oriented problems? With new delivery models. That is where all the new innovation is going to be. Some of the areas that we do not normally look at are more attractive [in India]. Water problems are unique in India. I think that we are going to come up against a great need in medical devices and pharma. The drugs that work for Caucasians do not always work for Asians. Proteins bond differently. There are tremendous innovation possibilities there.

SM: Is anybody working on that?

AG: I don’t know. There are some health care-focused funds in India, so they are likely addressing some of that.

SM: Down the road, I think that India should be able to crack the entire consumer electronics industry. To cater to India, there is a price performance requirement that is quite different from that in the West. To deliver smart phones to India, you have to drop prices so significantly that the entire architecture needs to be reconfigured. India has the opportunity to build technology for its own market. I don’t think that the expertise and perspective are there quite yet.

AG: Interesting. We will keep an eye out for that.

SM: What about location? Where is Indian entrepreneurism located today?

AG: It is pretty evenly distributed among Delhi, Mumbai, and Bangalore as the first year centers. It is very nicely distributed between Pune and Chennai as the second year centers. Unfortunately, Kolkata does not show up that quickly. We also hear about stuff that is happening Chandigarh. Several interesting companies have come out of Chandigarh; we have not seen that much just yet.

SM: You are based in Bangalore. Do you invest in these other cities?

AG: We have an office in Delhi and one in Chennai. We travel a lot to Mumbai. Our offices are reasonably well distributed.

SM: All these cities show up at my roundtables on a regular basis. This has been very interesting. Thanks for your time.

This segment is part 7 in the series : Venture Capital in India: Ashish Gupta
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