Can Silicon Valley create jobs in Modi 2:0 India?

Ritu Jha

 

Indian Finance Minister Nirmala Sitharaman’s 2019 Union Budget announcement that a special TV channel to boost her country’s startup ecosystem would be created has garnered a positive response in Silicon Valley.

(Left) Praveen Akkiraju, Managing Partner at Softbank Investment Advisers, with Ekta and Sanjit Dang at U First Capital event on May 15, 2019.

Venture capitalist Sanjit Singh Dang, founder of U First Capital, said the initiative would help create jobs in India.

“Startup TV Channel is an excellent idea. It will showcase the successful startups from India and hence encourage more people to start companies,” Dang told indica. “Overall, it will spur the Indian economy via innovation and jobs creation.”

Arogyaswami Paulraj, professor emeritus) in the Department of Electrical Engineering at Stanford University, told indica that India has grown at an average rate of around 7% over the past three decades, and the country has closed the gap on important developmental indices with most other countries, with the big exception of China, whose growth has been much stronger. “The challenge for us now is to accelerate our growth so that we too can lift the vast magnitudes of our countrymen out of poverty,” he Paulraj.

When asked on meeting the Modi 2:0 target of making India a $5 trillion economy, he said that among India’s big current challenges is creating jobs at the low-  to middle-income level.

“We add about 1 million youth to our workforce every month, and finding gainful employment opportunities commensurate with their education and expectation is a massive task. A lot of the youth in this cohort want government or PSU (Public Sector Undertaking) jobs, and they are going to be disappointed,” he said.

So, creating job opportunities in the private sector needs a renewed focus, Paulraj said.

“I am sure the current government. understands this well,” he said.

Paulraj also said he believes that one area where India needs more effort is in manufacturing jobs. China did this well, with an export-driven industry. Their recent attempts to shift to internal consumption and away from exports has been rocky but inevitable. Because of the recent trade wars and other friction between the U.S. and China, many multinationals are trying to shift some of their manufacturing base in China to other countries. Vietnam and other South East Asian countries have been successful in catching this flow out of China.

“India also needs to find ways to benefit from these trends,” Paulraj said.

Dang recently launched a VC Speaker Series, monthly talks that have featured Barry Eggers (founder and managing partner of Lightspeed Ventures), Praveen Akkiraju (managing partner of Softbank Vision Fund). Dang said they have started this as an initiative to connect both the U.S. entrepreneurship and Indian startup ecosystem.

Barry Eggers (founder and managing partner of Lightspeed Ventures) talking to entrepreneurs at U First Capital event in Silicon Valley on April 18, 2019.

“It (India) has a lot of potential due to top-notch talent and huge market,” Dang said but agrees much needs to be done.

The two things that need improvement in the Indian startup scene are venture capital funding and mentorship.

“Most entrepreneurs need guidance and mentorship on how to get started, then how to raise funding, how to approach customers,” Dang said. “And we are trying to shrink the distances between nations. Vision is to create a bridge between India and U.S. for mentorship and venture capital funding for Indian startups. That’s why we hold these events online over Zoom video conference, in addition to in person. In fact, we already have Indian startups joining these events.”

When asked what funding challenges he sees on the India side, he said that once there are more successes beyond Flipkart, Ola, Oyo, and the like, global VCs will start investing more and more in India. In addition, Indian corporations need to look at startups as their external innovation arm and hence acquire startups. This happens commonly in U.S. corporations but not in the Indian ones. This will improve the exit potential for Indian startups.

“We are looking at creating a U.S.-India Venture Capital Fund that solves the grassroot challenges of the Indian population,” said Dang, who has started U First Capital with his wife, Ekta Dang, and both were associated with venture capital investing at Intel Capital before setting out on their own.

 

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