NOW! The Best Time to Start an Internet Company in India
The decade of the internet in India has arrived, approximately 60 - 80 million Indians use internet, of which 20 million are in social networks like orkut and Facebook, and turns over a huge $ 1 Billion in terms of online transaction. While home broadband is slowly increasing, there is a fair bit of broadband in the office and cybercafes. With wireless broadband hopefully around the corner and the 3G rollout, internet will be pervasive in this country.
The country right now is going through gaining critical marks in the internet. Many of the internet applications across content community and commerce which should have been created in the 2000s but were not created because of the dotcom bust are being created now. Web 1.0 is migrating into other areas such as regular e-commerce. People are now coming out with entrepreneur ideas to do what every country in the internet space has gone through, which is basic content for the country, basic commerce for the country and basic community for the country. There is a very strong need for ecommerce across almost any vertical, both on the b2c and b2b spectrum. Travel has proven the propensity of Indians to transact online. Ecommerce players that will control the last mile customer experience like warehousing, logistics and payments will win.
We are still trying to figure out what the trends are. But one future trend for sure will be finding ways to socialize the mobile phone which actually had nt happened yet. Now there is no need for vernacular communities in the country as all the users of Facebook and orkut are English speakers, but when the socialization of mobile internet happens, since mobile penetration in India is much higher, then vernacular communities will make a big difference. It is very early for vernacular communities now, but I do expect in the next 24 months there will be some critical mass in this area and entrepreneurs will come out with plans for the community area.
There are also two global trends that are coming to India; mobility and video. Despite of bandwidth problems and low broadband penetration YouTube remains to be among the top sites in India. I think all kinds of applications in video and mobility will take off in this fashion. We have already invested in a company called Vdopia, which is basically a video adds network that monetizes video streams across mobile and the internet and we are looking for further investments in the video and mobility area.
The biggest challenge that an Internet company might face in India will be competition. The barrier for entry into the internet space in India is very low presently and as a result so many entrepreneurs coming up with internet ideas. To survive this you need to have a lasting power and staying power and the only way you can get this is by raising a substantial capital. If you have an idea launching it quickly is very important, but make sure you have enough capital to back you because it might take over a year to figure out the business model and may be even longer, still he luxury of waiting is absent because the competition would come an eat into your margins. So the challenges are which companies can attract capital investors to finance their business and then figure out their business model over time.
Out of, may be, a 1000 entrepreneurs with internet startup ideas about half a dozen to a dozen are getting VC funding every quarter. The key is to convince the investor that you can execute this idea the best. When facing an investor the focus should be on the team and it has to go beyond just having an engineer on your team. Talk about who you got and why, figure out what your go to market strategy is and why you will succeed in this cut throat internet environment where there can be 10,000 other players.
Then the second part is you have to start thinking big. You cannot go to an investor and say I am going to do something that will be a small business in five years. The ability to think big is important because venture capital and angel investor guys would go on taking the risk early and invest in a company that has huge potential to grow big. Think about how big you can make your company and target huge markets. Convince the investors that this company can become very large and this is the right team to back it. These are the two main questions we always ask ourselves.
My advice to entrepreneurs is that there is no better time to start an internet company in India than now!