First there was Bollywood in the movie business, now India is gradually building its own version of Silicon Valley in Bangalore in the south-east of the country. This entrepreneurial hub is still at the development stage, but already numbers around 500 startups and is booming.
Interview, during a broadcast by L'Atelier numérique (L’Atelier Digital) on the BFM Business channel, with Alexander Souter, founder of Overcart, an e-commerce site serving the unboxed/used items market in India.
L’Atelier: Your website offers high-tech products at clearance prices. Why did you decide to found your startup in India, to focus on the Indian market?
Alexander SOUTER: With close to 1.5 billion inhabitants, India represents a truly vast market. Our main product, the smartphone, saw around 45 million units sold last year. At the moment the Indian smartphone market is the world’s third largest and we’re even expecting it to overtake the US market in the next two or three years.
Apart from smartphones, are people in India keen on new technologies?
Absolutely. In India we’re seeing a rather interesting trend. The country tends to skip a few steps in technology. Take for example the fixed-line telephone. Indians have skipped this stage and moved straight on to the mobile phone. The same sort of thing is happening with all types of computers. Indian people haven’t gone for PCs. Instead they’ve moved directly to portable devices. So at the moment, the products which are selling really well are smartphones, laptops and tablets.
That opens up a lot of opportunities across the apps market. So has this trend inspired many startups?
Our equivalent of Silicon Valley is based in Bangalore and a lot of startups are emerging from this hub. In the beginning, India specialised first and foremost in outsourcing. Wipro and Infosys were two of the most successful companies in this field. Now companies are getting interested in software.
Is there any particular dominant sector?
Basically, two types of companies are emerging. Those that focus on the local sector, with e-commerce, tourism and recruitment sites. Then there are the companies that have a global vision. These firms are looking more at Big Data and messaging services. In fact the most downloaded application from the App Store at the moment is a messaging service called Hike, which was developed in India. It’s even more popular in India than the WhatsApp application or even Facebook.
What can you tell us about the ecosystem around the new technologies and startups? Is the ecosystem already mature or perhaps on the way to becoming mature?
It’s still developing. There are two or three ‘success stories’ but India has certainly not reached the level of Silicon Valley. The system’s still growing. However, a lot of international investors have come to India. Take Sequoia Capital for example. There are also companies such as the online travel firm MakeMyTrip, which is listed on the NASDAQ stock exchange in the United States. But there’s still some way to go before India reaches the level of Silicon Valley or Europe.
When you say that there aren’t as many success stories in India as in the US or in Europe, does that mean that there are none at all? We’re not necessarily talking about acquisitions, but more about ideas, innovations likely to get noticed, developed and used on a huge scale overseas.
Well, the ecosystem us still in its infancy. In actual fact successful Indian startups are often bought up by international players. There’s no major Indian company in existence that started up in India and is still Indian. Nor is there a major startup with a global outlook which has become a world number one.
What encourages startups to launch a project? Does the State play an important role in this developing ecosystem? Or is it investment funds that are stimulating entrepreneurship?
In fact entrepreneurship is really booming here. Around a dozen accelerators are establishing themselves. The prospect of your startup being taken over once successfully launched is highly motivating for new entrepreneurs. Once you begin to see two, three, four ‘success stories’, that will attract other entrepreneurs. And in mid-July the government announced it was setting up a billion dollar fund to help startups. So that shows just how dynamic the market is.
Coming back to you…Is it the growing competition that attracted you to India? Is the Indian market easily accessible to Westerners?
The biggest challenge for me has been to get to know the consumer. I grew up in France, so I grew up with French consumers. I understand what s/he wants and have no difficulty putting myself in his/her shoes. In India, I’ve really had to learn how consumers behave, what their tastes are. That’s been my biggest challenge. The other difficulty has been to raise funds. That’s more difficult given India’s laws on foreign investment.