Sunday, March 13, 2005

How to Start a Startup

Reached this article via Rajesh Jain's blog entry.

How to Start a Startup - Paul Graham.

A fascinating writeup on how and why to start startups. And who should start startups.

Building startups is more difficult in India than in USA. The angels are not roaming around and the VCs are mostly interested in BPOs (or whatever the flavour of the year is). The paperwork is a bit more complex in India than in USA, but from what Paul Graham says, must be better than that in Germany.

In India, more startups come in the IT sector. But there is a huge need right across every field.

In my opinion, there are some strong reasons why startups do not come up thick and fast in India.
  • People are massively afraid of failing in a venture.
  • Finding a job after failing in ventures may be difficult. (Though I guess the situation is changing now.)
  • Parents are a major dissuading factor. If they depend on your salary, that constrains you in going out and doing something crazy.
  • Risk equity is hard to find.
  • You can forget about the banks. They have no clue and won't even give you a simple overdraft facility until you build a business with credible revenue streams, and have been in existence for about three years or so.

However, I feel that the entrepreneurial revolution is about to be unleashed in India. The Indians have now watched and heard about the names of people who have made it big from nowhere.

We were earlier told that to make it big you had to have the right connections. Big daddy with lots of money. Uncles in right places. Political connections. And so on. There is also this thinking that building an ethical business is not possible in India because of the pervading corruption in all walks of life.

Having been closely involved in building Cricinfo since 1996 and now New Horizon Media, I can confidently say that it is possible to build ethical businesses in India and succeed.


  1. good post sir, and I am 200% agree with yr points..especially this one..."(Parents are a major dissuading factor....)"

  2. Badri, I agree with you. But most dissuading factor I see is fear of failure. Everyone wanted to have a comfortable table to sit & work and not many wanted to roll up their sleeves and get down to do something absolutely fresh.

    I agree on the Angels part of it. But more than Angels, Banks are skeptical to believe on youngsters. I heard, that in US, banks have "risk capital" thru which they fund startup ventures. There is no risk capital here in India. No Bank/VC/Angel is ready to believe "ideas which can change."

    Unless and otherwise, if there is a free flow of money to bet on ideas & people, i dont think, we can achieve global supremacy in terms of entreprenurial spirit.

    When it comes to startups, I always compare India with Israel, such a small country, but look at the product patents & service areas they cater to the world market. On the other hand, India is one country full of self-working like your "pottikadai", pan shops among others. But these guys dont have "breaking ideas of the world"