The recent buyouts of start-ups based in India’s Silicon Valley have rekindled hopes that home-grown entrepreneurs do have a shot at international success.
Internet giant Yahoo acquired Bangalore-based Bookpad, a company that helps in converting Microsoft Office or PDF documents on their Web browser, for reportedly $15 million. This comes nine months after Facebook acquired a small unknown firm in the city called Little Eye Labs for a similar sum.
Industry watchers are thumping their chests, confident that the day when Indian start-ups make their global mark has finally arrived, albeit not on the same scale when compared to their compatriots in Israel or the US.
“If you look at these deals, it is an affirmation that Indian product companies are starting to make a mark globally,” said Rajat Tandon, Senior Director of the Nasscom 10K startups initiative. Nasscom, in April, as a part of its InnoTrek initiative, had taken more than two dozen start-ups to Silicon Valley and showcased their wares to companies like Yahoo. Similarly, iSPIRT and Microsoft Ventures helped Bookpad with their business accelerator programmes.
These developments need to be viewed from a perspective of an ecosystem that is helping start-ups get noticed. “In the last couple of years, India has seen 4,000 start-ups, 400 venture capitalists and 150 start-up incubators,” noted Praveen Bhadada, Partner & Practice Head, Zinnov.
At the heart of all this is simple economics. Through the deal, Yahoo also acquires the skills of the three promoters, enabling the company to cut short the time needed to market something they do not possess at the moment, said R Narayanan, member of The Chennai Angels.
This, industry watchers feel, is something different from the past when Indian product companies were often overlooked. “Now companies are driven to develop innovative products with an ability to address a business or consumer need,” said TP Pratap, Co-Founder, Qwikcilver Solutions. Others feel that the economic benefits of testing out a solution in Bangalore is another huge draw for multinationals. “It comes as a viable economic option to bigger companies who can leverage the R&D expertise of start-ups on proven concepts,” said Rajiv Kumar, Founder, Manusis Technologies.
It is learnt that the two dozen employees of Bookpad will relocate to Yahoo’s headquarters in Mountain View, California.
However, some in the industry still opine that the champagne bottles should not be uncorked just yet. “This is not a drumbeat of success since a country like Israel with a smaller population than Bangalore sees 85 companies get involved in M&A transactions,” points out Sharad Sharma, co-founder and governing council member of iSPIRT. However, iSPIRT feels that if it meets the target of 40 companies being sold or merged in the next four years, it would be a significant achievement.