STARTUP SPECIAL...............Courage & Creativity are what Our Startup Investors Lack Now

Courage & Creativity are what Our Startup Investors Lack Now   Perhaps the most important leg of PM Modi's US tour was his visit to  California or meetings with Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg, and many other tech titans. The goal of these meetings ostensibly was to attract Silicon Valley capital and entrepreneurs -and their business models -to India. The PM's delegation in California also included over 30 Indian startup  founders,  each of whom helped showcase the depth of the Indian-startup  ecosystem while hopefully also getting inspired by Silicon Valley's success story . The larger vision behind this exchange is that India too can create its  own Silicon Valley, an unparalleled startup machine that will create wealth  and jobs that are the need of the hour for India. INDIAN STARTUPS SEARCH FOR A ROLE MODEL It's hard to believe that, just five years ago, tech startups in India found it  hard to recruit top talent. Today, with the influx of venture money most tech  startups pay handsomely and represent very appealing job opportunities for young and talented Indians. Million-dollar pay packages at larger companies  are not unheard of. Even the glamour quotient associated with Indian startups couldn't be higher, with successful tech entrepreneurs being linked to Bollywood actresses. Amidst the ongoing frenzy, it is worth stepping back to assess what kinds of companies are getting started and funded in India.As an angel investor and perennial startup well-wisher, I get to see lots of emerging startups from  India. There is a pattern that is hard to miss. Almost every startup business model I see seeks to replicate a successful US company. It begs the question: is idea arbitrage the only opportunity in India? Although idea arbitrage is the name of the game today, I strongly believe that Silicon Valley is ultimately not the best role model for India's startup  ecosystem. Silicon Valley is solving problems for the west. A mainstream problem of  the west is probably a problem for the top 1-2% in India. Thus, a lot of  entrepreneurs in India, who are mimicking successful models from the valley, are thereby solving non-problems for India. At best, they are catering to the wants of the top 1% instead of the needs of the majority. This is fueled in large part by a lack of courage and creativity among  investors. Most investors are interested in business models that are easily described as the XYZ of India. So, a novel startup that does not have an analog in the  valley is not initially considered scalable or fundable. But it's time to  acknowledge that me-too models, while they come with low product risk and lower market risk than truly innovative ideas, will rarely get big enough unless they  genuinely olve a need for most Indians. Over the past year, I have been looking to invest in companies that address genuine India-specific problems while simultaneously using creative and scalable approaches of doing so. Growing mobile and internet penetration are opening up completely new delivery mechanisms. The opportunities are immense. The question for Indian entrepreneurs is how they can use the exact same enablers that contributed to the valley's startup boom to solve new problems  -the India-specific ones. Perhaps, the answer lies amongst Modi's own startup delegation rather than in the valley. (The author is a professor of Technology and Digital Business at The Wharton School, University of Pennsylvania)

ET 30SEP15