ENTREPRENEUR SPECIAL .............Returnee Entrepreneurs

Returnee Entrepreneurs  Despite a sluggish economy and terrible infrastructure, India is an alluring challenge for people returning as entrepreneurs to their motherland     Turning their back on the American Dream has proven to be a fortuitous decision for a number of technology entrepreneurs who are crafting multimillion-dollar businesses within a few years of returning to India. Mostly in their early thirties, these highly-skilled professionals are building ventures that focus on the Indian market and offer a range of services from online retail to car-rental services, telephony products and refurbishment of used electronic products. “It’s like when people climb the Everest or go to the North Pole. There is a sense of achievement in coming back to India and participating in this unimaginable growth,” said Ambarish Gupta, who gave up a career at Microsoft to build a cloud-based telephony product in India. While he was still plotting a comeback, Gupta, 36, convinced his IIT-Kanpur batchmate Pallav Pandey to join him. He worked after-hours to build a prototype and landed in India convinced about its potential. It is an assessment by the former McKinsey consultant that has proven to be correct. This fiscal, Knowlarity, which has received venture funding from Sequoia Capital, is slated to earn revenue of 60 crore. And the Gurgaon-based company boasts a roster of clients including Medanta Medicity, Dr Lal Path Labs and Jeevansathi.com. “I am unwilling to accept a broken system, there is an oppurtunity to to fix everything,” said Gupta, who plans to return the coveted US Green Card, next year as he puts down permanent roots in his native country. Land of opportunity For a number of others, too, India is proving to be the land of opportunity. Among those creating companies that cater to the rising demand from an expanding middle-class are Kunal Bahl of online marketplace Snapdeal, Hitendra Chaturvedi of electronic refurbishment venture Reverse Logistics Company and Gaurav Aggarwal of Savaari Car Rentals. “If you can do business in India, you can do it anywhere else in the world,” said Chaturvedi, a US citizen who was posted to India by Microsoft in 2006. He came with plans of returning in two years but never did. Instead, spotting an opportunity in selling refurbished seconds from major electronic brands, Chaturvedi launched Reverse Logistics, which sells these products through an online portal GreenDust as well as through offline stores. The Delhi- based firm expects to double revenue to 500 crore by the end of next year. Such strong growth has also attracted the attention of investors. Last year, Vertex Ventures, Sherpalo Ventures and Kleiner Perkins together invested 171 crore in the company. Global experience The combination of global work experience and an understanding of the local market is driving the success of these professionals. Venture capital firm Canaan Partners, which recently completed a study of funding patterns in India’s startup sector, found that almost one-third of companies that raise capital are launched by entrepreneurs who have returned to India with at least three years of international experience. “A slowdown in the west has proven to be a blessing in disguise as we now have a skilled pool of people who have seen technological change at least a decade ahead of India,” said Rahul Khanna, a managing director at Canaan Partners. “They are not afraid to wear failure as a badge of honour.” For many of those who return with high hopes, doing business in India can be a trying experience. “In the first few months, I was flabbergasted to see a large number of inflated payslips and forged CVs,’ said Chaturvedi, 43. Swati and Rohan Bhargava, a couple who moved from London to Gurgaon this year to start Cashkaro, a cashback and discount coupons startup, discovered soon that infrastructure issues such as poor internet connectivity can be a drag on business. “We have four internet connections and all of them trip several times a day,” said Swati Bhargava, 30, a former Goldman Sachs executive. “The documentation to create a subsidiary is also a nightmare,” said Rohan Bhargava, 32. CashKaro has received about $750,000 ( 4.6 crore) as angel investment from UK investors this year. Ample support For those willing to stay the course, there is enough money and mentoring to see them through, apart from the lure of the market itself. IIT Delhi graduates Sameer Maheshwari, 37, and Prashant Tandon, 33, returned to India from the United States to start Healthchakra. com, a startup focused on scheduling medical appointments. “After six months we started wondering whether we had taken the right decision to return,” said Maheshwari, who found their business was stagnating. They turned to a few mentors to help them through the rough patch and changed their business model to ecommerce. The pivoted company, now known as Healthkart.com, has raised close to $22.5 million ( 140 crore) from a group of investors including Intel Capital, Sequoia Capital and Omidyar Networks. Red tape For many technology professionals, a tough visa regime in the US is also a reason for returning. Many aspiring entrepreneurs are not willing to wait for a green card or citizenship to start up, as in the case of Snapdeal’s founder Kunal Bahl. “I was working for Microsoft in the US and they applied for my work visa, which was rejected. This was a catalyst for me to move back to India,” said Bahl, 30, who has since built one of India’s most successful online retail ventures that is estimated to clock turnover of 2,500 crore this fiscal. “Once you are past the initial stages of friction and have escape velocity, a startup in India can grow much faster with relatively lesser competitive dynamics than in the US,” said Bahl. His company has till now raised a total of $90 million ( 500 crore) in equity capital from a consortium that includes eBay and Japan’s Recruit Co as well as six venture funds. Cycle effect As more success stories emerge, the number of Indians keen to return continues to grow said investors. “But only when they return with their families to settle here do we take them seriously,” said Ashish Gupta, cofounder of Helion Venture Partners, who returned in 2005. “It’s the biggest hurdle they will ever cross in their lives,” said Gupta, who has funded companies such as internet advertising venture Komli Media. “It has been a crazy ride doing business every day in India. In the US, I could predict my life and career with almost 90% accuracy for the next ten years. In India, I can’t predict even the next six months,” said GreenDust’s Chaturvedi.  The Return of the Native Startups by Returnees HEALTHKART: Online store for Health and wellness products KNOWLARITY:Cloud Telephony Company SNAPDEAL:Online Marketplace KOMLI MEDIA: Digital media network EXOTEL: Cloud Telephony Company GREENDUST: Reverse Logistics Start-up for Electronics ATTERO: Electronics Recycling & Management company SAVAARI : Online taxi aggregator CASHKARO: Online cashback & coupons platform FOODPANDA: Online food ordering platform VOTERITE:Online Social media platform for political campaigning The Reasons To Return: DIGITAL OPPORTUNITY IN INDIA: Internet Subscribers: 205 million Mobile Subscribers: 900 million No of Users of Mobile Web: 130 million ABOUT 90 MILLION FACEBOOK USERS, AND 40 MILLION TWITTER USERS No. of college going kids that are active Internet users: 60 million APT DEMOGRAPHICS: More than 50% of its population below age of 25 years More than 65% of population below the age of 35 years Average age of an Indian will be 29 years in 2020 Indian Middle Class: 300 million people (almost equivalent to size of US population) Per Capita Wealth per adult risen from $2000 in 2000 to $4,700 in 2013 MASSIVE TALENT POOL: India graduates 5 lakh engineers per year Salary for techies India $22,000 per year vs $116,800 in US Salary for non-tech grads 15k-30k per month SUPER RICH MARKET SIZE: Per Capita Wealth per adult risen from $2000 in 2000 to $4,700 in 2013 2.8 million people have net worth of over $100,000 1,760 ultra high net worth individuals with wealth over $50 million 770 UHNWIs with more than $100 million in India No of Dollar Millionaires: 180,000 (SOURCE: CREDIT SUISSE, BCG, IAMAI)   Troubles to Expect When You Return: Poor and Lax Work Ethic & Commitment from employees Difficulty in Hiring for startups Corruption not only in Govt but in the private sector Broken Systems; Lack of efficiency in basic requirements for a startup Little funding for start-ups without revenue traction Poor telecom and broadband infrastructure High regulations in telecom and financial sector  TIPS TO KEEP IN MIND: Keep a longer term perspective in mind Relocate with family to display commitment to investors Don’t compare the West with India on every count India work culture is seas apart, don’t take recruiting decisions alone  Harsimran Julka ET131122