Tag: Startup company

Lessons for India

There are many lessons applicable to India, which can be learned from Israel’s startup and innovation ecosystem. Some of these lessons maybe more relevant than the ones from Silicon Valley. These lessons can be categorized across culture, education, role of government, and role of corporates.

But before we get into those, it is important to note that there is a widespread myth that most entrepreneurs and successful startup founders are fresh undergrads or college drop-outs. Bill Gates and Mark Zuckerberg are big exceptions, not the rule.

Experience is a key factor for successful high value IP (Intellectual Property) driven startups. The average age of startup founders in the Silicon Valley and Israel is closer to 40. A typical startup founder is someone who has completed higher education (MS/PhD) and worked further in research/development for some years. This experience is not only useful for gaining deeper domain knowledge, but to also gain a good network of potential co-founders, employees, pilot customers, partners and investors.

While it is important to teach entrepreneurship to undergraduate students and giving them opportunities to build on their ideas – it is unrealistic to expect many breakthrough startups to come out of undergraduate colleges.

Culture & Education

Culture is difficult to emulate. It’s a more fundamental thing. Yet there are some aspects of the culture that are common across the two India and Israel (e.g. ability to do more with less, with constrained resources). These abilities in India need to be encouraged and rewarded. Of course, there is a right way of doing things and doing a total ‘Jugaad’. Need a right balance.

Indian education system discourages asking questions and challenging the authority – quite opposite of the Israeli system. Changing this is a huge task.

At the higher education level, a significant shift is required. India’s investment in R&D is very low across the board, and this also reflects in our funding of our higher education and research institutes. This needs to change. Of course, the efficiency and utilization of these funds also needs significant improvement.

We need to focus on improving our Masters and PhD level programs. We need quality, not quantity. We need to focus on relevant, market-ready IP creation. Today, our institutions like the IITs produce some of the best undergraduates in the world. However, the same cannot be said about our Masters and PhD students.

Some of our best undergrads end up doing MS/PhDs outside India (mostly in U.S. and in Europe, Japan, and other countries). This is a key issue and needs immediate attention (will need a separate article to discuss this in detail). The Indian government is taking some steps in this direction (like the recently announced PhD scholarships), but a lot more needs to be done. We need to track and improve the number of IIT, IISER, IISc B.Tech/MS graduates, who do PhDs in India.

Since we don’t produce many world class PhDs, the multi-national R&D centers don’t recruit them here. This is one reason good students are not doing PhDs in India, since there are very few good corporate R&D job opportunities. This is partially a chicken and egg problem. The cycle can be broken by upgrading our research facilities and PhD programs and improving the supply.

In some aspects IITs and the new IISERs are comparable with the best in the world. But they need a long way to go, before we could count some of these in the top-50 global universities. The quality vs. quantity argument is valid here too. Yes, we need more institutes; but we also need sustained focus (and resources/funding) to get at least 1-2 of the old IITs to world class level.

To further improve the quality of PhD programs in India, we need more university to university collaborations. These need to move forward with concrete programs at the department levels – and not just stay at signing ‘MoUs’.

Role of Government

As discussed earlier, the government has to play a key role in improving higher education (Masters and PhD programs). In conjunction, it is also critical to improve our basic research & development capabilities. We need large investments and great execution (like ISRO). Our R&D spend as a percentage of GDP is way low at 0.8% (compared to 4.3% for Israel, and 2.5% for China).

Government also needs to fund creation of Incubators that provide funding, support and mentoring for deserving startups. Here again, quality is more important than quantity. As mentioned earlier, Israel has less than 20 incubators. We need more startups with good solid IP; not yet another ‘me-to’ incremental e-business innovation, that too copied from a U.S. startup idea. We need more startups in cyber-security, agri-tech, energy, AI, healthcare, biotech, advanced manufacturing, materials, etc. and less in e-commerce.

A good example of successful (yet low profile) incubator in India, which supports startups with high value IP, in the areas of biotech, materials, energy, is the Innovation Center at National Chemical Laboratory in Pune. We need more startups founded by PhDs and senior R&D professionals, who have created some new, non-trivial IP.

Third and important long term area for government support is exploring the ‘DARPA’ (Defense Advanced Research Projects Agency) model from U.S. Israel follows a similar model.

DARPA is a U.S. government agency that funds strategic projects in the area of defense and national security. A good portion of this funding is received by the private sector. DARPA provides strong program management and oversight (by its own program managers) on these projects, executed by the private sector. This ensures good execution and efficient usage of the R&D dollars. The Program Managers from DARPA are industry veterans and are experts in specific domain areas.

In U.S. and Israel, the offshoots of defense related spending on strategic projects (through DARPA and other agencies) has resulted in many dual use products and technologies. These technologies are later commercialized or built upon by established companies and even startups. In many respects such agencies provide a basic R&D foundation (much like state supported universities), and help the overall innovation and startup ecosystem.

In India, the DRDO model is mostly all government (public sector). We need to understand, evaluate (and adapt as required) the DARPA model for India as well.

Role of Corporates

Indian private sector companies in tech and other sectors also need a strategic product/IP vision. Today, along with the government, the private sector too contributes to a significantly lower R&D spend, compared to their international peers.

In the IT space, India has been largely focused on the Software Services. Some of these large companies are sitting on large cash piles. The IT Services market is ripe for disruption with cloud, automation and other structural shifts. Now is the time for these IT Services companies to start investing more in product R&D and IP creation. They can also allocate more funds for their venture capital arms, which can in turn drive funding of IP driven product startups.

Closing Comments

We need to progress in multiple areas simultaneously, if we want to build a good, high-value IP driven startup ecosystem. Israel provides some good learning examples. We need to move to a ‘product’ and ‘solution’ mind-set. ‘Make in India’ should not just be about manufacturing, but also about IP creation, core R&D and import substitution in strategic areas. We need to improve startup to startup and university to university level contacts and close collaborations with Israel, U.S. and other countries.

The Indo-Israel Joint Innovation Fund announced last year during PM Modi’s visit is a good start. The Indian market is important for Israeli startups, and joint IP development should be explored. Lastly, we need better alignment between defense driven R&D and funding with our universities, corporate R&D and startups.