Vijay Anand who earlier spent 6 years at the IIT Madras Incubator, founded The Startup Centre at Chennai in May 2011. The startup centre works both as a startup hub and accelerator, however Anand asserts, it is different from the Y-Comibator which is a hugely popular Accelerator programme running in the Silicon Valley. Taslima Khan met him at Chennai.
Vijay Anand
A. We have a number of events happening here, each of these targeting a different set of people with a different need. Startups attending these events can enroll into the 'Resident Programme' which ultimately leads to the 'Accelerator programme'.
Q. How are you events different from big events like Proto?
A. Startups get a chance to meet each other in big events like Tie or Proto, but nothing much happens after that. They need smaller and more closer events to get to know each other better and work out ideas.
The Open Coffee Club happens every 3rd week of a month in 8 cities including Chennai, Bangalore, Hyderabad, Pune, Mumbai and Delhi, the largest crowd puller being Pune where a group of 60-70 startups conjures up. These get-to-know meetings take place at coffee places and the main draw for those looking to startup is to get to meet people who they would want to work with-say a good Chartered Accountant.
We have another event called In 50 Hours which happens on weekends, every 3 months from Friday evenings to Sunday evening. In these meetings which can pull a crowd of over 75 people, startups come with an idea and build a prototype of the startup in a high energy- fun filled environment where youngsters can get to learn a lot. The startup demos the prototype on Sunday evening. In the last event, out of a pool of 32 ideas, 26 were prototyped.
Q. What leads to the Resident programme?A. If you are out with a product protype, you can join the resident programme which lasts for 3-6 months. Startups can work from the Startup Centre to build the first version of the product. Every quarter, The Startup Centre takes in 4-5 teams that make a batch. By the time the startup graduates, the team is able to find a direction to go, the right market, etc.
Q. Finally what's the Accelerator programme like?A. While the Resident Programme helps startups get direction for their product, the Accelerator helps them finally build the company and launch in the market. They get help in things like incorporating the company, what kind of people they would want to have on their board, how they would market the product etc. Also by the end of the accelerator which lasts for 6 months, that startups can raise angel funding upto 10 lakh from angels at over 10% equity.
Q. What's exactly the idea behind an accelerator? How are you different the Y-Combinator- the popular accelerator programme in the Silicon Valley?A. Though the idea behind an accelerator is to help tech entrepreneurs get their businesses off the ground faster. Most startups coming out from the Y-Combinator are purely tech or social media based. But India is a very different market. A large number of startups want to leverage technology to solve problems in diverse areas ranging from payment gateways, to healthcare or education. At the Startup Centre, we need people from different backgrounds to mentor and guide startups.
Q. Tell us about the batches you are running at this point of time?A. 3 batches of residents comprising 10 companies have started. Out of them 3 have graduated, 1 has failed and rest of them are alive.
Q. Do you see demand for accelerator programmes increasing?A. Demand for these programmes is increasing. For the 1st 2 batches we had 2-2 teams each. For the current batch or 3rd batch we have 6 teams which were shortlisted from 75 applications. For the next batch we are expecting 10 teams. I think these numbers are only going up.
Q. Can the Y-Combinator model be copied in India?A. I don't think Y-Combinator model makes sense in India. The raw material we are working with in India is the entrepreneur who is sharply different from the entrepreneur sitting in the silicon valley. He is the one who is constantly hearing about starting a business right while he is in college. Compare it to someone in India who passes out of college and then thinks, Hey ive heard of something called starting a business, lets give it a try. Funding the Indian guy is much riskier.
Q. How different is the Indian Startup Ecosystem versus that in the Silicon Valley?A. The ecosystem there is way too advanced. Look at the number of clients a silicon valley startup can have. Who is willing to pay for an enterprise solution from a startup here in India, unless we some introductions for them and help them get their first clients.
Q. Do you think the resident component is important for accelerators?A. Having a residential programme is important, because a lot cross learning happens between entrepreneurs. Starting up is a lonely thing. So it is good to have people around to boost your morale from time to time.
The resident programme is important so that we can understand them fairly well. We sit with them to say that hey this is the kind of entrepreneur that I would like to back, no matter what.
Q. What's the risk with working with early stage companies?A. There is no guarantee that entrepreneurs will succeed. If you are working with early stage companies, you should remember that 9 out of 10 companies will actually fail, says Vijay Anand who has seen one of the incubate companies drop out. Here goes the norm- birds fly, fishes swim and startups die.
Q. What kind of startups you are focusing on?A. We are only focussing on technology companies here. These companies have two parts- building the product and creating a business model around them. The accelerator programme focuses more on the business model around the product- what should be positioning of the product, what can be the different revenue streams, strategy among other things. There are 12 mentors who have build companies spend over 3 hours in a week here. Sanjeev Gadre, Murugga-Bharat Matrimony.
If you get your product right you can make it to the Accelerator programme- the first batch running. Help them with the business mode, put in seed funding upto 10 lakh into the startup, connect them to mentors etc.at over 10% equity. Since we have our success tied up with that of the teams, we have an incentive to make them succeed.
Q. What explains the preference for technology companies?A. Sectors other than mobile or technology may take much longer time to develop. Unfortunately, accelerators like us won't have the support to keep them going for a long time. Its very hard to accelerate a renewable energy company which might take 7-8 years to get to see some hope of the company taking off. One of the reasons why we focus on technology is because it is easier for these companies to get off the ground likely in 6-8 months.
Q. How do you compare accelerators with incubators?A. The pace at which a startup needs to move is very much cushioned in an academic setting where you are allowed to take your own time to move the next step.The market reality is a little bit much harsher. When entrepreneurs are working with entrepreneurs we bring in more reality on that front.
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