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March 08, 2005

A Slow Start for Indian Startups?

Justin Hibbard

To read some of the more breathless U.S. technology media, you'd think there's a high-tech gold rush going on in India. Not so, says Rahul Bhasin, managing partner at Baring Private Equity Partners India, a New Delhi-based VC firm. When Bhasin and I chatted today, I asked whether there's any truth to the fairytale stories we read about Indian entrepreneurs striking it rich in the U.S. and then returning home to start or fund new companies. "I think thereís a lot more talk of that happening than is actually happening," he said. "What Iím seeing a lot more of are entrepreneurs buying a second home in India."

Entrepreneurial culture is still embryonic in India, Bhasin says. And though that's changing, it won't change overnight. In general, Bhasin believes American workers are still more likely than Indian workers to take a flyer on working for a startup. "Itís a pure function of wealth," he says. "If you have half a million dollars in your bank account, itís easier to take a risk with a startup." And then there's tolerance for failure. In the U.S., if at first an entrepreneur doesn't succeed, she tries again. "In India, you tend to get one chance," Bhasin says. "Thatís a mindset change that will have to be brought about."

Nevertheless, Bhasin has managed to find some investment-grade Indian entrepreneurs. In 2000, Baring provided seed funding for SlashSupport, which sells outsourced technical support for high-tech products. (If your Alcatel networking gear doesn't work, call these guys.) For a five-year-old startup, the company employs a huge number of highly educated engineers: 1,200 of them man the phones in India. Yet SlashSupport is profitable and expects to make $32 million in revenue this year, which would double last year's revenue. To get the company to this point, Baring has invested a mere $6 million.

Oh, but I forgot to mention: SlashSupport is headquartered in San Jose, Calif. And the company's founder, Shiva Ramani, previously founded another San Jose-based company, Cybernet Software Systems. Seems many of Bhasin's portfolio companies still want to be based in the world's largest tech market (the U.S.).

I invite you to violently disagree with Bhasin by writing to

11:21 PM

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