For entrepreneurs in search of the next great tech hub, the answer may lie beyond the borders of the United States.
In the past, we’ve written about the defining characteristics of startup-friendly cities around the U.S., and we’ve even spotlighted a few of our favorites. But what about the defining characteristics of a startup-friendly country?
India is now the world’s fastest growing major economy, and from the looks of it, the country is primed for tech opportunity. As Shashank Bengali writes, “India is a bright spot for global investors and an increasingly important market for U.S. technology.” As India continues to prove its mettle as a tech powerhouse, what should potential investors be aware of?
Empowered & Connected Consumers
According to Tech In Asia, consumer spending in India has been on the rise for many years, and is set to hit 3.5 trillion dollars by 2020. This is very likely the result of increased access to goods and services, internet connectivity, and opportunities for employment throughout the country. In 2014, India even surpassed Japan to become the third largest economy in the world based on purchasing power.
Even with this increase in consumer empowerment and connectivity, India’s Internet market still represents a relatively immature, and thus unexplored, environment for American companies to experiment within. Valerie Wagoner, Twitter’s Senior Director for Growth, has suggested a groundbreaking approach, posing the question: “If you are starting from a clean slate, what should Twitter look like?” This willingness to start from square one — or at least to consider the possibilities that doing so might allow — may be the defining characteristic of companies that achieve success in the Indian marketplace of the future, and those that fade into obscurity.
With only 23 out of every 100 people owning a mobile device and 34.8% of the country’s 1.3 billion citizens using the internet, India certainly has a way to go in terms of mobile and tech penetration. Even so, 34.8% of the population equates to 400 million people — so India is second only to China in its total number of internet users (The U.S. is in third place, with approximately 287 million internet users). What’s more, an influx of low cost smartphones and laptops, coupled with relatively low cost mobile plans, have empowered people across the country to connect — especially in previously isolated rural areas.
Innovation Is Disruptive (In a Good Way)
India is already home to a number of hugely successful startups, and the country boasts the third largest number of technology driven companies in the world. But that doesn’t mean the road to tech domination hasn’t been rocky, at times — or that the future will be without challenges.
Take the Flipkart-Snapdeal-Amazon trifecta, for example. Flipkart was founded in 2007, and the company is already considered India’s largest ecommerce company, with a May 2016 valuation putting the company’s worth at $9.39 billion. Flipkart is a direct competitor to Amazon, as well as the peer Indian company Snapdeal, which is worth over $6.5 billion. Despite these massive valuations, the competition between the three e-commerce groups is so intense that Snapdeal is rumored to be discussing a merger with either Amazon or Flipkart, which would keep at least one (if not both) of the Indian companies from competing with Amazon.
Regardless of an eventual merger, Flipkart and Snapdeal serve as prime examples of smaller, younger companies challenging their more established counterparts, bringing energy and vitality to the emerging market. Sunil Kanoria, President of the Associated Chambers of Commerce and Industry of India, believes “disruptive innovation in technology and process is creating newer Indian startups and [bringing] foreign investors.”
As these businesses develop, and interest from venture capitalists grows, disruption within the technology sector will most certainly contribute to a more diversified business landscape.