 "Time for consolidation in start-up world: Vinod Dham")
Inventor and venture capitalist Vinod Dham, popularly known as the ‘Father of the Pentium chip’, was the first investor in online marketplace giant Snapdeal. He recently founded AcadGild, an online technology education start-up. On the sidelines of a fireside chat organised by Snapdeal, Dham told Karan Choudhury that though there is no start-up bubble, the next two years would be all about consolidation in the sector. Edited excerpts:
Do you see a funding winter setting in the start-up scene in India this year?
The goal of investors is to make money. They go with the flow, so when everyone is investing they put in money, when they do that, valuations go up as everyone is competing for the same deal. But like everything else, this has to self correct as well, so it goes up high then comes back to a level. However, again in a few years, it will go up. It keeps on oscillating between being greedy and fearful.
Right now investors are fearful and for the next year or two, things would remain like that. It is a time for startups to consolidate and review. The companies that cannot sustain themselves will have to sell themselves off, get merged or acquired or shut shop.
Is there a start-up bubble?
The word bubble is an implication that too much air has been pumped into something and a small prick will cause it to blow. I think there is no such bubble in India or United States but there are pockets. For example, if you take enterprise software in the US, there are 78 unicorns and everybody decided to keep on funding them as they did not want to go the IPO way.
In the process, if 20-30% of them die, I do not see a problem. If one wants to call that a bubble, they may, but that's a part of the natural evolution of any business.
Start-ups in which sectors do you see getting funded this year?
I think startups in data science, cloud computing, services security, artificial intelligence and health sciences are among the sectors where there would be more growth. Even in the world of e-commerce, the companies that would win are not going to be the ones who have more users, but the ones with customers coming back. Even if you take the example of Snapdeal, the most paramount thing for them is customer satisfaction. Customer teaches a lot of things.
Do you think a lot of concrete R&D work is getting done in India, or is there a lack of innovation?
I do not think there is a lot of legitimate R&D work getting done in India as of now, not that I am aware of. Significantly, more needs to be done, we need to cultivate that type of work via universities and even defence labs, we should be doing a lot of work the way Israelis have done. They have vibrant venture capital and startup community that is working on amazing products, technologies and innovations that have come out of their research in the defence industry. We should encourage our defence sector to allow innovation internally that spreads into industry as well.
What do you think of the various government initiatives around startups and its ‘Make in India’ programme?
These are all synergistic programmes, which will all go together for the overall progress of the country. It has to focus on becoming digital, make things in India, so these are important initiatives and they need to be implemented now.
Do you see a funding winter setting in the start-up scene in India this year?
The goal of investors is to make money. They go with the flow, so when everyone is investing they put in money, when they do that, valuations go up as everyone is competing for the same deal. But like everything else, this has to self correct as well, so it goes up high then comes back to a level. However, again in a few years, it will go up. It keeps on oscillating between being greedy and fearful.
Right now investors are fearful and for the next year or two, things would remain like that. It is a time for startups to consolidate and review. The companies that cannot sustain themselves will have to sell themselves off, get merged or acquired or shut shop.
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Is there a start-up bubble?
The word bubble is an implication that too much air has been pumped into something and a small prick will cause it to blow. I think there is no such bubble in India or United States but there are pockets. For example, if you take enterprise software in the US, there are 78 unicorns and everybody decided to keep on funding them as they did not want to go the IPO way.
In the process, if 20-30% of them die, I do not see a problem. If one wants to call that a bubble, they may, but that's a part of the natural evolution of any business.
Start-ups in which sectors do you see getting funded this year?
I think startups in data science, cloud computing, services security, artificial intelligence and health sciences are among the sectors where there would be more growth. Even in the world of e-commerce, the companies that would win are not going to be the ones who have more users, but the ones with customers coming back. Even if you take the example of Snapdeal, the most paramount thing for them is customer satisfaction. Customer teaches a lot of things.
Do you think a lot of concrete R&D work is getting done in India, or is there a lack of innovation?
I do not think there is a lot of legitimate R&D work getting done in India as of now, not that I am aware of. Significantly, more needs to be done, we need to cultivate that type of work via universities and even defence labs, we should be doing a lot of work the way Israelis have done. They have vibrant venture capital and startup community that is working on amazing products, technologies and innovations that have come out of their research in the defence industry. We should encourage our defence sector to allow innovation internally that spreads into industry as well.
What do you think of the various government initiatives around startups and its ‘Make in India’ programme?
These are all synergistic programmes, which will all go together for the overall progress of the country. It has to focus on becoming digital, make things in India, so these are important initiatives and they need to be implemented now.