IT start-ups need to focus more on marketing

Securing funding no longer the primary challenge.

Access to market is going to be the major problem faced by start-up IT firms looking to hit the market with innovative products or solutions. Access to venture or angel funding, which was considered the prime issue a couple of years ago, has now been relegated to second or third position.

"I think before going in for venture funding, it is extremely important for companies in the start-up phase to understand whether the market they are targetting is ready to adopt the products they are planning to launch. They should also know the global implications of their products, and this is only possible when they explore a collaborative business relationship with others with deep technical skills," said Kallol Borah, managing director of Aumega Networks, a software infrastructure product company.

Industry experts believe that in terms of the graveness of the problems faced by the IT product companies, access to market occupies the number one position, followed by technological skill and access to funding.

In fact, access to funding, of late, had not been a key issue before the firms with the VC community showing a strong interest in investing in Indian start-ups.

According to a recent report by Venture Intelligence, VC investment including seed, early stage and growth capital accounted for $560 million across 100 deals in 2007, as against $500 million in 2006, an increase of over 10 per cent.

This indicates that the VCs are not averse to funding Indian start-ups just as they fund Silicon Valley companies. Many of the global venture firms have established their offices in India in the recent past, since they want to stay close to the market and their portfolio companies.

But they are quite cautious in making the right move as most of them prefer investing in technology companies who have put in place a proper marketing roadmap, even before they hit the market.

"Most people go more by hype than the reality in the market place. They need to understand that the technology or solutions they are talking about today may be sounding relevant in the context of India or any other emerging countries, but the demand for it might have reached the saturation point in advanced countries," said Srini Vudayagiri, MD, Lightspeeds Ventures.

He said this is the reason why many global venture capital firms preferred to share their experience with their portfolio companies by suggesting to them "when to go for a course correction".

Even though there had been a lot of hype about India as a market for IT products, sceptics believe that Indian firms still don't want to take the risk by buying their technology products from Indian start-ups.

IT adoption in India, which is poised for growth, is more likely to help global players like IBM, HP or SAP than the Indian product firms who are little known in global markets.