Friday, May 23, 2008

We're still in the first week of the iAccelerator
and the business workshop is still taking up most
of people's time. But as we get deeper in I'm
increasingly convinced this is a great model for India.

The YCombinator model is geared towards puting small
amounts of money behind first time entrepreneurs who
are willing to live together and work from an apartment
in order to make a startup happen. The 2BHK startup.

One of the biggest complaints with the Indian psyche
when it comes to startups is the lack of perceived value
behind the stock. By puting in minimal money, and leaving
the vast majority (~90%) of the equity with the founders
YC filters on this.

The biggest hurdle we'll need to overcome to apply the
model effectively here is the exit. My impression is that
THE YCombinator generates many early stage exits. - Does
anyone have data for this ?

I just came out of a session done by Chirag Patel - CEO of
Net4Nuts. He gave an impressive talk about how to launch a
company and get customers. His steps for growing a company
amounted to - Start, Survive, Scale, Sell.

He was pessimistic on the potential for early stage exits in
India. His point was that in the US the build vs. buy equation
is influenced by a strong premium placed on time. In India, he
said, time is much less appreciated so he didn't see a big market
for companies like this either in total money or number of
transactions.

This isn't necessarily a deal killer. Their should be
a foreign market for Indian startups with strong engineering teams,
proven track records, and clean paperwork as it reduces risk
for companies wanting to set up engineering teams here.

And because of super low costs 2bhk startups in India should hit
survivability fairly quickly - even if it includes a mix of service
work. And with that there should be time to develop the business
and eventually sell it.

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