U.S. slow down: Indian start-ups look for growth at home

By SiliconIndia   |   Saturday, 29 March 2008, 07:59 Hrs
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New Delhi: Unlike the past, all Indian Internet start-ups are not looking to do business in the U.S. and Europe now, a few of them are turning away from a slowing U.S. economy and focusing on their home with ventures targeted at Indian consumers, reported Mint.

These companies are creating search engines, social networks, online travel companies and even YouTube-style websites tailored for Indians, often taking their models from Silicon Valley while adding their own Indian twists.

Start-up PringOO.com, for instance, sells customized gifts such as mugs and T-shirts over the Internet here. But few Indians have credit cards and those who do have are often unwilling to give their card details online, says co-founder Jai Kumar.

So, he lets his customers pay cash on delivery, and 40 percent of sales happen this way. Once thing is sold, it takes three weeks for Kumar to get the money. He also runs the risk of a customer rejecting a highly personalized gift he cannot resell. But Kumar says there is no other way to do business in India.

Enthusiasm for India-focused start-ups is on the rise, even though most have yet to attract big number of customers.

"People are realizing that looking out at a market where you don't understand the customer IQ is hard," says Vijay Anand, who heads Proto.in, an organization that holds an annual competition to pick the country's most promising ventures.

But there also are good reasons why these start-ups remain few and far between, even though Indians are leading figures in Silicon Valley and other technology hot spots around the world.

India's rickety infrastructure and spotty customer service can make it tough to get going. Kumar spent three months last year officially registering the firm's name. It took two more months to get a reliable Internet connection to his office in Pune. Only in January was pringOO's site up and running.

Venture capitalists also have shied away from funding India-oriented companies. About two dozen venture capital funds hold $1 billion (around Rs4,000 crore) ready to be invested in Indian start-ups, according to Venture Intelligence, an Indian firm that tracks venture capital here.

But until recently, VCs were looking only for companies with executives who had experience running an Internet business, according to industry participants. The funds often passed over younger entrepreneurs who wanted to build for the domestic market, which remains very small, despite India's population of 1.1 billion.

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