Bangalore: Rajesh Nair, a young entrepreneur, is all ready to take his alternative fuel systems for two-wheelers firm to the world. Armed with a compelling presentation on how his fuel kit—both green and economical—will help in reducing petrol bills for scooters by as much as half, he comes across as a ready candidate to receive venture funding.
But the energetic Nair, managing director of Lords Automotives, feels a bit left out at Proto.in, billed as India’s largest start-up showcase event. The focus at such events, he says, still remains on information technology (IT) or software firms that funders are comfortable dealing with, given India’s success in that business.
“I slightly regret the emphasis given to IT sector firms. It is not that venture capital investors do not appreciate my idea. The interest is, nevertheless, more on IT,” says the Ahmedabad resident, adding that angel funding is just not happening for non-IT firms.
Feeling the heat: (left) Umesh Sachdev, co-founder and CEO of Uniphore Software, and Rajesh Nair, managing director of Lords Automotives. Hemant Mishra / Mint
Nair was one of a dozen entrepreneurs who showcased their firms and business ideas at the fifth edition of Proto.in, a two-day event for start-ups that concluded in Bangalore on Saturday. Nair is not alone in feeling a sense of competition from fellow IT start-ups. There exists a general feeling that as new ventures in non-IT segments are fewer, such firms are being outnumbered, be it at start-up events or on must-talk-to list of investors.
Of the 12 start-ups showcased this year, just two—Lords Automotives and Kadambari Consultants Pvt. Ltd—had nothing to do with IT and mobile phone services. There were the likes of LifeMojo, Khelo Communication Pvt. Ltd, Fingerprints Fashions Pvt. Ltd, and Uniphore Software Systems Pvt. Ltd, but they are completely dependent on IT-enabled services or infrastructure to leverage business.
“IT companies create a lot of buzz. We (non-IT firms) have to project ourselves a lot more aggressively to show our presence,” says Umesh Sachdev, co-founder and chief executive, Uniphore Software Systems, which has a product called Noddler. Noddler is designed to provide access to information and services from the Web through a multilingual voice interface over the phone.
Investors agree that currently, IT firms are hogging the limelight in the country. One of the reasons they cite is the larger number of innovations in the sector. Layoffs and a slowdown in the tech sector is, in turn, seeing several managers launching their own firms. Also, a substantial number of those returning to India from the US are keen on starting their own ventures.
Still, “there is a clear need to see beyond IT,” says Sandeep Singhal, director, Nexus India Capital, clarifying that technology is not just confined to IT but also encompasses biotechnology, chemicals, oil and gas and so-called clean technology solutions.
For investors who look at having returns several times their investment, IT companies, by the nature of their ability to scale up, especially when they are product-oriented, generate more interest. “We are also under constraint to look at companies which can give five times or eight times of returns. IT firms give that. Our investors do not want returns of 15% a year,” says Rajesh Srivathsa, managing partners, Ojas Venture Partners.
Besides returns, Srivastha says, capital expenses, demand for IT products and services, even returns are much easier to gauge than that in non-IT businesses, making for a natural bias towards such investments.
Entrepreneurs at Proto.in last week said one of the ways to encourage more innovations and to provide more exposure to the non-IT sector would be to have equal number of such firms and tech outfits participate at events specially organized for start-ups. New innovations are too few and far in between in non-IT sectors, says T. Sampath Kumar, chief executive, Kadambari Consultants, which has a product called Nualgi, which purifies water. “It takes a lot of time for innovations like ours before they come into the market and it needs to be encouraged by giving equal opportunities,” he says.
Organizers at Proto.in said they were aware of this need and intend to proactively diversify focus currently on IT and mobile phone service firms. “There are a lot of companies in biotech and nanotech, energy and clean-tech, which are catering to local needs. We will start including them from our next edition on,” says Vijay Anand, founder, Proto.in.