Home >Companies >People >People don’t understand what it takes to be an entrepreneur: Lalit Ahuja

Bangalore: Lalit Ahuja, 54, spent more than a decade in combat roles in the Indian Navy before joining information technology firm Datamatics Global Services Ltd in the early 1990s. Over the past 22 years, he has built and managed technology centres for companies such as Target Corp. and News Corp. He even managed a successful venture fund for Rupert Murdoch in the late 1990s. Ahuja is putting together a start-up accelerator in Bangalore that will have centres in key start-up ecosystems in the world and will help entrepreneurs outside the Silicon Valley build their companies. He spoke in an interview about his strategy. Edited excerpts:

Why did you start another accelerator?

We looked at the accelerators in the world and realized that there were a lot of gaps. They worked well in the mid-2000s when the accelerators first started with Y-Combinator. Of course, a lot of time has passed and there were a lot of industries that were in the throes of massive transformation. We’ve been at it for more than six months and we’re currently at a stage where our first cohort, which is six companies, will be graduating in a few weeks—8th of July. And a lot of assumptions that have been made about next-generation have clearly been validated.

We focus on building strong companies because typically entrepreneurship meant having a good idea and you could go out and create an application or a prototype and that was it. But this is also about getting good talent. This is about running your finance properly or having good capabilities to run your legal or your real estate teams. Because at the end of the day you are creating a Google or a Facebook and they’ll all turn out to be very large companies.

We also wanted to bring in a lot of academic rigour. It was almost like back to school and learning what it takes to value your company appropriately and how should you be looking at design or things like what are the best practices in running finance teams. So the view was to have mentors who would have skin in the game, who would be like co-promoters, who are involved and engaged and are going to influence the success of these startups rather than those who would come in and give counsel and that’s where it all began and ended.

So, overall, immersive, intense and a high-touch experience so that you are incubating companies in a very controlled, life-support kind of an environment and taking no chances on mortality because success breeds success. The idea was that once we churn out successful companies we would influence more people to take on entrepreneurship.

Can you really fail-proof entrepreneurship?

Very aspirationally, we talk about how Kyron (an accelerator fund) is in the game of influencing and managing zero mortality rate—we know it’s a myth and it’s not going to happen, but hopefully one day 20 years from now, all our companies are going to be very successful.

And I think it’s about a few things. It’s about making the right specs—we are trying to do that by having a broad-based team and the science and art of having the right companies, focusing on quality versus quantity. That’s a big mantra that we are following. Having a very meaningful mentoring process—you can literally do magic and miracles with a great team and so we found that a lot of accelerators focused on building the product. A lot of great product ideas only go so far if you don’t have a formidable team backing them up. So the focus on team development, leadership development, we figured out that design had a very important role to play.

We know of a lot of global leaders today that have excelled purely through design thinking and how you look at design, simplicity, intuitiveness to how you implement and create those colours and aesthetics—bringing it all together and there was big gap.

The point I’m trying to make is how do you put together an environment, an ecosystem where a lot of these companies will thrive because you’re leaving no stone unturned and so if you’ve fundamentally selected a good company, nurturing it in the right way is going to assure good chances of success of these companies. That’s the approach we have been following.

How does India’s start-up scene compare with the Valley’s?

I think it’ll be wrong to make a comparison. I think we have a very long way to go—I think we will eventually evolve to a very different kind of a Silicon Valley. Maybe there is a problem in trying to emulate Silicon Valley. It’s a different world, a different market—and we are a very different world and a different market to put it in simple terms.

There was a time when we used to talk about population as a liability—we are now (talking about) 1.2 billion people as a dividend, we are four times as big a market with much better adoption for change and new technology and I think we should be putting our efforts into creating our own Silicon Valley.

They’re fearless people—as we’re talking, maybe someone’s having dinner in San Francisco thinking of how they can bring down a Google. That can only happen in a Silicon Valley—that intense risk-taking ability that leads to a new company coming up. It’s a melting pot of money because money has gone there—VCs (venture capital firms) and PE (private equity) players realize that there (are) talent and leadership and risk-taking abilities which lead to good ideas because they’re thinking big—those lofty visions.

With so many start-up accelerators launched in the past one year, some experts are talking about a bubble.

I think that just because there has been a spurt of new accelerators, particularly in the last 12-18 months, there hasn’t been substantive or material changes in the ecosystem that leads to a bubble kind of a situation. Here’s how I’m looking at it—obviously it’s early days, but the market and the opportunity’s big enough to create another 10 accelerators. I think there has got to be a focus on the value that accelerators are going to bring to the table and one of those businesses where you can have your own operating model.

I think accelerators play an important role in looking at thousands of applications and selecting five. In our environment, mentoring and coaching are a very important need of the hour. People don’t understand what it takes to become an entrepreneur. We’re already seeing a lot of the angel networks collaborating with accelerators for a more sanitized deal flow. So I think the short-term impact which is not showing up in the overall maturation is the fact that you have a slightly better quality of deal flow that you are positively feeding to the angel networks. Accelerators are talking to each other, they’re talking to angel networks, they’re talking to corporates now, so the whole notion of corporate accelerator is now gaining ground.

How big is your fund and what are your plans?

We are in the process of raising $56 million in three funds—$1 million, $5 million and $50 million. We made good progress with our first two funds and as for our third fund, the time has not come yet to raise that. So, $56 million and 560 companies over six countries. Our game plan is obviously scale at a global level—so perfect the model in Bangalore and then move it to Latin America and Far East Asia and take it to China and to eastern Europe. As much as entrepreneurship is global, it is also local. It’s local markets and local talent that you are leveraging.

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