Page 48 - IACC Newsletter October November 2013 Issue 13

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investment destination, India had much less political risk than African nations and had better infrastructure. The nation
also had more subsistence farmers than all of Africa. In 2011 Frykman moved to Pune, India, after Driptech closed a
funding round led by Khosla Impact, founded by the venture capitalist Vinod Khosla. "It's kind of unusual to start a
company and then realize that the biggest opportunity is in India," Frykman said. "We sort of did it backwards."
India may be home to many of the largest outsourcing consulting firms, and tech-oriented cities like Bangalore have
attracted global technology giants like Microsoft. But attracting American-style entrepreneurism here has happened in fits
and starts.
U.S.-based venture capital firms and the Indian units of U.S. venture capital firms, like Sequoia Capital India, invested $172
million this year through mid-December, excluding joint ventures. That fell from $250 million in 2006, according to
Venture Intelligence, a research service based in Chennai that is focused on private equity. In the latest World Bank
rankings on the ease of doing business, India slipped three spots, to 134th out of 189 countries.
Some 42 venture capital firms based in the United States, however, have either opened offices in India or opened Indian
units since 2006, according to Venture Intelligence. Despite the challenges, the sheer potential in a country of 1.2 billion
people with a stable middle class is enough to tempt entrepreneurs and multinationals alike to explore opportunities.
"In the earlier years after I moved to India, around 2008-10, there was astounding growth in the mobile market, with 20
million new subscribers being added to the telecom network every month," said Valerie R. Wagoner of Modesto, Calif., 30,
chief executive of the mobile marketing firm ZipDial in Bangalore. That monthly growth was nearly equivalent to the
population of Australia.
Wagoner was working for eBay when she decided it was time to shift her focus to her passion: emerging markets and
technology. She did extensive networking in India with executives at mobile payment providers and joined mChek in
Bangalore in 2008 as head of strategic initiatives. In 2010, she founded ZipDial, whose investors include 500 Startups, a
Silicon Valley seed fund; Jungle Ventures of Singapore; and the Indian firms Blume Ventures and Unilazer Ventures.
The frustrations of doing business in India include bureaucratic hurdles in licensing and making other filings, and pressure
for bribes, which Americans cannot legally give. Many startups avoid these hurdles by catering to private clients and by
making products that do not need governmental approval.
Entrepreneurs have also had to adjust business plans quickly to get around complications. Sam White and Sorin Grama,
co-founders of Promethean Power, won second place and $10,000 in a business plan contest at MIT in 2007 with the idea
of using solar technology for rural electrification in India.
"India was the last country on my list to even visit - never had any interest," White said. Grama, 44, a Romanian-born U.S.
citizen, and White, of Boston, both eventually moved to Mumbai in 2012. They ran into problems from the start in trying
to make a cost-effective solar milk chiller for villages where milk was collected for dairies.
In 2010, they spent six months building a prototype, only to have the managing director of Hatsun, India's largest private
dairy, point out that the 2,000-liter thermal battery that was used to store cold thermal energy was too big for any shed
found in the villages.
Finally, they let go of the idea of being a solar company. Instead, they developed a thermal battery that is able to take
advantage of the intermittent power on the grid. The battery releases a cold fluid that chills milk quickly.
Now the company has Hatsun as a client and has attracted funding from clean technology investors like the Quercus Trust,
angel investors and grants by the National Science Foundation and the United States-India Science and Technology
Endowment Fund, which was founded by the two nations' governments.
"Eighty per cent was our own mistakes - we would have faced them in any country," White said. "But we always learned
from those mistakes." A common complaint among the entrepreneurs was the difficulty in finding and keeping good