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We recently talked with Freeman Murray who is managing iAccelerator, an initiative by The Centre for Innovation Incubation and Entrepreneurship at IIM Ahmedabad (www.ciieindia.org). iAccelerator is modeled after Y Combinator (www.ycombinator.com) and is described as “an intensive startup company assistance program geared towards first time technology entrepreneurs in India.” Increasingly, the Ycombinator approach of small seed investments to cover an entrepreneur’s expenses while they’re getting started is gaining traction (it recently got a vote of confidence from Sequoia Capital who invested $2 million) and so we spoke to Freeman about iAccelerator, his other initiatives, entrepreneurship in India and what drove his move to India and how he has acclimated to life in his new home.
Freeman, first some background on you would be helpful.
We used to joke at IUMA.com the first startup I was involved with and possibly the first internet music startup period, that it was a good time to be a geek. I studied computer science at UC Santa Cruz in 93 & 94. Mosaic came out, I helped my friends with IUMA, then I got an internship in the Java group at Sun microsystems right when that came out. So, I was very blessed with my timing coming into the software scene right as the web hit big.
During the late 90′s the startup dust was strong in the Silicon Valley air. Several of our friends from the Java group started up and their company IPOd and was on paper worth billions. There were a bunch of stories like that then. It seemed like we all had friends who were starting companies, building really cool software and getting super rich doing it.
After a few years of this I convinced a friend and colleague from Sun – Pavni Diwanji to do a startup with me. Sun was a very good network to be a part of at that time and we lined up excellent lawyers and investors. We then built a series of browser plugins that showed users information related to the websites they were visiting. We sold the company 2 years later to [email protected] which at the time was trying to copy AOL by providing a richer browser experience.
What drove the move to India?
Somewhere in here I caught the internet religion in a big way. Like the internet is the global nervous system and is pushing our evolution in a new direction. Its going to affect everything and we are just at the very beginning of building the necessary tools and services. Fresh from the [email protected] acquisition I got into angel investing doing a series of deals that didn’t go anywhere. I spent some time in LA as well where I tried to get an incubator going helping people start companies or do ‘made for internet video’. It was difficult and expensive, and after a couple years I basically came to the conclusion that I either needed to give up on all this startup stuff and go back to the valley and get a job, or I could go to India where I could keep this dream alive.
So, armed with a small contract to do some outsourced dev work for one of the companies I invested in. I showed up in Calcutta and just tried to figure out what this whole scene was about. Being jet lagged and aimless in those initial days I spent alot of time just wandering the streets at weird times of the night.
One thing which struck me the most was that by far the most common ad plastered all over buildings, light poles, shanties in slums and poor parts areas of the city were ads for Java and C++ programming classes. They would say things like 50,000 programming jobs coming to Kolkata next year. Enroll now. These ads were far more common than ads for movies, or tv shows, soap, toothpaste, anything else. The idea that learning how to program was the perceived ticket out of poverty for such a huge number of people really struck me. Like it might take some time, but if there really is as much work to do as I think there is, there is a large army of people here who are eager to do it.
While I really liked Calcutta, I developed a cough which I attributed to the bad air pollution. So, I started traveling in search of that perfect city which would combine a large tech scene with a happy healthy standard of living. After a very unhappy 4 months in Bombay, I visited Pune and just fell in love with this neighborhood of Koregoan Park that surrounds the Osho.com meditation resort.
Ok, so tell us about iAccelerator. When was it founded, who else is involved, what led to its development and what are its goals and where you see it going in the next several years? Any early success stories?
The iAccelerator started last year as an effort of the Center for Innovation Incubation and Entrepreneurship (CIIE) at the Indian Institute of Management in Ahmedabad. The management of CIIE had been looking for ways to experiment with incubation and decided to create a YCombinator clone.
I had wanted to do an incubator since coming to India, and was especially interested in the YCombinator approach to startup funding, but always felt I needed a credible partner in India to make it happen. IIMA is one of the top business schools in India, so when they announced the program I volunteered to be a mentor. This year I have pretty much taken over management of the program.
We just have the one batch of 5 companies that we have worked with so far. We learned a lot from the program. One of the teams was made up of super smart engineering students from IIT Madras, but they all went back to school at the end of the program. The founders from another team just took a sabatical from work to participate in the program. While they were great people and did good work, their company was sorta doomed from the beginning. Of the remaining three teams that really had a good shot at continuing, one has folded, one is still together but is doing service work, and one got follow on support and is still working on the original product building applications on top of Asterisk.
I’m hoping that we can learn how to provide the right kind of support to young startup teams to help them be successful. My hope is that over time we can establish a certain brand within the industry where people know that any company coming out of the iAccelerator has achieved a certain level of legitimacy Its well structured legally. The finances are all in order. The engineers are solid, using best of breed tools and frameworks and can show a track record of predictable development. I’m also hoping that I can facilitate more international collaboration on startups.
You are also the founder of UpStart.in, right? Tell us a bit about that and how does it fit with or what is its relationship, if any, with iAccelerator?
UpStart.in is a microfund I set up to facilitate angels in Silicon Valley investing directly in very early stage technology companies in India. Right now it is just made up of me and Satish Dharmaraj who is now a VC with RedPoint Ventures (www.redpoint.com).
UpStart.in & CIIE are coinvestors in each of the companies – we each put in $5k and split the equity.
Can you tell us what led you to shift to India? For you personally, what are the best parts of working in India? What are some of the challenges?
I have a very nice lifestyle here. In Pune I got really into yoga, had a great group of friends, ate good healthy food, connected with smart technical people, and spent relatively little money. It took me sometime to zero in on what exactly I was going to do. This was a bit of a frustrating time for me, but at least I wasn’t hemorrhaging cash. If I have any advice to give, its to take the time to figure out what you really want, India is a place where I could take the time to do this without going broke or having to get a job that took all my time but I didn’t like. And In the tech scene here there’s a youthful energy and enthusiasm I really like.
On the downside the infrastructure is definitely weaker. Compared to California the Internet is slow, expensive and unreliable.
What are your impressions of the venture capital infrastructure in India? We’ve heard from some VCs in the States that they’re investing in small-cap public equities in India as they’re not sure that there are good venture possibilities in the country at present. How would you respond to that based on your experience in India?
Yeah, this is what I’ve seen as well. Most of the VCs here get into private equity. While there are large numbers of eager first time entrepreneurs. Dealing with them is just too time consuming and too risky for traditional VCs. So, there’s a gaping hole in the venture capital scene in India right now with large numbers of first time entrepreneurs who can’t get funding. The iAccelerator and a number of similar efforts are beginning to address this.
Is there an angel investment community in India? What would constitute an angel investment in India (in terms of $/Rs. of investment)
The range is really huge. I’m trying to carve out a niche at the very bottom investing about $10,000 in companies who live and work from home Y Combinator style. There are a number of well established angel networks in Mumbai and Delhi who do much larger deals.
From an entrepreneur’s perspective, where are the opportunities in India? What are some of the challenges? Having worked with US and Indian entrepreneurs, are there any differences you’ve observed whether it be in their entrepreneurial approach, management style or some other facet?
The tech scene in India is very young. There’s all this very raw talent, but the pyramid of quality and solid experience is very wide. So, if you can work with younger people and provide them with guidance and a bit of hand holding to get them started, then the supply of talent available is limitless and inexpensive. Many well funded startups don’t have the time to deal with this. They need plug and play developers who can suck down a repository, look at Trac, understand where the problems are and just start committing fixes. These people exist here, but they are more rare, and more in demand.
There was sort of a joke for awhile in the tech scene in California where people worked with porn just to make money until their real business got of the ground. Service work is the equivalent in India. Lots of people are trying to develop their own products, but serving paying clients is a hard habit to kick.
One of the impressions we’ve heard of Indian startups is that they’re excellent at copying ideas or providing services but not necessarily the drivers of innovative business models/products? Do you think this is a fair or accurate comment? Why or why not?
The scene is still young. I don’t think there is any question about where we’re trending, and with the size of the wave thats coming, in 5, 10 things will be dramatically different. But yeah, its true right now. Entrepreneurs are younger and less experienced on average than their equivalents in the Valley.