How Different Can Launching An Indian Startup Be?

India and the U.S. are powerhouses when it comes to emerging tech innovation.

The Indian and American startup ecosystems are tremendously different, but there still may be many similarities. Some elements are universal — like the startup’s starting-up lifecycle — but others, like certain cultural norms, depart from each other.

Ajay Yadav, a U.S. expat entrepreneur living in India, recently wrote a Forbes article about how these two countries prove a perfect Venn diagram when it comes to startups. His company, Roomi, is a peer-to-peer platform helping people secure shared housing. Roomi is in the midst of opening its first office in India, which he said gives him “a unique full-circle vantage point.”

The appetite for investment in launching new businesses in India is a hungry one, he said, both globally and locally in India.

Who you know, and telling people that you know them, is a big deal in India. Yadav said, “It helps a great deal to have a ‘name’ attached to your business.”

That may be so. However, this does happen in the U.S. as well. Recently, Amazon’s Alexa Fund just helped Nucleus bring in more than $5 million, and it’s likely that connection was helpful.

Yadav said Indian investors are looking at whether the startup has already gained funding before they started bootstrapping. He gives the example of Flipkart and Snapdeal, both of which are investing in newer companies, which serves as the ultimate enforcement.

Sure, this may seem familiar from the “PayPal Mafia” days of Silicon Valley. That said, you want an investor who will not only be lured by a name drop but more so willing to scribble some numbers on a check.

As for the trajectory of the business, Yadav said it’s trickier to maintain than any other part of the lifecycle. He said you have to get your ducks and VIPs lined up, but after that, the funding can be smaller amounts. He compared that some funding in the U.S. can start at $1 million, whereas in India, it looks closer to $100,000–$250,000 in the first round seeding, with just double that in a second round.

While that may sound easy — and he said, “It’s easy to get going in India” — it can be problematic later. “Series A, B and later rounds can suddenly dry up — often leaving Indian companies with no choice but to seek out international investors.”

That said, there is no doubt there’s an enormous market in India. Just ask Uber…