Sujai Karampuri sent me his recent piece, Ground realities from a technology product company in India .
Sujai’s company Sloka Telecom is building Wimax base stations, and recently, they have won an important validation in France at Saint Medard en Jalles (5.8 GHz Wimax deployment).
I know that Sujai is pounding the doors of the VCs to get Sloka funded. His frustrations are real, and reflective of the situation and ground realities in India.
The biggest problem I see in his case is that there is no VC who is operating in India today who knows how to invest in a Telecom Equipment deal.
“Many VCs find Indian entrepreneurs clueless. There’s great deal of truth to it. But I also find many VCs in India equally clueless.” – Yes, Sujai, but that’s because the VCs who are playing in India have not identified Telecom Equipment as a category to assign partners to. You cannot expect random people with no domain knowledge to invest in categories that they know nothing about. You HAVE to find domain expert investors, as I told you when you came to see me here in Silicon Valley. And, you may have to find them here in Silicon Valley or in Boston. Probably not in India.
Another issue I see with your article, Sujai, is that you have equated “technology product companies” with “telecom equipment companies”. My personal observation is that VCs in India can tackle “software product companies” much more easily than telecom equipment.
In my Incubator Fund thesis, this is precisely the kind of problem that I am suggesting we address. An incubator would have a bias in terms of domain expertise and market focus. Just like we need incubator funds in India for SaaS, we also need one for Networking / Telecom equipment. Without these funds which bring together both expertise AND money, we have huge gaps in the early stage startup market.
Dumb money cannot possibly invest in really sophisticated technology, and pretty much all we have in India right now is dumb money. Hence the surge in retail, real estate, and consumer internet.
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that is true for most KPOs and LPOs . They setup shops in their primary markets for getting clients and then most ops are done back home in India
My first reaction was – “Why is he located in India?”, since so many of Sujai’s first customers will be in Europe or the US, isn’t that a better place to set up such a startup. In these locations there may be more investors likely to invest or at least subscribe, judging from the customers he’s got.
I had met Sujai a while back – and he told me a frightening story about how he spent a long time in the US, meeting venture capitalists, and trying to sell the story – with no luck. Luckily he was able to run the company through the prototype building process and now has traction too, but apparently not “VC attraction”. But what it means is: this problem isn’t local to India – it wasn’t just VCs in India that said no.
I think building products for a worldwide market from India is a good thing ™, but it makes true sense only if you locate your HQ where your first customers are likely to be. Meaning, treat India as an outsourcing destination instead of where it all begins and ends. If you have traction with Indian customers – like Tejas Networks built, for instance, with a lot of VC money – then it makes sense for you to be located (primarily) here.
Basab Pradhan, for instance, set up a US HQ for Gridstone Research and runs most ops from Mumbai.
Yes, it’s different for a newcomer like Sujai who will face the whole immigration process a nightmare to set up a US base, but it’s a chicken-egg situation. Investors won’t invest unless you’re there, and you can’t be there unless they invest.
Telecom equipment is a space that is out of favor not just in India, but even in US. Too much blood on the road… The tide will turn sometime, but hard to say when.
Customers finally pay for not rewarding innovation. Long sales cycles and slow deployments are popular horror stories, and over time, this can turn innovators away.
Firstly I would like to congratulate Sujai for his tenacity in pursuing his passion, and going through the agonising suspense that an entrepreneur is “destined to do” in a majority of circumstances.
Not sure however, if a ‘domain expert investor’ could provide a solution, if funding is the solution we are looking for. Nor would a funder from across the Atlantic be able to proide a ready magic potion. The problem lies not in the lack of undesrtanding of the domain but the very understanding of the domain itself! let me explain.. a domain expert in telco infrastruture would be painfully aware of the fate of the biggies on either side of the Atlantic. Equipment manufacturing business requires ‘sterner stuff’ as apart from pure technological issues, the market of the product has to grapple with more intricate problems of government regulations and policies. Indian policy making can do a lot with more consistency and the wavering stance on whether we migrate to 4G directly or through the western method of going through 3G has not helped in this direction. True, WiMax is certainly promising ,especially in India with its large rural remote areas, but who will ensure the ROI. Perhaps we need to wait for the budget steer early next year.
Having sounded more than a Devil’s advocate than I ought to have, I really want to congratulate Sujai for taking the company this far. Deployment is a good start but obviously not enough. If Sujai is reading this, I have a suggestion. Instead of looking for conventional VC funding in India or abroad, look for a strategic partner – preferably a large telco or a wireless OEM say Motorola/Intel/others who are betting on WiMax. Use your deployment to create/nurture this partnership. Beg,borrow or steal but get a partnership. You will need it even if you get funded.
Second thing is to talk to corporate VC’s like Intel cap or Cisco cap. They like to fund startups which are strategically aligned with growing their own businesses. Send me an email and I can probably find someone in Intel cap to talk to.