Tag Archives: Bangalore

The one question you need to ask VC’s in #India to understand how quickly they will move to fund your #startup?

I was in Bangalore for 3 days, meeting about 30 entrepreneurs on day 2 and about 50 earlier stage in-the-process-of-starting-a-company entrepreneurs. The first thing that strikes you is how amazingly vibrant the ecosystem in Bangalore is. I met with over 100 investors (angel as well as a few VC’s) as well at the Lets Venture event and they while many were complaining that “valuations are higher” and “entrepreneurs are pushing them to make decisions quicker”, they were very upbeat about the opportunity in the Bangalore ecosystem.

The entrepreneurs are also much more savvy than folks were even about a year ago (I know that I spoke with a curated list, but previous curated lists were provided as well and this cohort of entrepreneurs were far ahead of those a few years ago).

The most interesting part that I noticed was that there was a bigger focus on “traction“.

I can confidently say that having been to 23 cities in the last 6 months including New York, Beijing, San Francisco and other cities in the US, Bangalore has a clear shot at being in the elite “top 5” entrepreneur ecosystems (Of course it will be Silicon Valley (Snow White) which will be #1 by a wide margin, but the other cities (the 7 dwarfs) are doing well relatively. I look at ecosystems for entrepreneurs around cities more than countries.

That optimism also bears itself out in the numbers. From look at IVCA funding and other locations, Bangalore is trending stronger than other cities such as Seattle, New York or Austin.

There were many observations I had in my 3-5 indepth discussions with Venture Capital investors in India. One of them was their necessity to now “compete” to get entrepreneurs’s attention.

Which in itself indicates a strong and vibrant startup funding ecosystem.

The most important takeaway for you as an entrepreneur, that I have learned is this –

If a venture firm has spent any time forming an “investment thesis” in a particular market or segment, then they will move much quicker than other firms who have not.

So that’s the million dollar question you can ask to determine if a VC will move quickly in India. I know this is the case in other locations as well, but the funding frenzy has been more acute in Bangalore than I have seen before.

I would ask a variation of the question – “What is your investment thesis in XYZ market”? Or “Do you have an investment thesis on “my XYZ” market”?

if they do, then your job is only to convince them that you are the best team, company and startup with the right traction to invest in.

If not, they will take weeks to understand the lay of the land, look at competitors and then form an opinion on your market.

Let me know if this works.

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The surprising stats on funding in India #500Strong shows up high

CB Insights has a blog post on funding in India. Here are the 3 most surprising facts that I gathered from the post.

1. Education and training was the #1 funded industry by category. Business intelligence was in the middle of the pack. I am very surprised. I would have put them in reverse. In fact if you consider travel, apparel, etc. as eCommerce, then it would be the #1.

2. Bangalore companies have 39% of the share of funding, while Delhi has 23%. If you combine Gurgaon and Delhi, then they would be at 29%.I would have put NCR much lower. In fact Mumbai is #3 at 16%, which is even more surprising. I would have put Bangalore at 45%, NCR at 20% and Mumbai at 7%.

Bangalore city technology funding

3. 500 startups is the #1 investor by # of deals. Nexus is #5. In my mind that should have been reverse. In about 1 year, Pankaj and Dave have gone from being on the outside, to #1. #500Strong is beating everyone else by a wide margin.

#Biotech park in Bangalore

Quick note. I was invited to the Biotech park launch in Bangalore yesterday. This is a 56 acre piece of land to help Biotech startups in Bangalore. There is significant money being spent by both the state and central governments (approx $8 Million) to help startups in Bangalore.

The talent pool from BioGen, NCBS, Instem and others in Bangalore is large enough to support 20-30 startups each year is the thinking in Bangalore.

The space walk through was a 3D video. It was really cool. Loved it. Photos coming soon.

How much should you pay for an engineer / developer in #Bangalore? Winter 2013 edition

Many entrepreneurs from outside Bangalore and larger company VP’s of Engineering from the US, who wish to relocate often ask me this question – How much should I pay developers / engineers in Bangalore?

That is a very tough question to answer overall, but I have noticed some patterns based on working with many startups here and also have the information on the salary bands for several large technology companies here in Bangalore.

The best way to think about how much to pay is by giving salary bands and considering the parameters.

There are 3 primary parameters I have seen used when people hire folks to determine their salary.

1. Experience – usually measured in # of years working on relevant and related technologies. A rule of thumb I have seen is 1.2 to 1.5 times the number of years of experience + starting salary of a fresh graduate at 2L ($3K) per year to 6L ($10K) per year. For example, if you are looking to hire a developer with 5 years of experience, then you will pay 5 years times 1.2 plus 2L per year if you are a startup that’s not funded.

2. Type of technology – The more arcane the technology the more you can expect to pay for it. For example, you can expect to pay much less for a person who knows PHP and more for someone who knows Android app dev or Ruby on Rails. Some common technologies and your base times multiple is below. I am assuming php developer is the base at Rs. 1. All others are multiple of what you’d pay the php developer. I dont mean this to think of php developers as bottom of the pool, but that’s the most prevalent skill, so the supply of engineers is more than the demand, making it a skill that’s easiest to hire and least expensive as well.

a) php developer = 1

b) Javascript + HTML (front end) = 0.9 – 1.2

c) Ruby = 1.2 – 1.5

d) Python = 1.4 – 1.7

e) Android = 1.3 – 1.8

f) iOS = 1.4 – 1.9

3. Stage of company. Generally a company, which is bootstrapped pays less and one that is funded pays more. Larger the company, the more you are likely to pay, If the unfunded company pays INR 1, then I have seen number of upto 2.3 times that being paid by larger technology companies.

So, if you are looking to hire a developer or a team, how do you decide how much to pay?

Step 1: Start with fresh graduates at 2L ($3K) per year if you are a new startup and go up to INR 6L ($10K) if you are a larger established company in the US for the same fresh graduate.

Step 2: For people with experience, expect to pay 1.2 times their # of years of experience added to their salary. So someone with 2 years experience would get 2.4 (1.2 times 2) + 2L to 10K depending on your company size.

Step 3: Finally depending on your technology stack add the multiplier above. So if you are looking to hire a Ruby on Rails developer with 2 years experience for a startup, then:

(2L (fresh grad at an unfunded startup) + 2.4L (for 2 years experience) ) * 1.2 (for Ruby) = ~5 to 6L per year or about $9K to $10K.

Two other points, that are VERY important.

1. To determine if the person is *good* I’d recommend you get them on board for a week to a month before you hire. Don’t use this formula blindly and pay a person who is not good a boatload of money to get disappointed.

2. Most people use salary at the previous job plus a 20-50% uplift (or raise). I think that works for most, but if you have a superstar candidate I’d go back to this formula.

P.S. There’s no good way to determine a good candidate except working with them. I dont take reference checks in India seriously – more on that for another post. I prefer recommended candidates from people I know very well.