HottestStartUps.In Shows the Future of the Start-Up Launchpad

When I was researching this article, many of my contacts pointed me to a website that runs a competition to find the best start-ups in India. Browsing through it was a fascinating glimpse into an economy of over 1 billion souls in the midst of an incredible transformation.

However, more than any individual start-up, what jumped out at me was that this was a far better launchpad for start-ups than anything we have in the USA. This competition satisfies the three golden rules, FTV:

1. Free for the start-up, so that even one with no funding can play.
2. Transparent; the judging rules are open and the process is independently audited; no suspicion of back-door influence.
3. Virtual; no need to be in a specific place at a specific time in order to fully participate.

Of course this has been made possible by sponsors who have actually donated money to further the cause of innovation; it has not been driven mainly by the for-profit objectives of the event organizer.

What Segments Are Hot with VCs?

VCs miss many great market segments, and entrepreneurs who chase segments that are hot at the moment are usually a day late and a dollar short. Nevertheless, it is interesting to see what is getting funded these days in India. Here are the spaces that have already seen a lot of activity:

• Micro-financing. To some, this elicits a big yawn and a "Yet another micro-financing site?" response. But the blow-up of big banks in last few months indicates that a fundamentally new model may be needed. And India, with its huge unbanked population and technically savvy elite, is where innovation is likely to come from.
• Mobile ad networks. I am a skeptic of these. Nobody has found a way to capture attention on a tiny screen without being totally annoying. Maybe somebody will. They probably will, and it will have to have something to do with location. But it is likely to come from Asia, where mobile is more widespread than in the USA. Mkhoj is a Kleiner-funded entrant from India in this space.
• Personal outsourcing. We wrote about this in our article last year as well, and some of the companies, such as iYogi (disclosure: I have an interest in iYogi) and TutorVista, are doing quite well.
• Better, faster, cheaper SaaS clones. Zoho (which is bootstrapped) and DimDim (funded by VC) will inspire investment in many other segments.

Here are some bleeding-edge segments in which investors are taking an interest and in which India may be well positioned:

• Voice recognition. Voice recognition is hard. It is even harder in multiple languages. The official census in India from 1961 recognized 1,652 languages! Voice recognition is still the killer app for the mobile phone, and it is growing at a crazy pace (with over 3 billion mobile users currently). Ubona looks interesting, with some serious IP but also a pragmatic local market-entry strategy. Mscriber looks like it has a good market strategy, too.
• Mobile payments. In India, people live on their mobile phones, and when you are talking about billions of users, the dollars add up, even if in very small increments. Obopay is one company in this space.

Best Exit: Naukri

Naukri, usually described as the Monster.com of India, may not have the innovation to make techies gasp, but VCs salivate at its return. Naukri rode the outsourcing boom perfectly, exiting via an IPO in November 2006 that was oversubscribed 55 times (ah, remember those days on NASDAQ?).

What Have We Missed?

In a nation of over 1 billion people, where technology is the best route to wealth, we are certain to have missed a ton of amazing innovation. Let us know what it is.

(Photo by Thomas Roche.)