Silicon Valley & India 2015-2016: A Symbiotic Relationship



Venture capitalist Vinod Dham, the “Father of the Pentium chip,” says 2015 was a banner year for the technology relationship between Silicon Valley and India and it will only grow. At Intel, Dham headed the team that developed the Pentium chip which revolutionized the way chips were designed keeping customers and uses in mind. In a telephone interview, Dham spoke passionately about his experience investing in India and the future of start-ups and venture capital in Silicon Valley and India, as well as the role Indian-Americans have played in technology and investment growth.
Here are highlights from the interview:
Historic year for venture capital
The year 2015 is a very, very historic year for India, and in some ways, for the United States.
Here in the U.S., for the first time since the dotcom era, venture capital investment exceeded the peak reached then. It was the same high point in India but for different reasons.
I am personally proud of what’s happening in India. A handful of us back in 2006, thought of creating a venture capital for India. Five of us – Sunil Chadda, Ashish Gupta,
Naren Gupta, Kanwal Rekhi and me –went around [at] the same time to set up a venture capital ecosystem in India where none had existed. And it has taken off like wildfire, beyond my dreams.
My motivation was to think of one way to give back. We’ve invested all of the $189 million I raised then, mainly with the objective to create a few Silicon Valley type millionaires and a Silicon Valley type of mindset which involves the desire to innovate and create enormous success that has enormous impact. We have gone beyond that goal. In 2015, India has the world’s fastest growing start-up ecosystem. It is the 3rd largest in terms of money being invested in startups, after the U.S. and China. It went up by 300 percent in 2015 alone. I won’t be surprised if India bypasses China in a few years.
Modi’s start-up campaign
Prime Minister Modi has a lot to do with this start-up boom. He is into this campaign to bolster start-ups. Some of us have been advising him on that. You will see significant start-up activity in India in 2016. The reason is jobs need to be created for the large youth population. And it’s mainly thorough start-ups and not through government or big businesses of the past, that this will happen. Now it’s “desruptive” technologies which will make it happen.
The beauty of it is that the whole venture capital system has generated 100,000 jobs in India (in 2015). Some of these startups may become the Googles and Face Books of tomorrow.
The year 2015 was very significant also because many Indians decided to go back to India and once there, they were able to make the same kind of salaries they made here. Puneet Soni comes to mind. (Soni was senior product officer in Google and Motorola before leaving for India where since March this year, he has been the chief product officer of Flipkart Online Services, a leading ecommerce company.)
Rise of the ‘unicorns’
In India, companies are coming up as “unicorns” or billion dollar concerns who could become IPOs.
In the U.S., 84 “unicorns” have been set up over the last decade. According to Techcrunch, there were 39 companies in The Unicorn Club, and now that has more than doubled (TechCrunch called it a ‘jawdropping’ increase of 115 percent).
This despite the fact that venture capital is a difficult business. Only one in 10 start-ups succeed, 6 fail, and the rest barely return the investment. I don’t think the failures in “unicorns” will be that high and quite a large number will come to fruition.
And ‘unicorns’ have Indians embedded in every company, more in the enterprise sector, meaning those making software and Business-to-Business type companies, and less in the
Business-to-Consumer companies.
The July 2015 report on ‘unicorns’ by Techcrunch found, “Immigrants play a huge role in the founding and value creation of today’s tech companies,” and added,”We wonder how much more value could be created if it were easier to get a work visa.”
Silicon Valley’s Banner Year
While India is my focus, and my investments are mostly in India, here right under my nose in Silicon Valley it has been a banner year with rising investments in cloud computing, big data, cybersecurity, virtual reality, digital health, etc. Mind you, India is catching up on that.
Indian-Americans remain very significant players in the Valley. They have a large representation as CXOs of Indian origin, that is, CTOs, CEOs, CIOs, in start-ups that venture capital goes into. They (Indian-Americans) are also entering the investment field in a significant way. The future looks positive.
Silicon Valley is very positive about India. There are not many companies in Silicon Valley that do not have an Indian employed or do not sooner or later, have a presence in India.
India is very integral to Silicon Valley. They are very important to each other.