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Satish Mugulavalli

Satish Mugulavalli, Director of Technolgy at YourNest Venture Capital.

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Future of Technology Startups: India in 2050

It is predicted that before 2050 we will see a computer pass the Turing test, where a machine will be able to exhibit intelligent behaviour equivalent to, or indistinguishable from, that of a human.

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Over 60 years ago, a group of engineers and researchers choose “silicon” as the most appropriate semiconductor material and started a company in California and with the help of an investment banker, raised over a million dollars. The startup, later named Fairchild Semiconductors; the founders referred to as the  “traitorous eight”; Arthur Rock, the investment banker who started one of the earliest successful venture firms and the nearby Stanford University, became the bedrock upon which the present day Silicon Valley is built.

After nearly a decade at Fairchild, several of its engineers built successful startups to participate in what came to be known as the second gold rush in the United States.These successful entrepreneurs went on to build venture capital firms and continued to fund and co-create more startups. A large domestic market, driven largely by the defence, consumed these high technology solutions in the 60s and 70s. An informal, but highly connected network of people, availability of risk capital, a growing local market created great opportunities for fearless entrepreneurs.

Inspired by Silicon Valley, many countries attempted to create their entrepreneurial eco-system. India, post liberalisation in the early 90s, saw her share of this startup wave playing out. Massive opportunities in software development services created large companies with Indian engineers building world-class software for several companies worldwide. However, India’s role in the startup world was largely limited to her very talented engineers and businessmen and women working for startups worldwide. A cost advantage and an absence of risk capital encouraged many to start software services companiesin India increasing the pool of skilled workforce.

The first wave of Indian startups of the early millennium was primarily focused on bringing services already available in the offline world online, like ticket bookings, employment discovery and matrimonial services. Some of these startups were massive successes as well. The last ten years saw many venture capital organisations being set up in India. Armed with money mostly from the west and run by Indian fund managers, these funds looked for bright entrepreneurs addressing the growing local market.

Sometime in 2010, Tiger Global believing in the Indian consumer story strongly, invested in Flipkart, when the number of Internet users in India was barely 10 million. Since then, Flipkart has become the first Indian company to be valued at a Billion dollars and the first Indian company to raise over a Billion dollars. We probably got our own “Fairchild” moment from an eco-system perspective!

However, most of these startups used technology as an enabler or differentiator rather than creating break-through innovations. So while a healthy startup eco-system of thousands of startups, multiple unicorns and Billions of dollars in funding, has developed, deep technology startups have been few and far between.

Will things change over the next 25 years? History teaches us that breakthrough technologies rarely happen in isolation and the most influential technologies are humble and low cost. Some factors are coming together to propel India’s startup eco-system in a way that we may not be able to comprehend today completely.

  • We now have Aadhar, the largest identity database in the world built ground up and entirely in India that could form the bedrock on which all digital services are built, producing an enormous amount of data.
  • We also have UPI, an indigenous digital payment system that reaches and has significant adoption by non-urban population. This payment system is widely acknowledged to be ahead of other systems anywhere in the world by at least five years.
  • We are witnessing a young and entrepreneurial workforce shunning corporate jobs and either joining startups or starting up themselves without the fear of failure. Some of the experienced entrepreneurs are very willing to pay it forward by functioning as mentors. 
  • The democratisation of Computing, Commoditization of Infrastructure and Newer models of Software Distribution has created a level playing field between the incumbents and the challengers.
  • There are early indicators of deep technology startups in the areas of AI, Robotics, IOT, Nanotech and even space tech startups attracting Venture Capital.
  • The number of IITs, the prestigious institute of higher education in India has tripled in the last ten years.
  • The Indian government, looking at the ever-increasing import bill, is feverishly working on the policy front to encourage local design and manufacturing with a specific focus on assistance to startups and investors funding such startups.

It is predicted that before 2050 we will see a computer pass the Turing test, where a machine will be able to exhibit intelligent behaviour equivalent to, or indistinguishable from, that of a human. Any form of AI needs data and India will probably be the richest country in terms of data. Indian startups have a massive opportunity to build deep technology organisations efficiently. Over the next few years, more and more Venture Capitalists will warm up to invest in these opportunities where the gestation period is longer than usual.

Predicting the future is an entertaining exercise, but we now have a real opportunity at creating it ourselves. Eric Schmidt, the former CEO of Google, said a few years ago “Just think what will happen when India's entrepreneurial innovators can create great global companies without leaving their country. They will change the world. Hundreds of large firms focused on the Internet will be founded and will succeed by focusing purely on Indian consumers, Indian taste, and Indian style, and one of them can ultimately become the next Google”.

Bring it on!

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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