September 22, 2011


[Even though India is famous for it software industry, it hasn’t been a conducive environment for up-and-coming technology companies. Unlike in Silicon Valley, start-ups here can’t easily access capital, tap into a network of serial entrepreneurs or hone their ideas through incubators.]

By Nida Najar
Sanjit Das for The New York TimesThe Indian Angel Network discussing funding of new ideas in their office in New Delhi, India.
Teacups in hand and butter biscuits within reach, a handful of local technology titans debated the future of some young Indian entrepreneurs on a summer Saturday. After grilling five teams over several hours, the group, the Indian Angel Network, put two promising start-ups on the shortlist for potential financing.
“The Angel Network is really trying to help breed innovation,” said Padmaja Ruparel, the president the organization. “Our efforts are really going into driving the economic engine of India.”
Sanjit Das for The New York TimesThe Indian Angel Network discussing funding of new ideas in their office in New Delhi, India.

Even though India is famous for it software industry, it hasn’t been a conducive environment for up-and-coming technology companies. Unlike in Silicon Valley, start-ups here can’t easily access capital, tap into a network of serial entrepreneurs or hone their ideas through incubators.
Wealthy individuals and organizations like Indian Angel Network are increasingly filling the void, providing initial capital to young companies with strong prospects.
It’s a small but growing class. In the last five years, angel investors plowed less than $200 million into start-ups, based on data from Venture Intelligence, a Mumbai-based research firm. In the United States, the angel investor market topped $20 billion in 2010 alone, according to the Center for Venture Research.
Angel investing is a high-risk, high-reward game. Since start-ups often fail before they ever make any money, the investors, which typically invest less than $1 million, are betting that a few will take off — earning returns as much as 10 times their original outlay. In India, they’re basically hoping to find another Nandan Nilekani, the co-founder of the software exporter Infosys, or the next Azim Premji, the billionaire chairman of Wipro, one of the world’s largest technology service companies.
Entrepreneurs in India have faced even tougher odds. Until 1991, the country had socialist economic policy, with most industries dominated by state-owned firms or a handful of large business conglomerates like the Tata and Birla groups.
Back then, upstart projects often got stalled by bureaucratic hurdles. Saurabh Srivastava, the chairman of the India Angel Network, who founded the software company IIS Infotech in 1989, said he had to wait 2.5 years to get permission from the government to start his company.
“For first-generation entrepreneurs, it was a monopoly; anyone who had an alliance got ahead,” said Mr. Srivastava, who is considered one of the pioneers of India’s modern technology industry.
Now, established entrepreneurs and business executives like Mr. Srivastava are looking to ease the burden for the next generation. The Indian Angel Network, for example, has started an incubator, where members mentor young entrepreneurs. It also set up “boot camps,” inviting 10 individuals or teams to give three-minute pitches in different cities across the country, to practice for future fund-raising efforts.
Analysts say it’s unclear whether angel investing will become enmeshed in India’s business culture as it is in Silicon Valley, or whether it will crumble if early investors suffer too many losses. While conditions have improved significantly for India’s entrepreneurs, they still face numerous challenges, including a weak infrastructure and a poor education system.
Many of these new investors are “the first wave of people who kind of made money in their first venture and sold off probably 10 years back,” said Arun Natarajan, chief executive of Venture Intelligence. “Time will tell what will happen when a real downturn arrives. Will some of these guys stick to safer investments?”
The Indian Angel Network understands the potential pitfalls. Founded in 2006, the group counts the outsourcing giant Raman Roy; Harish Mehta, the founder of an engineering design services firm; and Rajan Anandan, the managing director of Google India, among its 175 members. Mr. Anandan spent the majority of his career working for McKinsey & Company and Dell in the United States, joining the India Angel Network in 2006 after he returned to his home country.
“It’s very fulfilling to work with entrepreneurs,” said Mr. Anandan, who also invests in start-ups on his own. “We sit on the boards of the companies. We are deeply involved.”
To vet potential investments, the group meets most Saturdays in boardrooms across the country. They listen to 20-minute pitches from young entrepreneurs based in India and abroad. After they reach consensus on a start-up, they solicit the larger membership for money.
In the last five years, the group has made 25 investments, notching gains in Druva, a successful real-time data backup software company. Another company in its portfolio, Hungry Zone, a restaurant reservation site in Bangalore, was bought by the British company Just-Eat.
They put candidates through the wringer. While the organization hears more than 200 pitches a year, it only finances a handful.
At a recent meeting, the first presenters were graduates of IIT Roorkee, a prestigious engineering school in the country. The two young men described their idea to develop a virtual learning company for “freshers,” or recent graduates, to make them more attractive to multinational companies with Indian operations.
As they described in their pitch, it would fill an unmet need in the country. But 20 minutes into their PowerPoint presentation detailing the hardships face by new graduates, the judges grew restless.
“In the interests of time, can you move towards a solution?” asked Vishal Lalani, who runs a dashboard instruments manufacturing company.
Later in the day, the group voted down the pitch, citing doubts that the idea would really address the problem.
“We’re not looking at it as cutting checks,” said Pradeep Gupta, the chairman of the specialty media house CyberMedia and a member of Indian Angel Network. “We should be able to add value to the company. We should be able to add value to India.”

[Since the beginning of this year, Sonia Faleiro has been traveling across India’s small towns and villages, meeting farmers, weavers, teachers, tamasha troupes, small-time politicians, Panchayat members, pickle-makers, housewives, and circus artists to gather reporting for her next book. In this regular feature for India Ink she will send postcards from her travels, providing a glimpse of the people and places whose stories are seldom told.]
By Sonia Faleiro
Sonia FaleiroAnita Kumar and her daughters
in Nakhighat village in 
Varanasi, Uttar Pradesh.
In June, Ganta Devi’s son Krishna died of Grade 4 malnutrition – the most severe classification. He was a year old.
Ms. Devi is 30, but appears 40. Her face is gaunt, her arms bony. Her stillness as she talks of her son attracts scores of flies to her arms and feet. “He was fine until he started crawling,” she says quietly.
As dictated by tradition, a family member delivered the baby at home. In his short lifetime he was taken to the doctor once. Ms. Devi says the doctor told her Krishna needed more food and left it at that. Clearly malnourished herself, she says she fed him as much milk as she had, and, when possible, black tea.
Devi lives deep within the slum colony of Nakhighat in Varanasi, Uttar Pradesh. This 20,000-strong community of former handloom weavers was once known for its Banarasi saris, which are traditionally finely woven and heavily brocaded, and therefore expensive. Since market changes in the 1990s, its members have struggled to find gainful employment. As a result, families have less to eat.
Women and children are the most deprived. Ms. Devi admits to eating just one meal a day. And Krishna isn’t the only child she lost. Six of his siblings died before him, also of malnutrition. Two girls survived. From July 2010 to July 2011, the non-profit Child Rights and You (CRY) tested 171 randomly selected children for malnourishment. As many as 150 were suffering from some form of acute malnourishment. Of these, five have died.
In the maze of single-room homes women contribute to the family income with pickle making. They earn 20 rupees (42 American cents) for 10 kilograms, or about 22 pounds. Husbands find irregular work as daily wage laborers. The average monthly income for a family is 1,500 rupees, or about $31.
Project Vision, a non-profit that has been working with CRY in Nakhighat since 2006, says the colony’s deprivations have been in the making since a spurt in the usage of power looms, which take a night to produce what might take a handloom a week, in addition to an influx of affordable Chinese silk cloth. Thousands of weavers have been forced to abandon their livelihood.
Since Nakhighat has pursued a traditional livelihood, education isn’t valued. Education is seen as a means to employment, and as families were already employed, most of the area’s population remained illiterate.
The circumstances have left them vulnerable. ‘‘When we spoke to the Jaat (Caste) Panchayat about the rising cases of malnutrition, they responded by forcing all the men, who earn a daily wage, to take the day off to pray,” said Jagriti Raha, an activist with Project Vision.
The government does have measures in place to help malnourished children. But the system fails the children.
When the local primary health center identifies a malnourished child; it is expected to make a referral to a government hospital where the child will be treated for free. But chronic absenteeism by hospital workers, as well as overcrowding, force repeat visits that parents are reluctant to make because of the distances involved. While the cost of public transportation may seem small to some, for those in Nakhighat it soon becomes an untenable expense.
A 2004 government order requires a local government to immediately release 1,000 rupees to families of children identified as malnourished. But Project Vision says this mandate, which may have helped save Krishna and other children, isn’t routinely carried out.
A short walk from Devi’s home, the Ganga and Varuna rivers meet in quiet confluence. On the grassy banks of the river, boys practice riding their fathers’ large bicycles. They listen to Bollywood music on a mobile phone. There are few girls to be seen.
In Nakhighat, as in other conservative areas in Varanasi, girls are married off as young as 15 and quickly become pregnant. When an undernourished girl gets pregnant, she may lose her child, or even die in childbirth. When she does give birth, it is to an undernourished, underweight child with a low level of immunity.
In the close confines of a slum in which mosquitoes hover greedily over open sewers and illness spreads quickly, the child is condemned to the many diseases that plague the community, such as malaria and tuberculosis.  Death due to infectious diseases is the most prominent manifestation of malnutrition in Nakhighat. At the last government-sponsored testing, according to CRY, 12 out of 15 Nakhighat children tested positive for TB.
The short- and long-term impact of infant malnourishment is evident in the faces of the children of Ms. Devi’s neighbor. Anita and Dilip’s 10-month-old twin girls, Archana and Kalpana, are underweight. Their 5-year-old sister Riva also displays symptoms of malnourishment, including a distended stomach and brownish-blonde hair. The twins drink their mother’s milk. Riva, says Anita, is happy eating nothing more than a single bowl of khichdi, watery rice and lentils, every day.
The children would benefit from visiting the local “anganwadi”, a government-sponsored care center for children and mothers, and part of a scheme created to provide nourishment to children under 6 years of age.  But the anganwadi workers’ time is routinely diverted by the government toward alternate work, forcing the center to remain closed for months at a stretch.  Among the tasks they are asked to perform instead: tallying numbers for the livestock census.
Lacking support, and with no education to guide them, the villagers of Nakhighat have adopted a fatalistic approach to the tragic losses they have suffered.
“My child ate well,” says Ms. Devi. “It was witchcraft that killed him.”