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American Technology Entrepreneurs Take on Skeptical Indian Investment Market

Ambitious American technology entrepreneurs have recently started to target the investment market in India.1 Historically, India had a reputation for being a notoriously tough market for start-ups, even for the most promising young businesses.2 The inability to succeed as a start-up in India, however, is not due to lack of proposed innovations. Compared to America’s Silicon Valley, where a great idea may draw a great deal of funding, there is a limited amount of seed equity in India and investors are markedly more hesitant to hand over their money to start-ups.3 The limited amount of seed money in action in the market is being funneled to validated businesses rather than to entrepreneurs simply testing the waters with innovative concepts.4 Given this difficulty to secure outside funding, many entrepreneurs have been forced to take time off to save, build their businesses with the help of family and friends, or use IT services to generate cash and develop costumer intimacy while building products.5

Despite the limited investment prospects in India, aspirational entrepreneurs, such as Valerie Wagoner, have continued to target the market.6 Ms. Wagoner moved to India in 2008 after working for eBay. She was initially drawn to the country by the astounding growth in the mobile market between 2008 and 2010, when 20 million new subscribers were joining the telecom network every month.7 After working with mChek in Bangalore for several years, Wagoner founded ZipDial, a digital marketing company that allows consumers to opt-in to receive a Short Message Service (SMS) with more information on the marketing campaigns of ZipDial partners.8 Today, ZipDial has established itself as a well-known name in the digital marketing arena, having worked with many major brands, including KingFisher, LG, Oreo Biscuits, and Videocon to name a few.9 In April 2013, ZipDial secured yet another round of investment from Jungle Ventures, a venture capital firm in Singapore.10 Backed by Jungle Ventures, Wagoner intends to make one of her most ambitious goals a reality: to launch ZipDial’s first campaign abroad in Sri Lanka, and form an Indian multinational corporation.11

As much success as Wagoner and ZipDial have experienced in India, there are several recognized difficulties unique to the Indian start-up market.12 Some of the frustrations of doing business in India include bureaucratic hurdles in licensing, and the pressure put on American entrepreneurs for bribes.13 Many Indian start-ups reconcile these frustrations by catering exclusively to private clients and making products that do not need governmental approval.14 While these roadblocks can often be reconciled with the help of mentoring and support networks for entrepreneurs that are becoming more popular in India, one critical resource that startups are still struggling to find is talented workers.15 Indian tech employees are notoriously restless and according to Wagoner herself, “[t]he job market is so hot it’s not uncommon for a young person to think they can build a career by quitting within three months to get a pay raise somewhere else.”16

In order to attract loyal tech employees, companies have been forced to offer salaries at the market rate, or higher, to offset the instability that accompanies signing on with a start-up.17 There is also a distinct lack of enthusiasm associated with joining new businesses in India, far from the attitude that characterizes America’s Silicon Valley market.18 So, in addition to the risk-taking and lower salary that accompanies singing on with a start up in its early stages, there is generally a low regard for startup careers in mainstream society in India that is particularly problematic for startups recruiting skilled employees.19

To combat the unattractive features of the Indian startup market, many entrepreneurs have started to use specialist hiring firms and online tools to target new talent.20 Startups have also been forced to look outside of India for candidates who have specialized tech skills and are passionate enough about the startup to take the plunge with founders like Wagoner.21 As an added incentive, Wagoner has made stock ownership plans part of ZipDial’s compensation package, and will award hard-working employees additional stock without their asking.22 By doing so, Wagoner continues to change the world of entrepreneurship in India, thereby improving the Indian tech market with ZipDial and the attitudes of investors and employees across the country with her progressive employment practices. “I believe it is very important that people who are taking a risk in building a company see the benefits of that.”23

  1. Sei Chong, American-Style Start Ups Take Root in India, Dealbook (Dec. 30, 2013), /12/30/american-style-start-ups-take-root-in-india/

  2. Id

  3. Sramana Mitra, How to Fund Indian Start-Ups, Harvard Business Review (Dec. 9, 2013),

  4. Id

  5. Id

  6. Chong, supra note 1. 

  7. Id

  8. Zipdial, Product Capabilities, (Feb. 7, 2014),

  9. Preeti Chamikutty, ZipDial with its missed call solution claims to have cracked the code for mobile marketing medium, The Economic Times (Sep. 7, 2011),

  10. Mark Bergen, Valerie Wagoner: Tapping the missed-call trade, Live Mint (Aug. 19, 2013),

  11. Id

  12. Chong, supra note 1. 

  13. Id

  14. Id

  15. Krithika Krishnamurthy, Startups find it difficult to recruit; begin to offer perks to retain talent, The Economic Times (Nov. 15, 2013),

  16. Chong, supra note 1. 

  17. Id

  18. Krishnamurthy, supra note 6. 

  19. Id

  20. Krishnamurthy, supra note 6. 

  21. Id

  22. Chong, supra note 1 

  23. Id