BIG investment on supercomputers - Will it help INDIA grow? | #Roundup #140 | The Startup Operator

[00:00:00] Hello and welcome to another episode of The Startup Operator Roundup, I am Roshan Karifa. And I am Gwingen Saha and together we break down the biggest headlines from India's growing startup ecosystem.

[00:00:10] In this week's episode we'll be examining the performance of The Startup India Initiative that has completed 8 years. And then as the pre-season is approaching I'll be asking Roshan about what the sentiments are for founders as to the Hikes.

[00:00:25] After that we'll be discussing the distressed acquisition of Zest Money by DMI Group and what it means for the FinTech landscape. In our tech segment, we'll be exploring the Indian government's plans to invest around 10,000 crore rupees in building super computing and quantum computing hubs across the country.

[00:00:42] And last but not the least, we'll be discussing PIXUS inauguration of its first spacecraft manufacturing facility in Bangalore. So stay tuned as we explore these exciting topics.

[00:00:53] Before we start, if you're a regular listener of The Startup Operator podcast, please consider liking this video and sharing it with your friends. And if you're tuning into the channel for the first time, make sure you subscribe to our channel for regular updates from startups and more.

[00:01:07] Let's get started. Roshan, before we start off with this topic, Apple released a very nice video of the manufacturing process of the Vision Pro 2. What did you think of that? It looks sexy man, in one word, right?

[00:01:29] I don't know, I mean it's quite different from Apple's previous videos. I think previous videos show the use case how these products are actually used. I mean, in the previous video of the Vision Pro also showed this guy who was taking meetings watching movies.

[00:01:44] There's a bunch of entertainment stuff as well happening. But I think this video may be because they're saying that it's going to launch or whatever. Had a whole lot of focus on manufacturing as such, right? And you could see how it was literally being made and so on.

[00:01:59] And just looks really sexy. I think the vibe is clearly shifting to manufacturing, right? I mean, as at ProtostFing's by said on Twitter, right? I mean, the vibe is clearly on deep tech and manufacturing. But yeah, what have we come in?

[00:02:16] The vibe is also of the Ramander, right? We have the Pran Pratastan happening on Monday. And I think it's a mega moment for us, I would say. It's a cultural moment in history. It's the stuff that we will probably be talking to with our kids, grandkids, etc., right?

[00:02:33] If you live to be so long, that is, you know, not to sound morbid or whatever. But it's a moment and time. I mean, really like the amount of effort, the amount of sacrifice that's gone into making this happen is remarkable. So, Jeshiram.

[00:02:48] Well, you know, this is, of course, a very big moment, right? So what is really mind boggling or rather difficult for me to adapt my head around is the fact that India is home to some of the oldest temples in the world, right?

[00:03:01] And these temples have lasted centuries and million years. This time with all the modern technology, you know, we have to stay here, establish a new temple. And imagine how long this temple will last, right? And when you think of that scale, I mean, it's just so amazing.

[00:03:19] Yeah, it's fabulous, but you know, you look at some of our older temples, right? I mean, they have lasted millennia as well, and the precision of the science and the architecture is like, it's amazing, right? To the degree of, you know, shadows being cast at a certain angle

[00:03:37] you know, it even boggles my mind how they even cut those huge stones, right? I mean, some of these are single stone structures as well, right? So yeah, we have a rich history in that, I would say.

[00:03:49] Right, but I'm really looking forward to going to Ayodhya this year. Let's see. Yeah, let's put a note in a bottle and leave it somewhere so that centuries later someone finds it. Someone finds it. Let's see. We'll say like, Shash, subscribe, start a pop.

[00:04:05] Okay, probably see it on the metaver, so something like that. Probably. Okay, but let's get started with the news. On January 16th, Malikarjan Khargev, who is a president of Indian National Congress, took two X and said that the Modi government started being initiated as remained a non-starter,

[00:04:22] and has now become a tool to garner publicity for Prime Minister Modi. He says that the initiative has miserably fallen short of its delivery, so of course we take a look at numbers.

[00:04:34] The startup in the initiative was, of course, launched by Prime Minister Modi in January 16th of 2016. And this was focused a primarily on building a strong ecosystem for nurturing innovation amongst startups in the country. As of January 16th this year, over 1.18 lakh startups were registered with a DPIAT,

[00:04:53] which is a department of promotion of industry and internal trade, and 2977 of them received income tax exemptions. 3685 startups have funded under the Sidby Fund of Fund scheme, which was established in 2016 with the co-oppers of 10,000 crore rupees.

[00:05:11] And under the startup India Seed Fund scheme, which is another flagship scheme of the startup in the program, 747 crore rupees has been approved to 192 incubators who have put in 2 91 crores in around 1600 startups.

[00:05:26] Now, I do not have much time to evaluate these numbers but one thing for sure that this startup in the initiative has achieved is that it has made startups a day-to-day conversation. Right?

[00:05:39] And there's a paradigm shift in the mindset towards embracing innovation and this taking within the country. So, leaving the numbers aside, I think the startup initiative program has been a success. It's brought to focus startups in a very mainstream fashion. Right?

[00:05:56] I mean, the fact that the Prime Minister himself is meeting these startups at every given occasion. Right? Is phenomenal, I should say. Right? Aside from that, look, I think let's talk about some of the expectations that people had,

[00:06:13] which is that some of this regulatory cholesterol, as managed to have a well often says, was east out. Right? Some of these laws and regulations were not, I mean, that don't need to be asked cumbersome. Are kind of east out for startups, right?

[00:06:31] It's easy to open and shut down companies. So on and so forth, right? I mean, to that end, well, I mean, they could definitely have been more progress, I would say. Right? Everyone is expecting this kind of a single window of clearance or sorts of various things,

[00:06:45] right? Where it's all digital and so on. And I'm not saying that nothing has happened, but yeah, there's a lot more that could happen on that front, I should say, right? But we had Koshik Muda of Ethereum machines on the podcast some time back.

[00:06:58] And he spoke about how they wouldn't have been able to afford, you know, some of these filing for IP and so on and so forth, right?

[00:07:06] In the past, I mean, if it costed, you know, four or five or eight lakhs for them to really file those patents, right? You know, thanks to the government initiatives. It costed them a few tens of thousands or even less, I should say, right?

[00:07:18] There are multiple startups like this that have kind of benefited, I would say. The other thing has been to co-opt some of these larger organizations like isro and so on into the fold, right? I mean, isro has been famously partnering with startups and so on.

[00:07:30] And you know, you can argue how much of this is the PMO's doing, right? But clearly, you know, there is a signal to up down that, you know, we have to encourage startups and innovation.

[00:07:40] Look, in terms of capital influence and so on, I mean, I think it's bound to happen where India is geopolitically at this point of time. We are bound to attract some of the global capital just make it easy for this capital to come in.

[00:07:52] Make it easy for people to trade, right? It is still quite the struggle for anyone to sort of set up a fund to invest in startups. And there's a whole bunch of regulatory compliance that needs to be east out, right?

[00:08:07] And maybe, you know, we will have someone on the podcast to talk about some of these nuances and further details. But those are the things that people are kind of expecting, they're not really expecting that, you know, the government starts funding startups tomorrow, right?

[00:08:19] I mean, God knows there are enough pension funds in Canada or elsewhere that will deploy money here. I mean, if they see a reasonable return, right? But yeah, just make it easy on the regulatory compliance front, that I think will be really important.

[00:08:35] And this is more so important as, you know, we start moving towards, let's say manufacturing hard deep tech and so on and so forth, right? Where, you know, your building physical stuff. Yeah, some of these labor laws for example, have to be absolutely simplified.

[00:08:51] You know, so I'm really looking forward to those kind of things. Yeah. Another thing which the government has really successfully done is they've created a very conducive market for the startups to grow, right?

[00:09:03] Recently there was a report out there which said that the journey to become a unicorn has shortened, right? Now the average time taking for a startup to attain the unicorn badge is just 5.5 years and 44 startups in the country have become unicorn in less than 5 years.

[00:09:19] You know, I just remembered this story that a friend of mine was telling me a couple of days back. You know, this guy is one of those little known SaaS entrepreneurs who's running a very successful business, right? And he was meeting this person from Utah, right?

[00:09:38] And he was very conscious of the way he can have projected himself, right? So he found himself in a, you know, five star hotel, nice facility etc.

[00:09:49] This was for a zoom call, right? Because he was one earlier by someone else that, you know, this person is, you know, Republican types and, you know, may not entirely look up on Indians very kindly and so on and so forth, right?

[00:10:03] So see, it was kind of prep to give that sort of a global, you know, metropolitans, cosmopolitan sort of an outlook to this gentleman, right?

[00:10:12] They get on a call, they have a reasonable chat, whatever and, you know, towards the end of the call, you know, to much to my friend's surprise.

[00:10:22] You know, this gentleman from Utah does Namaste, right? And, says this was very nice talking to you and I know that, you know, Modi has been doing fantastic work in India, right?

[00:10:34] Which kind of blues guys mind and he was just saying, you know, that was a largest accounting closed, right? It's not of a million dollars. And he was saying that it's almost like, you know, the Prime Minister was an additional A on the daily or something, right here.

[00:10:50] He had sold India already before, you know, he could sell, right? So I think, you know, we talk about all the soft power and everything and it really does make a difference.

[00:11:02] It really, really does make a difference. Right? There's a huge value to thinking that, you know, Japanese quality is absolutely amazing to thinking that German precision and engineering is absolutely amazing to think that American branding and marketing and so on is absolutely amazing.

[00:11:19] Heck to think even that, you know, Swiss cheese is really great, right? I mean, there was some cheese competition recently and, you know, apparently an Indian cheese has come out as the number one,

[00:11:29] in fact, right? I mean, but all of these, you have to take with a pinch of salt, I mean, could be one of those UNESCO what's up forwards also, right? But, you know, there is there is a lot of value to soft power actually, right?

[00:11:42] And oftentimes, I mean, you know, especially when dealing with the West for a long time, I mean, you're already dealing from a back foot, right?

[00:11:51] So, so yeah, there is a certain mindset shift that's happening. You know, one thing that has lately been garnering a lot of attention, a product of India is the Indian whiskey, right?

[00:12:01] I think Indian whiskey is definitely out there on the map now. Absolutely. Yeah. I mean, look at Amruth, look at Indri, a bunch of these jeans also, right?

[00:12:09] I mean, there are top class, I would say, right? And I don't know how many of you guys follow this whiskey Bible, right? I mean, all of these are consistently rated up on 95 on the whiskey Bible, you know? And amazing value for money also, right?

[00:12:25] Amruth is like, all of these are less than $100, you know? And for context, I mean, a good Macalent or something will cost you like, how much is that?

[00:12:33] Four hundred, three hundred, four hundred dollars, right? So almost four X. So I see a lot of, you know, this kind of stuff right? Why in cheese?

[00:12:43] Yeah, what is the other thing? Yeah, should we do a sampling? Let us know in the comments. Yeah. All right. Let's get back. Okay. Now let's move on to a very important topic, right? The appraisals season is coming up and Indian startup employees are, you know, expecting the worst.

[00:12:59] According to Inc. 42's annual survey 62% of startups plan to keep up pre-sales below 20% in the next fiscal, and of course this comes after tough year for Indian startups,

[00:13:09] their fees challenges for fundries and also seals. However, there is hope for the job market as 90% of founders surveyed said that they have expansion plans on their agenda for the next year. So sectors like FinTech, clean tech and emerging technologies may provide new opportunities for employment.

[00:13:26] The Indian startup ecosystem is aiming for a better year in 2024 focusing on innovation and sustainability, but Russian, what do you think? How the Hikes went to Viennioti? I mean, I'm going to sound like a doomer here or a boomer, I don't know which one.

[00:13:42] But look, I think there's a whole generation of people in startups today who think that the salary is dropped from the skies or something.

[00:13:51] At the end of the month, just magically appears in their bank account. I still am part of the generation that the hot that you know salaries,

[00:14:00] I mean if you were earning X, you had to sort of generate three to five X of that, you know, for your company. I don't know how many of them really think about it that way, in terms of what you are generating for the company also.

[00:14:14] And yeah, I mean, there's been an over-inflation of salaries I would say because of the bull done right 2021, 2022. And one thing about salaries is they're always set up a puntal, they never, you don't find depreciating salaries. They may remain flat for a while, but they don't depreciate.

[00:14:32] So which means that there's a higher base on which that appraisals have to be paid out, right? So I kind of sympathize with founders on this one because the market has been set to a certain level,

[00:14:46] right? And it is what it is for every two or three people who are saying about these things, I mean there's always one or two who are irrational about it.

[00:14:56] Right? And who think that the good times might come back? But I feel like this year, I think it's a hard reality check, right? I don't think a lot of startups will pay out because you know this year again, there's a lot of ambiguity, you know.

[00:15:11] The US elections are here, right? And I don't think the funding environment will be back to normal for a year or 18 months, maybe even two years, who knows.

[00:15:21] Right? So everyone literally is trying to nickel and dime and just hope that you know they can hold on to ask much of the, as much of the capital as possible to impact their runway.

[00:15:33] So yeah, I mean I wish I had better news but the good thing is that hopefully you'll still have a job, I suppose. Okay, but you have been in the startup ecosystem for I think about 15 years now?

[00:15:46] Yeah. So what advice do you have for people who want to negotiate a better appraisal? Is this your appraisal pre-conversation that we're having for our viewers? Well I mean, and also me. Look, I think you obviously have to have a more open relationship with your manager, right?

[00:16:07] Which is that you guys, I mean I hope that you guys talk about career and money and work. You know more than a few times in your, you know, in a year, right?

[00:16:16] It should not come down to that one conversation, you're going to have it there into the year and magically each of you will understand exactly what the other wants and, you know, Walaam, I mean something great will come out for both of you all right?

[00:16:27] I mean it isn't as simple as that right? I mean you need to have reasonable expectations set on both fronts. So in order for you to negotiate, I mean I recorded a real sometime back, I think we'll probably link it in the, in the description.

[00:16:41] One is to set expectations way, way before your appraisal actually happens. The second thing is to be very explicit about the value that you've delivered for the organization. I mentioned 3 to 5x figure out how you can sort of demonstrate that value, right?

[00:16:58] And the third thing is to not read this as a sort of a binary thing, right? You give me this or else kind of a conversation which, you know, people and leadership absolutely hate that kind of conversation.

[00:17:10] So figure out a roadmap to achieving that number, you know, I mean if I have to hit that particular number, you know, what will it take for me to do that? Right? That is a more productive conversation I would say.

[00:17:20] So but do check out the real, I mean I've articulated it in a little more detail. Yeah? That is a good starting point of which. Awesome. So you're also to have that conversation with me, Gullgeon. I thought already has those conversations at Dileavices. So yeah.

[00:17:35] Alright. Moving on to the next topic, DMI Group requires zest money in a distressed sale. DMI finance hasn't contemplated in the acquisition of zest money for several weeks now and hasn't competing with the likes of a Dithabila capital.

[00:17:48] Pyramal and hero Finn Cop. However, Adithabila and Pyramal backed out of the deal a few days ago, citing high exposure, which amounts nearly to 700 to 800 crores rupees in the zest money deal.

[00:18:01] Now, zest money was a company that was once valued at around $475 million, but you know, last month in December, they had to shut down shop and one of the primary reasons for it was a change in regulatory environment. Right. So what do you mean of this update?

[00:18:17] Well, we've spoken often enough about zest money as well. We'll perhaps link an older episode of theirs. Look, coming the entire, you know, BNPL game has changed right after the RBA regulations, which basically are, you know, screwing some of these intermediaries in that sense, right?

[00:18:37] Just money did have, did introduce a bunch of tech innovation I would say, right? In terms of converting your one-time payments to EMI and so on, offering you a seamless loan. And that still, I think could be valuable for a traditional lender, right?

[00:18:53] Whether that is, you know, if you see or hero Finn Cop or DMI as well, right? And and she or I think DMI has come up in front.

[00:19:02] So yeah, I mean they're probably going to acquire them for the technology and for some of these new age users that they may have gone or write them in. I don't know how you value something like this, right? But yeah, what is the deal they've signed it?

[00:19:17] That number has not been disclosed. Ah, okay. But I'm guessing it's a distress seal. So I mean, can I say it to you? Yeah, I'm sorry. Yeah, yeah. Yeah.

[00:19:29] Okay. Another exciting news from last week is that the center will be allocating around 10,000 crore rupees for building super computing and quantum computing hubs across the country. Wow. Wow. This will be done in collaboration with private sector through public private partnerships.

[00:19:45] These proposed hubs aim to provide access to high performing, computing, utilizing either a leasing model or a computing as a service approach, particularly benefiting startups, micro small and medium enterprises and other companies.

[00:19:57] The initial plans involves setting up quantum computing hubs that will be used primarily for by education institutions and government research and development, but this is very exciting news because if you look today, this quantum computing powers are really enjoyed by the likes of developed countries,

[00:20:15] the UK, Germany and the US. But for a country like India, I think having a super computing powers will really be beneficial because one India is still highly dependent on agriculture and our country still struggles with severe cases of drought and cyclones. Right?

[00:20:32] This happens on a yearly basis. And by analyzing the weather patterns and the various data we collect, we will be able to provide better information to farmers so that they are prepared for such calamities.

[00:20:42] Another aspect which I think will really benefit us as a country is that given a diversity, right in the various welfare schemes at the centre comes up with

[00:20:52] the analytical power of super companies will enable us to device better welfare schemes and also see how this schemes are being passed on to the grassroot levels. What the impact they are having at a grassroot level?

[00:21:05] Well people may argue that they are better problems to solve in India, the money can be invested elsewhere. I think this itself is a solution that will catalyze a lot of things in society. There is a real race for computing power.

[00:21:17] If you look at some report came up that Facebook is buying record number of NVIDIA chips for instance. Or meta-ish should say. So there is really like everyone kind of recognized.

[00:21:30] I mean one crazy theory that someone floated the other day was that, you know, the web3 crash has resulted in the AI boom because previously all of the compute power was being used to mine crypto which kind of was used for this LLM and AI stuff instead.

[00:21:47] I don't know whether that has any credence but possible. So compute power is precious and we should definitely like amp up on that. Okay another exciting news pixel inaugurates is first spacecraft manufacturing facility in Bangalore.

[00:22:05] The company said that this new facility is a comprehensive assembly integration and testing facility to allow the company to scale for large-scale satellite manufacturing. Pixel has launched three part finder hyperspectral satellites and plans for a constellation of 24 satellites in total.

[00:22:22] We had a ways in the podcast recently and there was a fantastic conversation.

[00:22:28] But while I was exploring you know the space sector as a domain for startups, what I kind of realized that the stage at which we are in today, it's more of like a solution that is in looking for a problem.

[00:22:41] Right we are getting a lot of data. In fact better data from our spatial satellites, but how the data is going to be repackaged and you know turned into use cases that is still left to be figured out.

[00:22:53] Yeah I mean this is a whole category creation process right I mean so obviously the data would be useful and there's a question that I post to our ways as well.

[00:23:01] It in terms of how do you paint that vision for your prospects who don't yet really know that they need something like this right and I would say this is as common as someone inventing a new drug for something or you know.

[00:23:16] So this is classic category creation right I mean we had one of Banzu on the podcast you know just last week. Do you think it's a add tech thing to name a company after you have by use for by use if Banzu you have can't for can't.

[00:23:30] Yeah I mean it could be that very astute observation Gungen but anyway coming back to the coming back to the topic I mean it is just category creation and I know it's immensely hard right you have to paint a vision you have to show people a whole new way of doing things and so on.

[00:23:49] But do check out that podcast we did with a ways it's a fantastic episode. He answers this and a lot more in fact. Awesome so now before we move on to the talk of the town section here are some of the biggest fund raises of the week.

[00:24:05] Warmomo days 49 million dollars from Kazana National Barhard and Oaks asset management. FinTech start up fin AG technologies raised 11 million dollars from Tata capital blue orchard said be prime venture partners and others. Acquire culture technology startup aqua exchange raise around 6 million dollars from ocean 14 capital India partners and others.

[00:24:27] EV start of all mobility raise 6 million dollars on shell ventures. Euro zero EV 2 ventures twinem using inclusive and the likes and manufacturing automation startup grow you raise 5.4 million dollars from light host canton and trifecta capital. Well looks like manufacturing is definitely coming is manufacturing is becoming sexy again.

[00:24:49] Yeah yeah it is I mean we started the podcast way kind of saying that we're going to have a been of the sort of orange wood in the on the show soon right and they're building robots and stuff. I mean it should be a pretty cool conversation.

[00:25:04] No orange wood or in good yeah gray oranges difference so these guys are based up north as well so they're based on noida. So yeah it'll be interesting talking to a been of another astute observation does orange have to do anything with robots.

[00:25:19] I think you had a good one with the previous joke you should have. Cash out when you still had it yeah. Okay so Ashish Chandurka right really put a very interesting tweet which is showing the working age population with income over 10,000 dollars and that is growing at a 12%

[00:25:41] This is a cross 2019 to 20, 23. He says that total number of people with an income over 10,000 dollars in the working age population of India has grown at a Cagor of 12.6% over FY 19 FY 23. Now why is this such an important statistic for the economy?

[00:26:00] Well it's amazing I think he is referring to a Goldman Sachs report here right I mean it just shows you that this spending power is increasing.

[00:26:09] You know we often reference this per capita income kind of a thing right but India is also many different India's because we are such a large country right.

[00:26:18] And you know you should check out the Silicon Valley report by Bloom Ventures which kind of talks about this various different India's right I mean they call it India 1, India 2 and India 3.

[00:26:29] And India 1 or India 2 even though there are fraction of the country could be as as big as the US or you know Mexico or any other country right I mean so they could be a country by themselves.

[00:26:43] So there is value in building products and services for them right now for long there has been the stroke that you know Indians don't pay and maybe to an extent that is true obviously.

[00:26:53] But that seems to be soon changing right I mean if you look at any of these consumer products that are being developed I think there's a lot more aspiration today right and the people and that's kind of reflected in the in the money they're making and also more importantly in the money they're spending right.

[00:27:10] So yeah it's a pretty interesting report do check out the Goldman Sachs report as well we'll probably link to it in the description yeah no work for our produce. Okay awesome so with that we come to the end of down to number 140 we hope you enjoyed this conversation.

[00:27:26] If you haven't already subscribed to a channel for regular updates and if you want to sub reach to be delivered straight into WhatsApp and box you'll find the WhatsApp link in the description below.

[00:27:35] Let us know in the comments as to how we are doing and what are some of newer topics that you'd want us to talk about will definitely try to cover them in the upcoming episodes.

[00:27:43] Alright folks you hope you enjoyed this conversation and we'll be back again next week with more exciting updates until then take care. Thank you so much.