Difference between silicon valley of India and silicon valley of USA

By | December 9, 2014

Information Technology evolved with the development and production of computer software and hardware as well as programming languages and information systems.

Last four decades, a huge amount of development and growth making it one of world’s leading industries today which paved way to the emergence of several IT companies in such places as Silicon Valley in the US and Bengaluru in India.

The name Silicon Valley in San Francisco, came from silicon used in the production of semi conductors which were first products developed in the area of Santa Clara Valley where the companies producing them were located.

Bengaluru is the capital of Karnataka, an Indian state which was housing various industrial establishments like Bharat Electricals Ltd (BEL), Indian Telephone Industries Ltd (ITI) and Bharat Heavy Engineering Ltd (BHEL), Hindustan Machine Tools (HMT) and various other defence establishments like DRDO and ISRO to name a few. However due to liberalization in policies of the Indian Government, which gave space to new ventures like Infosys Ltd (Infy), WIPRO and other smaller companies.

Starting 1980, Karnataka emerged as the information technology capital of India. It was in 1985 Texas Instruments became the first multinational company to set up the company in Bangalore near HAL Airport.

There were many feel good factors which fuelled the growth of information technology industry in Bangalore. One major factor is presence of science and engineering institutions like IISc, IIM, BMSCE, RVCE and PESIT to name few. The software industry requires skilled engineering students who are churned out of these colleges.

Many employees who were working in US returned to Bengaluru to setup their own companies. Also many jobs were moved away from Silicon Valley to Bengaluru which in turn coined as ‘Bangalored’. This was due to the factor that Bengaluru was low cost center. This in turn created lot of issues to the US Government and created lot of hurdles of the software industries in Bengaluru.

UB City AerialThen the second wave of software entrepreneurs who were returned to India from US or High Network Individuals in India started investing in new domain of software services such as Online Services, who were called Venture Capitalists or Angel Investors.

Companies like Flipkart, Snapdeal and Myntra started providing shopping experience online whereas RedBus, Go ibibo and Make my trip provided travel tickets for road, rail or air. For your movie tickets companies like Ticket New or Book My Show started their services in major cities. Of course these companies faced lot of hurdles in terms of backward integration. For ex : RedBus, when they started the services faced lot of challenges from the travel agencies in terms of seats allocation and cancellation policies.

Almost all these companies have been funded by venture capitalists like Accel Group, Catamaran Ventures, Redclays Capital, Kalaari Capital and Sequoia Capital to name a few.

Money-HandshakeIt was not easy task for the online companies to get the funding, either these companies were offering stake in their capital or sharing profits.

Compared to the United States, it would be hard to find entrepreneurs in India who are more interested in making a long term impact. A comparison between entrepreneurship and venture investing scenes in USA’s Silicon Valley as well as Bengaluru in India.

Fear-of-Failure-Success-FailureDifference between silicon valley of India and silicon valley of USA

Fear of Failure:

The US entrepreneur is not afraid of failure, if he does, he simply starts new venture. He has unemployment benefits to help him financially as well as his peer’ support and respect for following his dreams.

The Indian entrepreneur has fewer safety nets to capture him in case of failures. His social obligations and security issues threaten his dreams and make him consider entrepreneurship as mere last choice. However recent trends indicate a change in this pattern, where Indians do not consider entrepreneurship as taboo. Institutions like IIM, will offer safety net in the form of second chance in campus recruitment if an entrepreneur fails in his venture.

Changes in Business Models:

Compared to American startups that focus on long term productivity and impact, Indian startups tend to focus on short term success. Indian startups also tend to copy successful models from the west and tweak them to suit local market conditions in order to gain quick buck. For ex: Snap Deal based on the model of Group On of US started operations in India.

hedge-funds-coinsFunding Issues:

There are 2 million Angel Investors in the US. Comparatively, most of the startups in India are self funded or boot strapped. Only a few companies step forward to provide first round funding while second round funding is abundantly available. An up and running company would have better chances of attracting investors.

Infrastructure Woes:

American entrepreneurs will settle for a garage or dorm room to launch their startups while Indian entrepreneurs will settled for cost effective office to give good impression. Many of them simply avoid the above options.


Team Recruitments:

Indian employees are more cash driven and do not believe in stocks or equities when compared to American employees would settle for lesser payments in return for an equity component.

Author: Venu V

i look for minute details, whatever i do. Avid reader, read lot of Hindu mythology, Technology and General news. Extreme foodie and like to taste new types of vegetarian food. Travel a lot, like to explore new places which are not explored by anyone. Participate in adventure sports like river rafting, grappling and hot air ballooning.