Time has an interesting article highlighting that in the US, startups are being built for under $10,000. As several people compare the differences between the previous dotcom bust and this one, I think this is a key element – its much cheaper to do internet startups (of a certain kind), and this could be a great time for those to start businesses.

I have always been intrigued by the cost of starting up in US relative to India. It seems to me that the seed stage investment required in India is higher than in US, even though at a later stage, Indian startups may have better economics due to lower cost of marketing. With reference to this article, at the seedstage, an Indian startup may have the following disadvantages at being capital efficient:

  • Lack of Compact Skills – of people who can handle 2-3 distinct aspects of the business (such as building the site, UI, marketing) with high level of expertise.
  • Inability to attract top talent for equity in early stages of startup.
  • Low limits on credit cards – yes, thats a useful tool when you are starting out!
  • Lack of relatively cheap/free infrastructure like garages, attorneys, etc.

I think the key to success on such startups is personal passion (or “immersion”) and ability to pick narrow niches and market to them.

Are you seeing under-5-lakh startups taking roots here in India?