Indians have Contributed in Creating Several Jobs in US through Startups, Still Face Accusations in the Country: Study

India faces accusations of taking away jobs from American people but have they only snatched and not given them opportunities through startups

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Sundar Pichai, CEO of Google Inc.
Sundar Pichai, CEO of Google Inc. Wikimedia
  • Indians have contributed to growth of iconic business firms like Sun Microsystems, Hotmail and some of them have turned into biggest entrepreneurs and job creators
  • There are many Indian-origin leaders who have become household names today like Indra Nooyi (Pepsi), Shantanu Narayen (Adobe), Satya Nadella (Microsoft), Sundar Pichai (Google)
  • Hotmail.com founder Sabeer Bhatia, the company was founded in the year 1996

New Delhi, August 21, 2017: Indians are facing accusations from Americans that they are snatching away American jobs, but it’s not the case.  There is an Indian- American venture capital firm called Inventus Capital Partners which is trying to throw some light on the contributions Indians have made in the growth of Silicon Valley.

Indians are stereotypically viewed as a source of cheap labor in US Technology Industry but they are much more than that. Case in point is over the last 10-20 years, Indians have contributed to the growth of iconic business firms like Sun Microsystems, Hotmail and some of them have turned into biggest entrepreneurs and job creators instead of being just job seekers.

As per a report from July, Director of Inventus Capital Partners- Manu Rekhi, the company operates from Bengaluru and San Mateo, California, he observed how Indians have left a mark in the American entrepreneurial space.

There are many Indian-origin leaders who have become household names today like Indra Nooyi (Pepsi), Shantanu Narayen (Adobe), Satya Nadella (Microsoft), Sundar Pichai (Google). But these success stories were due to decades of hard work.

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In the early 1980’s, arrived in the US the first generation of Indian entrepreneurs. According to Quartz report, Manu Rekhi said,  “Among these legends  was Kanwal Rekhi (my partner) along with Vinod Khosla, Naren Gupta, Prabhu Goel, Suhas Patil, and many others, who went on to finding notable companies like Sun Microsystems (acquired  by Oracle), Excelan, and Cirrus Logic.”

When the early entrepreneurs moved to America global exposure was very limited and also their understanding of consumer behavior of the people in the US was also limited. That is the reason they founded engineering- heavy systems and networking companies instead of going for consumer facing ones.

Slowly, with time more Indian tried their hands at launching new ventures and also US doors opened for foreign students, thus Indian entrepreneurs turned their focus from enterprise to consumer- oriented companies. One prime example of this is Hotmail.com founder Sabeer Bhatia, the company was founded in the year 1996. Sabeer Bhatia is a BITS Pilani graduate, did masters from Stanford University and has worked for Apple before launching his maiden email service.

The 1990s was also the year in which the Indian-origin leaders were also mentors in the Silicon Valley.  Case in point is BV Jagadeesh who is a Serial Entrepreneur and Venture Capitalist. Jagdeesh helped to raise the seed money for Netscaler, a San Jose based company. He later went on to become its President and also CEO by the year 2000. Currently, Jagadeesh is a managing partner at KAAJ Ventures, it makes early stage investments in startups, and he is also an adjunct professor at Santa Clara University, takes classes on early-stage startups and valuation. Ram Shriram is a Venture Capitalist, a founding board member and is one of the first investors in Google. His stake in the company was $ 1.3 billion in the mid-2000, he also mentors budding startups.

Also Read: 4 Startups which changed the face of Food and Beverage Industry in India

Rekhi said that later companies of Indian entrepreneurs shifted towards technologies which were more advanced.For example, Jyoti Bansal started App Dynamics, a management and operations analytics firm, which was later acquired by Cisco for $3.7 billion on 22 March 2017. Dheeraj Pandey, Indian Institute of Technology (IIT) Kanpur alumni owns Nutanix, a cloud-computing software company. In 2016, it had a multi- billion dollar initial public offering. Manish Chandra who is the CEO, Poshmark, which is the social fashion marketplace. Chandra created a product which would be “unheard of 20 years ago,” Rekhi said.

For example, Jyoti Bansal started App Dynamics, a management and operations analytics firm, which was later acquired by Cisco for $3.7 billion on 22 March 2017. Dheeraj Pandey, Indian Institute of Technology (IIT) Kanpur alumni owns Nutanix, a cloud-computing software company. In 2016, it had a multi- billion-dollar initial public offering. Manish Chandra who is the CEO, Poshmark, which is the social fashion marketplace. Chandra created a product which would be “unheard of 20 years ago,” Rekhi said.

Indians are less than 1% in the total US population, but still by 2012 they founded 8% of all the American tech & engineering startups. The group has started one-third of the immigrant-founded startups in the US. The firms which they have founded also provide great acquisition opportunities and also made high-value public debuts, Rekhi said, mentions Quartz report.

The first Indian-American founder led company- Nasdaq IPO (Initial Public Offering) opened its doors in 1987 with Excelan going public, but the pickup in big-value exists came only in recent times.

In the last 5 years, the software and services sector, which has 17 companies, tops the list of IPOs owned by Indian founders and co-founders and has a combined market Capital of amount $26.2 billion. The second in the list were Pharmaceuticals, biotechnology, and life sciences in terms of the number of IPOs (six). But, the retail industry saw a much larger market Capital of as much as $6.67 billion, in comparison to Pharmaceuticals, it was $397 million. 10 of these 34 companies that make approximately 29% were acquired following their stock-market debut.

Also Read: Amazon Launchpad’ comes to India; will support Indian Startups

According to Quartz report, Rekhi said: “Even before the turn of the millennium, companies like IBM and Intel had been making acquisitions, but mostly of outsourcing services companies where you’re basically buying manpower.”

But between 2012 and 2017, more than 25 companies by Indian-origin entrepreneurs saw mergers and acquisitions worth- $500 million and more, Rekhi found.

Rekhi noted, “Topping that list is Western Digital’s acquisition of SanDisk, worth a whopping $19 billion, followed by several acquisitions from Cisco, HPE, and SAP.”

Today, 14 of the 261 unicorns are headed by Indian-origin founders (private companies valued at over $1 billion) in the US. These 14 startups, when taken together have a combined value of $35.17 billion and funding of $81.8 billion, with the IT industry taking the lead, according to Rekhi.


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