India is the hottest startup spot in the world: Anand Mahindra

India’s current domestic startup ecosystem is “extremely robust” and though it trails the US and Israel at present, India will soon become the “hottest startup spot in the world”.

According to Mahindra Group chairman, Anand Mahindra, large corporations, and not necessarily prestigious tech schools like the IITs or MIT, are the new startup garages as big businesses race to stay relevant.“You are only going to see more action. Whether it is about unicorns or cockroaches, you are going to see plenty of action.”

“The cycle has turned, where large companies are not turning obsolete,” he said, adding large corporations are emulating startup ecosystems within themselves. “In a sense, what we are doing is putting up a Silicon Valley inside a company.”

Mahindra thinks that a corporate garage, unlike a VC or private equity fund, also has the strength of being more flexible and staying invested for a long term. At Mahindra, people who launch startups within his group are called ‘intrapreneurs’ and are spread across various verticals, including Tech Mahindra and the flagship auto company Mahindra and Mahindra. The diversified group valued at nearly $20 billion has a dedicated entity called Mahindra Partners that acts like the group’s venture capital and private equity arm and invests in companies both within and outside the group.

“They have been given a notional allocation by our board. We have a different approach. It is not a fund, because when you operate as a fund there is a point at which it is redeemed,” he said.

Mahindra Partners’ website says it is a $900 million PE and VC division of the group. Tech Mahindra, the country’s fifth-biggest software exporter, has also earmarked USD 200 million for investments in startups, reports PTI.

Citing the case of Club Mahindra, which he termed as one of the most successful startups floated by the group, Mahindra said the company turned around and started delivering profits in the ninth year while a VC or PE fund would have been forced to exit early.

India is the third largest startup market in the world with over 18,000 units valued at $75 billion and employing 3,00,000 people, as of December 2015. These companies collectively raised funds worth $8.5 billion in 2015, up 64 percent over 2014, and saw over three times the number of deals as compared to 2014.