Indian Startup Ecosystem and the obsession for IIT/IIM Founders

With or without a reason for years, graduates of the Indian Institutes of Technology (IITs) and the Indian Institutes of Management (IIMs) have been considered the crème de la crème of the startup world. Think IIM or IIT, and you often think success.

A few weeks ago, I read a post by Sugar Cosmetic’s co-founder and COO Kaushik Mukherjee narrating their story of raising funds and the hardships it took despite having all the illustrious tags of validation in the Indian Startup Ecosystem. Yes, you got it right- IIT/IIM and Ex- XYZ.

Somehow this post stayed with me because being a part of this club I have heard and faced it too. Though Kaushik’s post says that it’s not entirely true but let’s admit it is partially true.
After a few days, I found an article by Business Standards about the other Co-founder of Sugar, Vineeta Singh, where the headline itself celebrated her IIT status.

Fine, irony died a hundred deaths when these two posts are kept side by side.

So, here’s the point-

There’s a by default obsession for founders/core teams out of IITs and IIMs- as if they hold a pre-validated pass to run a successful startup. VCs in India have made an unsaid filter that may define academic pedigree as a precursor to success.

For years, graduates of the Indian Institutes of Technology and the Indian Institutes of Management have been treated as the holy grail across India’s industries — all the more so in its startup ecosystem. But as the sector matures, this seems to be turning into a problem.

Remember back in school, how teachers use to make the class topper as the class monitor by default without even rekindling any thoughts on the kid’s personality or leadership skills. Being academically great was considered as a by default proof of being a leader or managing a class.

Maybe that’s a herd mentality in the Indian startup ecosystem forming a confirmationship bias. A very interesting and yet shattering findings have come out of researcher Abhay Jani’s investigation for Quartz. It revealed a narrow worldview of Investors when it comes to startup founders.

They show a clear inclination towards companies founded by male entrepreneurs with an academic pedigree.

Jani collated data on the portfolio companies of five big VC firms—Sequoia Capital, Nexus Venture Partners, Blume Ventures, Accel, and Kalaari Capital. The data was sourced from startup intelligence firm Tracxn, jobs site LinkedIn and other news sources.

All other things being equal (market, idea, approach), investors appear to view academic smarts as a proxy for the ability to solve tough problems.

Interesting Anecdote-

Last year, while applying for our Y Combinator Program, we were looking around for some sample video interviews on youtube (it’s a mandate to submit your application with 1min video of co-founders telling about their product). Most of the videos that came from Indian applicants had a typical format wherein in case any of the co-founders went to an IIT or IIM they would explicitly mention it as a highlight. I am so and so…. and I have studied at IIT/IIM. Guess, I don’t need to mention the reason for this social conditioning even for a global platform.

Remember the web series TVF Pitchers, where Mandal’s introduction was so well crafted by the writers- where he never missed on mentioning that he is from IIM Indore.

Looks like the subtle satire in the series about the Indian startup ecosystem was prototyped through Saurabh Mandal’s character.

And it’s still a long journey for women

In the same research, it was found- Men still dominate the startup world’s success stories with less than one in five VC firms backing companies with any female founders.

The question left on the table here is -

Is it the right kind of culture getting developed, promoted and propagated

• The same theory of class topper being the class monitor is the right approach by VCs (many a time). ?
• Your ability to understand a problem-build a product-lead a team-survive the chaos- sustain your passion etc is somehow validated by your prestigious alma mater?
• Are we building the same model of college elites to suffer from a massive God’s-gift-to-capitalism complex in the Indian startup ecosystem?
• Are we killing the so-called concept of diverse perspectives in the most privileged manner?
• What’s the way out for this perpetual mindset, an obsession or even a pet peeve to make the Indian Startup Ecosystem more diversified and inclusive?

But the scenario has changed and the Indian startup ecosystem now has examples of many successful entrepreneurs who don’t belong to these clubs, and have still climbed the crest. These entrepreneurs don’t have any fancy degrees and show that it takes more than an academic pedigree to create and run a successful business. From Byju’s to Oyo to Paytm we have enough reasons to celebrate and look around to deter this confirmation bias.