$10m for 10k companies is way too less. It stacks up to one grand per company. Really? That less, they might as well not invest. Compared to startup Chile, they give $40k as the article itself says. India is not a very costly country compared to Valley, but 50k rupee is nearly not enough, even to get the company going, let alone sustain it for a few months. And as far as I can tell, it is not even an incubator type programme.
YC only gives $14,000 for one founder ($11,000 + $3000n) http://ycombinator.com/apply.html. Maybe it's a lean YC, plus India is cheaper than US (esp SV), as you say.
EDIT I've heard YC funding gives about 3 months, so 1-1.5 months is 1/3-1/2 that. Of course, one expects to take a pay-cut when doing a startup - the test is not whether it's comparable to a job, but whether one can actually survive on it. (note I also said a "lean YC") BTW: I also find fascinating the idea of non-urban startups, since all you absolutely need is internet - rural living would be far cheaper (in US too).
If you are comparing YC to this then YC partners also give an option for 80k promissory note with no cap (IIRC) in the center of the biggest startup hub in the world. And $1k is relay not that much in a big city like Bangalore. Definitely not even enough for a company of (say) 3 for at least 3 months with just living and bare lean operation costs (broadband, rent, electricity, hosting).
India is cheaper but not 14 times cheaper. $1000 doesn't go far in urban India. Its 2 weeks salary for awesome developers in India. One to one and a half months salary for ok to good developers.
Maybe it's not enough for "awesome developers" who can choose between jobs, but still it can provide young people (without families) enough money to pay for shelter and food for many months.
Even in Poland (GDP PPP $20,334) it's enough to survive for 2 or 3 months.
$1,000 and the ability to say "Backed by Google" might go a lot further than you would think. There are probably plenty of people who would be willing to do something as prestigious as YC for free, so I don't imagine it'll be impossible for Google to find several willing takers for their offer. They only need a tiny fraction of these companies to succeed for the program to be considered successful by traditional venture capital metrics , so there's not a lot to lose for Google here.
Just To give some perspective to the $1000... it costs:
- < $1/month for a .in domain
- $20/month for an unlimited 250kbps internet connection
- $20-$100 a month, should cover phone bills for startups that need to make a lot of calls
- $200-$400 for a studio apartment ( my first startup had 3 startup teams sharing rent for a 3 bedroom apartment where we shared food/bills/wifi/etc )
- $250 for 30 pizza's a month, $150/month for 3 subways/day for a month OR ~$100/month if you spend $2 per meal
- $200/month for the cheapest dedicated machines if you choose to host at a good local vendor. higher for the cloud based ones of the same config.
- $75-$100, and you should be able to fly half way across the country if you can plan your tickets early enough, (or lesser if you're frugal about timings )
- $50 worth of free adwords is what new businesses get occasionally on signing up for adwords. i'd be surprised if they increase this incentive alone by 20x though.
Misc notes...
- $1.5/litre for petrol, $1 for diesel
- $100/month for an iphone 5
- $5000 is the usual limit you can withdraw at most ATM's
- $300-$1000/month, and you should be able to start hiring fresh graduates you could train
This isn't Google's program, it's Nasscom's (a trade organization) program. Google is one of the partners and they're investing $10MM. There are several initiatives that are working in parallel with the goal of boosting startup activity in India. I imagine the money is going into running the program and/or providing support to startups, not providing direct cash investments/grants to companies. Nasscom isn't in the business of directly acting as an incubator/accelerator.
How far does $1,000 go for a young (unmarried) just out of college engineer?
Just for reference I will give you what my first paycheck was 1 month out of a mid-level engineering college with a Comp. Sc. major. Rs 2,000/mo as a software engineer. After my boarding (shared) and living expenses I could still save close to Rs 1,000/mo.
Granted this was 20 years ago and in a non-metro area, so adjusted for inflation lets multiply that by 10.
So $1,000 (= Rs 50,000) today, could feed a hungry unmarried entrepreneur on a Dosa (substituting for Ramen here) budget and shared living with friends for several months.
After all this is a startup.
Keep your eyes off those Aeron chairs and you could manage to run a lean startup for several months on that.
I am not sure if those numbers hold good anymore. The starting salaries have gone up to 10-25K, thanks to growing cost of living in India. That hardly gives you a few months to survive.
Even if you were willing to sacrifice a decent paycheck, you need to think of hosting, marketing and other expenses.
Kind of unrelated, but pretty astonished India is ranked so low there, with all the incredibly talented Indian gentlemen I've worked with over the years. I wonder how #-of-active-natives-coding holds-up? I'd bet they're near/at the top of that list.
Techies from India will lap up this opportunity. As I see it, the incentive for them is not the $1000 bucks, but the chance for their product(if good) to be showcased on a much larger canvas.
Eric Schmidt is landing in New Delhi in a day or two. How much of this promise converts into 'invested cash' is something that we all will have to wait and see.
Looking at the numbers ($1000 per startup) however, it seems more like a sales pitch, rather a publicity stunt, to appear in the national news. If so, they've done it quite successfully but it is also a very sad start.
