1. The total number of startups is going to be lesser due to redtape although I believe that is becoming less of an issue as time goes on.
2. It is probably perceived to be more lucrative to target the American market. I would think that a larger proportion of the ~ 120M internet users in India would be similar (young urban professional) and therefore easier to release products compared to the general public (cultural variations and interests make it harder to disrupt outside the cities).
OK. If you look at the growth amongst Internet users in India between, say 2009 and estimates for 2011, it resembles the growth amongst Internet users in US in the late 90s. US had 120M Internet users around the time of the Web 1.0 boom.
Mobile usage is even higher as you know so it seems like mobile app startups could do really well. If the growth is happening in small towns/rural areas even better, no SV company is going to want to spend time in Gummmidipoondi to understand their target customer. I don't know if cultural variation is really an issue: look at iPad for instance, even a non-English speaker has a finger with which they can tap on the screen.
I've heard horror stories about red-tape, corrupt officials and so on from friends. But every time I've dealt with GOI officials they've been extremely helpful. Maybe I just got lucky.
Reg: redtape: I have personal experience with trading stocks in both india and U.S. I have found that the real problem has simply been in finding the tax agreements btw the countries and finding bankers who understand and fix the issue. Not sure that's relevant to startup company space.
1. The total number of startups is going to be lesser due to redtape although I believe that is becoming less of an issue as time goes on.
2. It is probably perceived to be more lucrative to target the American market. I would think that a larger proportion of the ~ 120M internet users in India would be similar (young urban professional) and therefore easier to release products compared to the general public (cultural variations and interests make it harder to disrupt outside the cities).