We’re living in the Golden Age of Indian entrepreneurship in Silicon Valley

A Kauffman Foundation report reveals that 33% of all immigrant-founded companies in the US have Indian founders, more than any other minority ethnicity combined.

In the 1980s, the first generation of Indian entrepreneurs broke through the glass ceiling and began making a mark on the American technology landscape as startup founders and CEOs. Among these legends was my partner, Kanwal Rekhi, along with Vinod Khosla, Naren Gupta, Prabhu Goel, Suhas Patil and many more who went on to found notable companies like Sun Microsystems (acq: Oracle), Excelan (IPO) and Cirrus Logic (IPO).

A second and much bigger wave came during the dotcom era of the mid-90s, when people like Sabeer Bhatia (Founder of Hotmail), BV Jagadeesh (President & CEO at Netscaler, later acquired by Citrix) and Ram Shriram (founding board member and one of the first investors in Google) made their mark.

Since then, the US has continued to experience wave after wave of successful Indian-born founders and CEOs. A recent report by the Kauffman Foundation found that 33 percent of all immigrant-founded companies in the US have Indian founders, more than any other minority ethnicity combined.

Today’s startup cycle boasts its own share of renowned Indians leading the charge at exciting and impressive companies:

• Jyoti Bansal famously waited seven years for his green card before finally starting AppDynamics, which was acquired this year by Cisco for $3.7 billion.
• Dheeraj Pandey went from being voted "Best All-Rounder Student Among All Graduating Students in All Disciplines” at IIT Kanpur to lead Nutanix, Inc. to a multi-billion dollar IPO late last year as CEO and Co-Founder.
• Manish Chandra shifted his focus from enterprise software to consumer internet businesses, ultimately becoming CEO and Co-Founder of Poshmark, the largest social fashion marketplace for millions of users worldwide.

And of course, don’t forget that Indians have penetrated the top ranks at global Fortune 500 companies, including Google, Microsoft, Adobe, Pepsi, MasterCard and Wayfair, to name just a few.

Successful exits on the rise

Indian-founded US companies have also provided some incredible acquisition opportunities. Since 2012, more than 25 Indian-founded companies have seen M&As worth more than $500 million (Figure A and Figure B). Topping that list is Western Digital’s acquisition of SanDisk, worth a whopping $19 billion, followed by several acquisitions from Cisco, HPE and SAP.

Figure A: $500M+ Mergers and Acquisitions of Indian-founded US companies since 2012

Figure B: Timeline of $500M+ M&As of Indian-founded US companies since 2012

Another way to consider how Indian entrepreneurs have made their mark is to examine the fascinating array of IPOs in the last five years across multiple sectors (Figure C). The software and services sector comes in at a combined market cap of $26.2 billion. And while the pharmaceuticals, biotechnology and life sciences industries came in at second place based on the number of IPOs (6), the retail industry saw a much larger market cap of $6.67 billion, compared to just $397 million.

However, most notable are companies that were acquired post-IPO, including Auspex Pharmaceuticals (acquired by Teva Pharmaceutical Industries for $3.5B), Nimble Storage (acquired by Hewlett Packard Enterprise for $1.9B), and Cvent (acquired by Vista Equity Partners for $1.65B). In fact, 10 of the 34 companies — approximately 29 percent — were acquired after IPO.

Figure C: US Companies that went public over the last 5 years who have Indian Founders and/or Co-Founders, including any post-IPO acquisitions and/or closed companies.

What’s next? A peek into the future

So what’s next for the golden age of Indian entrepreneurship in Silicon Valley? It seems that future and continued successes are already well in the making, judging from the proliferation of Indian-founded Unicorns — startups valued at more than $1 billion — in the US. (Figure D). Fourteen out of 261 total unicorns boast Indian founders, for a combined valuation of $35.17 billion and combined funding of $81.8 billion. The #1 industry for Indian-founded unicorns? IT, followed by healthcare.

Figure D: Current Indian-founded US Unicorns

Conclusion

With many Indian-led US companies well on their path to a successful exit — creating jobs and wealth — there is also a big wave of entrepreneurship building out of India itself.

If just 1 percent of the Indian population were to become entrepreneurs (half the rate of in the U.S.) India would have ~13 million tech entrepreneurs. This is transformational not only for India, but worldwide; imagine the impact on the global technology ecosystem.

With two very large movements underway, Indian entrepreneurs have gone from yesterday’s tech outsources to today’s tech innovators, disrupting global markets.