Billion-dollar valuations bring Rs 1 crore salaries to tech startups

MUMBAI/BANGALORE: Flush with investor money and valuations topping a billion dollars, a small but fast-growing group of Indian startup superstars is fuelling a new wave of wage inflation in the Indian technology sector.

The likes of e-commerce leader Flipkart, which raised $1 billion recently, and mobile advertising network InMobi are attracting mid-level executives and technology professionals with annual salaries of over a crore of rupees, something unheard of a couple of years ago.

An angel investor who did not want to be named says any startup that has received substantial funding is today willing to pay a Rs 1crore-plus package to some of its senior talent. Bash Gaming, FusionCharts, Eka Software, Capillary, Indix, Freshdesk and Knowlarity are said to be paying senior management executives an overall compensation that is close to or more than Rs 1 crore. STOI could not independently confirm these figures. The elite billion-dollar valuation club of privately held companies includes e-commerce major Snapdeal and data analytics firm Mu Sigma, besides Flipkart and InMobi.

Salaries for techies in Bangalore, India's Silicon Valley, saw the first bump up in the late 1990s and early 2000s when Infosys, Wipro and the like were building the IT services ecosystem. It's now the e-commerce and IT product startups that are beginning to repeat that phenomenon.
"Guess where wage inflation is super high and unfunded smaller startups are feeling embattled — Silicon Valley. It's no different in India now," says Ravi Gururaj, chairman of the Nasscom Product Council and co-founder of the innovation lab Frictionless Ventures.

Abhay Singhal, co-founder of InMobi, suggests it is not the Indian startups that are leading the wage inflation, but the US ones with whom some of the Indian startups have to compete. "I don't think startups are fuelling wage inflation. New-age companies need different talent and calibre to make that big shift happen. We pay more than Indian IT services companies, but we offer competitive salaries, on a par with Google and Facebook," says Singhal. InMobi competes with Google's AdMob, and Flipkart and Snapdeal with Amazon, which has just committed $2 billion to its Indian operations.

Indian startups have also been hiring hundreds of IIT and IIM graduates with top offers. "Entry-level salaries in IT services haven't changed substantially in the past few years, but startups looking at niche skills are willing to pay a premium," says Kris Lakshmikanth, founder of the search firm Headhunters India. The demand for talent in product management and product tech far exceeds supply.

For smaller startups that have not raised much capital, the current wage inflation is worrying. K Sudarshan, MD at the executive search firm EMA Partners, says salaries will stabilize once the startup ecosystem matures.

"Those for whom funding has been shaky have suffered and many have shut down," says Raghunandan G, co-founder of Bangalore-based TaxiForSure, a tech-backed transportation startup which has raised more than $40 million in venture capital since its inception three years ago.

Gururaj says smaller companies will have to get creative with intangible benefits and lures such as fancy titles, overseas travel, and opportunities to speak at important events. Stock options are another element many talented professionals are comfortable with. Ashish Goel, co-founder and CEO of the online furniture portal Urban Ladder, says his company gives its "team members a greater ownership in the company".

There's also a big positive in these salaries for the startup ecosystem. Many who were happily ensconced in large MNC IT services companies in India on account of their salaries are today willing to experiment with startups. "Heavily funded startups with their high valuations create access to a talent pool that would otherwise never consider startups as a career option. People are now willing to take a bet on early-stage startups with the hope that they also might grow into billion dollar companies," says Zishaan Hayath, founder of the online education startup

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