K Ganesh, CEO, TutorVista; Raja Kumar, Founder, Ascent Capital; Sanjay Nayak, Founder, Tejas Networks and Bharati Jacob, Founder/ Partner, Seedfund at the ET discussion on the Challenges before Entrepreneurs in Bangalore.  India's most youthful city, famed for its technical prowess, cosmopolitan culture and innovative companies, is now at a crossroads. Burgeoning population, with over 8.5 million, and creaky infrastructure has dimmed the luster of Bangalore, arguably one of the worlds most visible symbols of globalization.  Twenty five years ago, when The Economic Times launched an edition in Bangalore, the city was yet to acquire its now familiar moniker as the technology capital of India. But the timing of that launch would prove to be serendipitous. A short distance away from the citys central business district where the offices of ET are located,a multinational technology company Texas Instruments set up its operations. This decision by the US semiconductor company to house its research arm in the southern city would herald the wave of an influx of technology professionals that has turned the city into a hub for high-tech entrepreneurship. The journey, which ET has chronicled minutely, range from new company formation to the global stock market listing of shares of some of the citys most famed technology firms. Fittingly, it was not just the entry of multinational technology companies that spurred Bangalores reputation as a centre for high-tech innovation. Now as unbridled growth and poor growth forecasting jeopardises Bangalores position as the innovation capital of the country, there is a growing clamour to understand how the city can retain its competitive edge. To debate this point and arrive at a prescription that can serve as a roadmap for future innovation, ET invited a high-power panel consisting of some of the citys top entrepreneurs and private equity investors. The four member panel consist of Bharati Jacob, partner in Seedfund - an early stage venture capital firm; Raja Kumar, founder, Ascent Capital - a $350-million private equity firm; Sanjay Nayak, founder  of Tejas Networks and K Ganesh, founder - Tutor Vista.The panel engaged in an hour-long discussion that highlighted the need for greater infusion of risk capital, more active role by large technology firms in nurturing and supporting the start-up ecosystem and an enabling role by government that drives greater entrepreneurial activity across the city.  Does Bangalore offer an advantage that helps build new businesses? Bharati: The best advantage Bangalore has is the weather. People who move here do not want to move out. It is a very cosmopolitan city that has attracted people from different parts of the country. It has had a science-oriented education. A lot of the original PSUs that were set up here were all high-tech. It had a science and innovation culture in that sense. I think the fact that a lot of MNCs and IT companies set up their offices here, like Wipro and Infosys, created a pool of IT talent, which spurred some of the entrepreneurial ventures.   What are the most important inputs that a city can provide for entrepreneurs,what does Bangalore provide? Raja Kumar:Bangalore has a legacy advantage. If you look at the Silicon Valley, it took them 60 years for the right kind of ecosystem and culture to develop. The first venture capital fund was started by Indian institutions way back in 1988 and was headquartered in Bangalore. The big wave of venture capital happened when the Silicon Valley was booming and many Indians were doing start-ups in the valley. And almost 60 funds, somewhere in 2000,directly and indirectly had a presence in Bangalore. They were literally imitating what was happening in the Silicon Valley. About 50% of the venture capital fund and 40% of private equity today is getting invested in South, mostly in Bangalore,Chennai and Hyderabad. For sustaining entrepreneurship,we need skilled technical entrepreneurs. Those came from public sector companies such as BEML, BEL, BHEL, HAL and institutes like IISc. These were the existing advantages for Bangalore. Today, if any automobile company has to set up their operations in Asia, the first place they will choose is Sriperumbudur in Chennai. There is a similar ecosystem for Tech companies in Bangalore.  So what are the missing links and gaps that need to be filled? Who has to play the role? Raja Kumar: What is required for a perfect ecosystem is skilled people coming from large companies to take the entrepreneurial plunge, good source of capital and exits for entrepreneurs and also for the investors to make money. It is early to say why we dont have perfect ecosystem in Bangalore. Take Silicon Valley, large companies collaborated with start-ups offered their clients cash to buy these start-ups. Cisco alone has spent billions to acquire start-ups. Hundreds of start-ups have been acquired this way. Bangalore is also hub for large tech companies, but they are not adopting that model. They have billions sitting in the balance sheet in cash,which unfortunately is being deployed in money market and mutual funds. The real cash they have is in stocks,which are worth billions of dollars. There is a gap in venture capital, because people are not able to exit from small companies. K Ganesh: I think it is unfair to shift the blame to large companies in India or abroad. Companies as an example make a habit of acquiring start-ups.  There are multiple reasons for it. One is that they want to take up competition. Two is that by acquiring ten such things, one of them could be that defining product the product of the future. But I think we are shifting the blame here when we are saying that exits are not happening and the ecosystem needs Indian large companies to acquire.The problem here is with the venture capitalists. They are acting like banks and private equity. They are not willing to take the risk. Everyone wants to do private equity. One of the venture capitalists and a good friend of mine left early-stage investing to focus on public markets. Great for them,public markets are good. They want well-cooked meat. The lack of venture capitalists in India, in the truest sense,is the problem. Bharati Jacob: Strangely,I somewhat agree with Ganesh. What is somewhat missing in the ecosystem is that Indian enterprises do not buy local products. They do not support and take the risk of buying local. Whether you look at Titan or Britannia or any of the large corporates, they do not buy Indian. Also, the CIO of a company has never been a strategic position. Technology is never seen as a strategic tool. Marketing and finance are seen as strategic. The CIO never has the business perspective and is not willing to take risk of buying from an unknown start-up that is developing a product. Till we bridge this gap, we will see fewer tech companies emerging out of India.    What about the need for domestic funds in Bangalore Raja: Silicon Valley is the only place where failure is celebrated, that kind of perfection in the ecosystem will take time to come here. However, access to capital has now improved tremendously. Bangalore has become one the important location for investments, especially in the area of real estate. Even though VCs may be many in India, around 90%-92% of the capital come from overseas investors and institutions. We are not able to raise risk capital from Indian banks and institutions. Government can become the facilitator in this process. Is there a market in Bangalore A Future Ganesh: In terms of entrepreneurship, Bangalore is still the best. There is no doubt about it. In terms of availability of technology, people and resources. The lack of VCs and early-stage risk capitalists are small issues. It is natural for entrepreneurs to go where the VC fund is, and the VC fund will go towards technology. But I see a lot more coming up now. Opportunities are great. Could you talk about the opportunities in the non-tech space Bharati: Before I get on to non-tech, I think our tribe is getting bashed here. There was a lot of talk about venture funds not taking risks. Most of the Indian tech companies in Indian market are primarily service companies. There is not a whole lot of R&D happening. In services you want to see early profitability and there isnt a lot of money to invest in R&D. I wont call Bangalore or India an innovation capital. But that doesnt matter. We do not have to create a Google or a Facebook as long as we are able to create valuable companies that solve existing problems. Sanjay,you had said that the first 25 were easy to hire and then it wasnt so. Sanjay: I dont think we should give up on the aspiration to become the innovation capital. We have enough talent in Bangalore and in India to become the leader in the next 10 years in innovation in any form. The advantage that India has which we dont take advantage of is our domestic market size. If you look at what China has done in building an equivalent of Google, I think there is tremendous opportunity to take the Indian domestic market as an initial sandbox. This can give the scale that 100 other countries cannot, use that as a mechanism and then go global. Does Bangalore need to do anything differently Ganesh: Media should celebrate failures. We should learn to celebrate failures. They should write about the number of failed patents from Bangalore. Unless we create a culture where failure is celebrated, because there are many people who have started it. The guy who has failed thrice should be appreciated. The fear of failure holds the entrepreneurs back. Secondly, the government should take on the role of seed funding and support early-stage seed fund from the point of view that this is how entrepreneurship should start and jobs will be created. Thirdly, there should be collaboration between academic research and companies working together. Bangalore is still the best, I would say, but still a lot can be done. What will the prescription be then Ganesh: The ecosystem that everybody spoke about is a macro issue. Every city has those problems. Bangalore just needs better infrastructure. There is a high percentage of operating cost and cost of power. Sanjay: In the US all the net new jobs have been created through entrepreneurs. I think government should create innovation funding. We need to use our domestic pool. Bharati:I agree with the need for creating some platform, which could be a secondary market. This could be the SME exchange. But that is again not a Bangalore issue. We need close collaboration with academia, industry and research institutes. But the problem is, I have seen a gap between what commercial reality and research project is trying to do. Dont blame just us. I dont agree with government starting an innovation fund. Raja: Government should not create a fund. It should be an enabler not a direct player.