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Fostering entrepreneurship in India - the missing links in the ecosystem

March 24, 2007 · Posted in Entrepreneurship

BusinessWeek has a story on the successful entrepreneurial journey of Sai Gundavelli, an Indian immigrant entrepreneur in the USA. In the interview, Sai says

There is no way it is possible to break the entrenched social system and the cultural barriers over there (in India). When an immigrant comes here and sees that so many opportunities exist, he becomes quite ambitious.

There are countless other stories of Indian immigrants becoming very successful entrepreneurs in the US. And almost all of them attribute the entrepreneurship ecosystem in the US as a significant factor in helping them to get where they are today.

Well, the Indian entrepreneurship ecosystem, which was nonexistent for a long time is finally coming together. The various pieces that constitute the ecosystem are slowly falling in place. The early stage VC funds, the angel investors have emerged. Proto, the showcase event for emerging Indian startups, is getting widespread acceptance in its first year of existence. Mentors, incubators, b-plan competitions are all germinating.

However, in my opinion, there are a few major impediments to this ecosystem transforming into a dynamic, vibrant entity.

1) The education system and the outlook of students.

Consider the figures below -

In 2006, only 1 out of 182 graduates from IIMB opted to start his own venture (via DH)

In 2006, only 6 out of the entire graduating class opted out of the placements to start their own venture (via HT)

In 2006, all 35 students of the graduating class of IIIB IT school were placed in MNC’s. (via IITB).

In 2006, 327 students out of the graduating class of 345 opted for campus placements. It isnt mentioned if the remaining 18 students started their own venture. (via ISB)

If these are the numbers for the premier educational institutions, you can imagine how little emphasis is given to entrepreneurship in the remaining academic institutions. The IIMs and ISB keep glorifying all the 6 figure pay packages that their graduates are being offered. Instead of getting into a race of attracting the highest pay offers, why not encourage the graduates to break away from the mould and become entrepreneurs ?

In my opinion, the education system in India needs to be revamped. Students need to be encouraged to think big, think different and think beyond the regular aspirations of a well paying MNC job. Entrepreneurship and innovation should be included as part of the curriculum to fuel and drive the passion of students who are interested in starting their own venture. The origins of majority of today’s tech behemoths lie in universities such as Stanford, University of California Berkeley and MIT. Colleges in India should realize this and act as a conduit - incubator for students who are interested in venturing on their own.

On the bright side, there have been some recent efforts in this regards - IIMA has started a campus placement deferment program - where graduates can attempt their own entrepreneurial ventures and if they fail, they can come back and participate in the campus placement program. Several IITs have started entrepreneurship cells to encourage entrepreneurship on campus.

2) The recent boom of the IT offshoring - outsourcing industry.

While the IT offshoring industry has brought in immense wealth and put India on the world map, it has had a detrimental effect on innovation and entrepreneurship. As the offshoring boom continues, the salary hikes continue. As a result, lot of people are becoming complacent with their high salaries and cushy lives to venture into entrepreneurship.

3) Socio-cultural issues.

You may dismiss off socio-cultural issues, but I think they are a major factor in fostering entrepreneurship in India. Leaving the comforts of a 9-5 well paying job and starting your own venture is not very well taken by a large part of the Indian society. Many parents fail to understand why their beta wants to throw it all away and start his own company. Failure may also have a social stigma associated with it.

4) Lack of success stories

One of the most inspiring and motivating things for an entrepreneur can be following examples from other successful entrepreneurs. While entrepreneurial success stories have been few and far in India, this is just a part of the vicious chain that resonates the classic chicken and egg problem.

All these reasons aside, I’m still very optimistic about the nascent startup ecosystem in India. It will evolve with time and slowly the missing pieces will start falling in place. Hopefully, it emerges as vibrant, dynamic and active as the ecosystem in the US.

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2 Responses to “Fostering entrepreneurship in India - the missing links in the ecosystem”

Only six Indian B-schools have noteworthy incubation cells « Startup Dunia - Indian startups and Entrepreneurship on May 20th, 2007 11:22 pm

[...] In an earlier post, I wrote about how educational institutions in India need to emphasize on creating job-makers as opposed to job-seekers. A story on Livemint tries to capture some of the same thoughts on the role of B-schools in fostering entrepreneurship in India. As per the story, of the 1200 B-schools in India, only six have incubation cells that have made some impact. [...]
Ankur Gattani on June 6th, 2008 9:20 am

I’d quite agree.. in IIMC Class of 2008, there’s only one student who opted to start his venture!

Academic institutes aren’t quite keen to foster entreprepreneurs, at the same time I would admire the efforts being put at IIMA by some seriously motivated faculty.

with the national entrepreneurship network pushing hard for motivating entrepreneurs, and the relative ease of web startups, you do have some enthusiasts jumping to be entrepreneurs..