Sramana is doing a series on Entrepreneurship – Innovation in India for Forbes and requested my perspective about the same. I chose to write down my thoughts as a post and seek out your thoughts about it as well.
When it comes to entrepreneurship in India, for the longest time now, it seems that most of us have been rehashing, repeating and regurgitating the same things over and over again:
“Revamp Education system”, “Lack of funding”, “No ecosystem”, “No product companies”, “Indian mindset and culture”, “Bureaucratic red-tape” and many other such reasons.
Its time we really took a deep, hard look at what is the current state of entrepreneurship in India, what is broken and how can we really fix it ?
In all fairness, I am not on ground zero. And so it may seem as inappropriate to many that I speak of entrepreneurship in India while residing in the US. You might very well diss my opinions expressed below based on the same grounds, and in that case, I welcome your perspective – hopefully we can have a healthy discussion via the comments. In my defense, even though I’m not at ground zero, I have been closely monitoring the startup and entrepreneurship scene in India over the last couple of years. I’ve talked to lots of Indian entrepreneurs, tech enthusiasts and VC’s over this time – enough to form an opinion.
If someone who’s totally ignorant about the Indian market walks up to me and asks me about entrepreneurship in India – my answer to them would be that its more hype than happening. The awareness about entrepreneurship is definitely increasing incredibly, but not enough converts yet. Lots of wannapreneurs, but few actual entrepreneurs.Again, my goal isnt to ridicule or point fingers, but rather narrow down on what’s broken.
Some of the most commonly attributed reasons for the lack of entrepreneurship in India:
Lack of funding:
Is lack of funding that much of a big deal really ? The cost to do a technology startup has gone down drastically. Reduced hardware costs, bandwidth costs have dropped, cloud computing and open source technologies make it really cheap to launch a technology startup. Unless you are launching a capital intensive business, why should you really need outside funding for doing a startup ?
Look at the Ycombinator model – $5k – $10K per startup, which is literally peanuts if you need to survive in Silicon Valley. Why cant Indian entrepreneurs be cheap in a similar way ? Why not bootstrap ?
If you would have made this argument 5 years back, I’d probably have agreed. But over the last few years, the startup ecosystem has improved by leaps and bounds. VC’s have entered the Indian market, events and conferences are helping the startup community to network and converge, B-plan competitions on various campuses are raising awareness, an active and vibrant community is forming around entrepreneurship.
While I agree that some things in this aspect are not as smooth as in other countries. However, most of the entrepreneurs I talked to did not cite this as a major hindrance as part of their entrepreneurial journey. Hire a chartered accountant and he will take care of majority of the initial process of incorporation, taxation and other legalities.
No Product Companies:
I for one dont really buy into this argument. While I agree that product companies may offer long term sustainence value (while current outsourcing focused services companies are simply benefiting from the cost advantage), but then entrepreneurship is still entrepreneurship – be it a services or a product company.
Below are some of the reasons that I personally think have a strong impact on entrepreneurship in India:
If you look at the success of Silicon Valley, one of the key factors that was instrumental in shaping it was Stanford & UC Berkeley. Ditto is the case with Israel’s Technion. I strongly believe that education, innovation and entrepreneurship go hand in hand – especially technology innovation. While the IIT’s have immensely successful alumni, the IIT’s have not been able to create a fertile hotbed of innovation & entrepreneurship in their own backyard.
At the same time, we need to encourage out of the box thinking as part of our education system. Rote learning can only get us so far. We need to ramp up coursework so that student skills remain in sync with the rest of the market. When Stanford and other universities are teaching iPhone and Facebook app related courses, teaching Cobol & Fortran to Indian students would be stupid in today’s age. Students should be encouraged to consider entrepreneurship as a viable career option. I believe this to be the single biggest factor that could foster entrepreneurship in India. Young college graduates are at an age when their inherent risk is at the least to becoming an entrepreneur. Educating them early enough would also give them ample time to shape up their skills and experience that can prepare them for their entrepreneurial journey. We also should make it easy and acceptable for students to take sabbaticals from their degree coursework. Currently, this if frowned upon in Indian society — we should try to make people more accepting of it.
The NEN Foundation has done a good job at increasing entrepreneurship awareness across various campuses. However, when you take a quick peek at some of the questions that are asked by some of the student participants, it just boggles your mind. Few are requesting ideas, several requesting funding even before doing any analysis of the idea and several others simply leave you in sheer disbelief. One common aspect across most of the questions is that they are looking for handholding. And I think that really needs to change. I’m not sure if we’re (including mainstream media that has glamourized stories about entrepreneurship and VC fundings) sending them the wrong signals – but if you think all information, market research and other info will be served to you on a silver platter, then probably being an entrepreneur is not in your best interests.
We missed out on the technology innovation bus, but if we dont really ramp up our education system and associated R&D – innovation, we might end up sitting on the sidelines of the cleantech wagon as well.
Lack of Good Mentors:
India does not have a large pool of successful entrepreneurs who have built global level companies and are keen on mentoring the next generation of entrepreneurs. From a lot of entrepreneurs that I’ve talked to — they were more desperately seeking good mentors as opposed to funding.
We probably need someone to lead & pave the way just like what Yossi Vardi did to Israel and what NR Murthy did to the outsourcing market in India.
Lack of M&A activity:
This I say just from the technology market. M&A is just not happening in the Indian market. Consequently, the already existing portals, news sites get a chance to launch their own services without any strong startup getting an opportunity to establish itself.
These are the three things that I think have the biggest impact — but then, there’s a good chance that you might disagree. This is a highly subjective topic and everyone has their own convictions about it. I think when it comes to technology entrepreneurship, we should try and do a detailed case study of Israel. The country has just a population of 7 million, hostile neighbors and high taxes. Yet it boasts of the 2nd highest concentration of startups just after the US. They’re definitely doing something right. And that’s what we should try & emulate.
What are your thoughts about the topic ?