Entrepreneurship in India - the future looks bright

We are a nation of entrepreneurs, by necessity if not by choice. Our innovations extend well beyond the often-quoted “Jugaad”. Almost a century ago, we perfected supply chain management to get home cooked meal to office workers through a six-sigma rated “dabbawala” service. In the 1950’s, we reconfigured old Harley’s to start the phat-phatiya taxi service. In the 1970’s we made quality eye-care affordable through the Aravind Eye Hospital. And in the 2000’s, we sent a mission to the moon at 50% of the costs of other nations.

On the technology side, one of our earliest innovations came with the founding of Hindustan Computers Limited (HCL) in 1976, the same time as Apple and 3 years before IBM’s PC launch. The story of the six DCM engineers who quit their jobs and, in the absence of funding or access to customers, sold teledigital calculators and channeled funds from this venture to build microcomputers, is well known today.

India has been innovating since a time when almost all “essential ingredients” of entrepreneurship were absent - capital, institutional support and even well-developed markets and customers. But are things any better today?

The past decade has seen the emergence of angel funds such as Mumbai Angels and Indian Angel Network that provide financial assistance and advice to entrepreneurs. In true spirit of angel forums, both have consistently backed even ideas on paper, and helped entrepreneurs turn them into reality. Another recent source of seed funding has come from corporate venture funds such as One97, who provide seed funding in the mobile space. Traditional sources like personal savings, friends and family continue to dominate seed funding in India.

At the same time, the cost of tech entrepreneurship has declined - SaaS and cloud computing have made it possible to launch new ideas without investing in servers or distribution channels.

Today, entrepreneurs can launch with limited funding, and stretch their funds over a longer period.

Though capital might seem most critical, the importance of a strong, entrepreneurial team cannot be overstated. In fact many VC’s will provide funding for an OK idea being executed by a brilliant team.

Today’s generation is dispelling long held notions - that people prefer stable, low-risk careers and are not willing to risk the social stigma of a failed venture. Across the country in our top universities, entrepreneurship cells have becoming popular. The recent successes of companies such as MakeMyTrip and SKS, where employees have become millionaires overnight due to their stock options, have led to more people willing to chart their own path. This is reflected in the high caliber teams we see today - ranging from new graduates, to seasoned execs.

Creating a good product is only half the battle. Getting people to buy the product is the key to success. India now has the world’s third largest internet population, behind the US and China. This statistic is only going to get better with the launch of WiMax/LTE and 3G services. Even more importantly, with 500+ million users, the mobile phone presents a high growth market for startups to innovate in.

So what does the future of Indian entrepreneurship look like? What can we do to ensure that the next Tencent, Google or Baidu to come from India? I feel it comes down to welcoming new ideas, providing better support to our entrepreneurs and a more active government involvement.

In Silicon Valley in California, engineers who have tasted failure get quickly hired by other companies. Why? Because there is a belief that while “Success is a good teacher, failure can teach even better”. This mentality permeates the Valley, and consequently people are unafraid to quit their established jobs to explore a new idea. This is exactly the thinking we need in India, so that entrepreneurs don’t feel they are risking their entire lives by turning down a lucrative job offer.

Angel funding in India still has a long way to go to when benchmarked against established powerhouses like the US, where angels provided $8.5 billion to 25,200 ventures in the first 6 months of 2010. Angels not only provide much needed capital, but also valuable guidance to help startups, well, start up. The Indian investing community needs to realize that investment opportunities in the later stage are directly dependent on our efforts to nurture startups in the seed stage.

Lastly, similar to the Small Business Administration in the US, we need stronger governmental support to provide capital and resources to startups, and to ensure Indian entrepreneurs continue to start, build and grow new businesses.

Alok Mittal, Managing Director

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