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Entrepreneurship in India

Posted on Tuesday, Feb 3rd 2009

I spoke with a number of people this week, and one comment that came up several times, is that the entrepreneurial ecosystem in India is not coming together as well as it needs to.

Indian readers: Why do you think this is the case? What are you experiencing?

Addendum:

Based on your responses below, I have started several different initiatives:

The Entrepreneur Journeys book series, to give you real world role models and access to Silicon Valley entrepreneurs, their tribal wisdom, strategies, etc.

The series includes Bootstrapping: Weapon Of Mass Reconstruction, which addresses the dysfunctions of seed investing and how to get your business off the ground without external financing.

The EJ Methodology is heavily rooted in using bootstrapping to get an idea validated, and raising money only after it has moved from being an idea to a business. I also regularly teach entrepreneurs to bootstrap their ventures at my weekly online strategy roundtables.

It is my observation that not bootstrapping and not validating their ideas with customers before going out to raise financing is one of the most common causes of the Infant Entrepreneur Mortality (IEM) disease.

And finally, you *must* validate your ideas before spending any energy on building products. Please use the Clarify Your Story appendix of Positioning, How to Test, Validate, and Bring Your Idea To Market, to do so. This due diligence is essential.

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A few I can think of:

- lack of true seed capital. VCs in India are mostly inclined towards late stage.

- lack of mentors who could inspire – very few success stories

- very few good incubator programs

- lack of quality tech talent in India. Mediocrity is available in plenty

- i feel it is important to have a big addressable market and India lacks it despite its large population

- entrepreneurship is generally driven by young people who have the drive and flexibility. In India the distribution of young people coming out of college is heavily skewed towards IT, crowding out other sectors.

-socially still not glamorous though increasingly getting more acceptance

- people who can be active participants in entrepreneurial ecosystem are comfortable in their decent paying MNC jobs. someone needs to reach to them and get them out.

Mav Tuesday, February 3, 2009 at 3:31 PM PT

-Yes, but why is there such a lack of seed capital still?
-Why aren’t angels participating?
-Why aren’t mentors from the diaspora active if India is one of greatest opportunities of this century?

And no one gets entrepreneurs out. Entrepreneurs are the most self-motivated people ever. They normally get themselves out. So the people you have in those MNC jobs are not entrepreneurs by definition.

Young people are changing … I think they are truly interested in entrepreneurship.

Sramana Mitra Wednesday, February 4, 2009 at 8:52 AM PT

Indian thoughts are still ruled by what the society thinks, rather than the individual’s aspirations.

How many family members really encourage starting out a new business?? Atleast dont keep discouraging, pinpointing the failed examples.

Though I admit, the society on a whole is changing a lot, I believe we have a long way still to go, to be matured on this front.

Thanashyam Raj Wednesday, February 4, 2009 at 10:42 AM PT

Good questions sramana. I don’t think I have convincing answers to all of them.

My experience with VCs here has been mostly negative. Even US based VCs look for late stage opportunities and strangely want to act more as financiers than mentors. This is probably because they do not have dedicated teams living close to entrepreneurs – most of them shuttle between India and US and have little time to provide involved operational and strategic guidance. Most Indian VC funds are run by people with no operational experience, I don’t think they can act as mentors anyways, so at best they do is fund late stage and hedge their risk.

I guess we need to see some big success stories in India before entrepreneurial ecosystem blossoms.

“India is one of greatest opportunities of this century…” – I find this claim pretty superficial. Popular argument is about India’s demographics, increasing consumerism,… . What people don’t talk about is that half of the favorable looking demographic is not going to be educated properly, not have good health care and will not have good enough jobs/earnings to be active participant in consumerism. That is why I say that India does not have a big enough local market.

Not sure if all this makes sense.

Mav Wednesday, February 4, 2009 at 12:13 PM PT

I think one reason why we do not see as much tech entrepreneurship in India is because of our education system.

It is more like an assembly line which manufactures working professionals. There is almost nothing in our system which exposes young minds to ‘out of the box’ thinking, or innovating.

I teach at grad college in India, and one trend that I have noticed is that most students are more concerned with grades and getting a job in a reputable company, rather than doing something fun and cool.

Most entrepreneurship is driven by passion and the desire to do something you believe in. I think both these are lacking.

Having said this, there are people who have passion and good ideas and want to strike it out on their own, but the environment to foster such efforts has not exists.

Even in the US, there are more startups and entrepreneurs in Silicon Valley than anywhere else. This is because it has a certain culture, environment, and vibrancy. This environment also plays a role in giving people ideas and giving them courage to do something cool and innovative.

But things are changing gradually. More people today want to be entrepreneurs than maybe 4 – 5 years back.

You may be interested checking out iAccelerator (http://iaccelerator.org/) which is being conducted by IIM Ahmedabad this summer for mentoring startup companies.

I am sure there are many other aspects and reasons why entrepreneurship has not grown in India, but these are some of the reasons I have personally felt in my interactions with people.

Parag Shah Friday, February 6, 2009 at 11:20 PM PT

I think the problem is primarily manifold.

1. I do not know if Indian companies will accept candidates if they fail after doing a startup or did not find the business viable after sometime.

Will the home grown companies accept resumes when someone goes for a startup?

They still do not accept resumes with the gap!

2. Lack of family support:

I think this recession is a perfect time to involve the family members and let them understand that anything can happen.

No matter how hard you try, no matter how well you do you job, your job can go at any point of time. Scandals like Satyam and layoff that has started happening silently in the name of performance appraisal may help them understand.

Startups, I believe, survive more emotional strengths of the founders than technical astuteness. In India, family support is of paramount importance.

3. Lack of acceptability in the society:

It is hip to work for Infy or Wipro. But it is not hip to struggle, sell, work day and night for your own.

It is hip to stay till 4am at somebody’s else company, (though your job may vanish anytime), but it is not hip to work hard for yourself.

I do not understand it yet.

4. Lack of true awareness in the Outsourcing model:

I have respects for people like NRN, Premji. But they too now start telling the truth.

Starry eyed fresh graduates must have the eyeball rolled and eyebrows raised in delight when they see the blue tinted glasses, sprawling campuses of these companies.

But for how long are they going to survive? Next to their company, there might a hardcore product development, but nobody wants to go there.

The lure of onsite travel to see snow is perhaps still strong in Indians. Monetary wise startups pay far more.

5. Lack of proper ecosystem:

In friend circle, learning circle etc. very people have done anything on their own. Also though they are incubation setups by many, a professional with decade of experience might not have the knowledge of how to go with a startup.

6. Half Baked Liberalization:

Liberalization is half baked. Still there is license raj for come cases. Everytime the bureaucrat get in, there will be some problem in India.

Why do not automate various licensing schemes from the govt.?

Spandan Saturday, February 7, 2009 at 10:00 PM PT

Important topic (one that doesn't get discussed much in India), and good discussion.

My take:

1.There are many youngsters across the country with great ideas and the required talent.But unless one belongs to the IITs/IIMs , it is hard to find the would-be entrepreneurs being confident about getting noticed.Labels are very important in the Indian context.

2.The biggest opportunities are in the area of providing services for SMBs, and rural and semi-urban consumers.But the unit cost of delivering a service is so high that one needs to operate on a large scale to have any margin.There seems to be a lack of intent among entrepreneurs to target this sector.

3.The big IT services companies don't mind funding silicon valley companies based on advice from VCs, but shy away from desi companies that are focused on the Indian market.All they do is be a co-sponsor for the many startup events in Blr and other cities.

4.Most would-be entrepreneurs in India, especially the tech crowd, can't imagine themselves leaving the comforts of the cities and moving into towns and villages.We (my self and 2 other friends) were ready to pool in money to seed a venture focused on delivering rural IT services, but the entrepreneur couldn't build a team because none of the job seekers were willing to relocate from Blr/Hyd to a small town.Can't blame them really..

5.Like others have already stated, risk taking is frowned upon in Indian middle class – this attribute is reinforced since childhood and it becomes very difficult to go against it.

My guess is that an entrepreneural eco system such as the one in the valley may never comeup in India.We can hope that a distinctively Indian ecosystem will develop some time in the future..

Rant: The entire educational system, export-oriented business and employment models, pervasive corruption at all levels of the Govt, fragmentation of the polity leading to "cargo-cult democracy"..these are all impediments to the flowering of the true genius of the people. One can not expect 'confidence' and 'risk taking' from youngsters in such a scenario.There will always be exceptions to this generalisation, but we need to make that a trend.I have some ideas, (and I am sure lot of people have ideas on how to develop this ecosystem in India), but the required will and guts is lacking.Most of the talent in India is looking at their paymasters and feeling smug about their pay checks.

Kumar Sunday, February 8, 2009 at 9:43 PM PT

May be majority of us don’t become entrepreneurs due to “fear of failure” and would like to be in the “comfort zone” of working for someone else rather than being on their own.

And as many of you have mentioned real “seed” capital is hard to find in India and all VCs would like to get in after the project takes off or crosses the “pilot” stage. And many people with ideas do lack the seed capital.

Arunn Bhagavathula Monday, February 9, 2009 at 2:33 AM PT

VC community still favour later and expansion stage ventures for funds, a true seed fund is missing and the need of the hour. i had to shut down my venture because of lack of capital!!

Hope that the things get better soon.

Satya Vyas
http://www.satyavyas.wordpress.com

Satya Vyas Monday, February 9, 2009 at 1:09 PM PT

But why aren’t entrepreneurs bootstrapping more?

In Silicon Valley they are … people are trying to avoid a lot of outside capital infusion early on.

Sramana Mitra Monday, February 9, 2009 at 1:42 PM PT

If you look at thriving businesses around you, more than idea, the operations plays a significant role in the success and the profitability. This somehow makes disruptive innovation/entrepreneurship few and far between.

Service and trade are safer bets. Service is limited by reach, and trade is boring than a job!

Because of the importance of operations, progression towards innovation is roughly like:
trade -> Service -> produce -> incremental innovation
This is a ~20+ year timeline.

If there is a way to start with ‘produce’ without much friction the timeframe can be brought down.

Balaji Sowmyanarayan Monday, February 9, 2009 at 6:07 PM PT

It is the mindset that has to change. In India, the focus is too much on services rather than products. If you look at students graduating today, when they think about working in computers field, they think services. Not many people think about products. Compare this to the mind set of Silicon Valley which is the opposite.

If there are product focused startups bubbling up, capital will eventually flow in and successful companies will inspire others and slowly the ecosystem builds. This does take time, but I am betting on the current slowdown in services industry forcing people to think about products.

Raju Vegesna Monday, February 9, 2009 at 6:20 PM PT

Hi

I guess Im late for your article, but anyways.

Entrepreneurship in India is coming of age, but the reason why it isnt all coming together is the lack of mentorship and networking and absolutely no focus on marketing and packaging.

Shitij Monday, February 9, 2009 at 6:56 PM PT

[...] interesting discussion in the comments. Feel free to add your two [...]

Entrepreneurship in India | DesiPundit Monday, February 9, 2009 at 9:00 PM PT

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Entrepreneurship in India Monday, February 9, 2009 at 9:12 PM PT

Sramana,

Entrepreneurs are bootstrapping in India too; not because they want to avoid capital infusion early on, but because bootstrapping is the only way to startup for many.And then there are many who can’t even do that..they are dependent on monthly salaries, and can at best be part time entrepreneurs.The idea of having a steady revenue stream in one area, and then bootstrapping in the core area is good, but except for Zoho, I haven’t seen that model work well.

Raju,

I am surprised that you mention mindset.Why are we still talking about services and products separately? Aren’t we doing software as service now a days?I can see a synergy between products like Zoho, platforms like Novatium, and service providers like BSNL – the entire package can be a service delivered throughout the country’s rural and semi-urban areas. I was explaining facebook to my dad’s cousin in the village, and he asked me if there are any social networks for farmers worldwide :-)

Kumar Monday, February 9, 2009 at 9:25 PM PT

India still does not have a sizeable, loosely interconnected ecosystem that Silicon valley has. This ecosystem is not only about VC’s but also about an entreprenurial culture in general. Especially in technology, you need to have success stories, what we basically know as the big bangs in terms of popularity and success. In India, those who have the resources dont have the acumen to think big whereas those who have the acumen usually dont have the resources. In a rich entrepreneurial ecosystem, a good idea would have investors running after you. On the flip side, there are not enough big ideas either precisely because VCs arent investing in them.

Bipin Monday, February 9, 2009 at 9:32 PM PT

I think innovation is at the heart of entrepreneurship, and for that we have to build an environment for experimentation, allow failures and encourage people to take risks for what they believe in. While there are other factors, I think this is the one that has turned into a vicious cycle. If we can break this cycle, I feel the other things will fall in place.

The longer version of my thoughts on this – http://ifacethoughts.net/2009/02/10/entrepreneurship-ecosystem-in-india/

Abhijit Nadgouda Monday, February 9, 2009 at 10:02 PM PT

I broadly agree with some of the comments made by Parag and Spandan. In my experience with MBA/Eng institutes and entrepreneurs, I notice two things, one which I am discussing here:

1) Thinking pattern: One of the biggest challenges that we face in India, even as I talk about entrepreneurship across campuses, is the “low glamour quotient” for entrepreneurship. A short survey which we undertook sometime back at the IIMs and their parents (through telephonic interviews) reveals two sides of the story.

a) Parents : Brought up in a closed economy, most parents tend to think that entrepreneurship is for two classes (a) for the traditionally business families and (b) for the poor and uneducated low class. Both these classes according to them, have no other options available to them, and hence do wander in to the business sector. According to them, starting up a small business/trade, though it appears risky, happens to be the least risk option for the low uneducated class, since they have nothing to lose compared to the middle educated middle class, who have everything to lose, including their dignity.

For parents the most important aspect about their children is security. And they translate security to working for an established company, which gives access to a steady fat income and hence the “brag factor” among their relatives and neighbours. Middleclass parents think that education is the best insurance and the best way to put that in to use is by working for someone else – the best way to reduce any direct risk on their children. Finding a suitable mate is also seen to be occupying a large part in their choice of professions for their children. Even now, access to good mates are reserved for those who are in employment, rather than in risky business sector. This also leads parents in discouraging their children away from any entrepreneurship dreams.

b) Students: Students who are brought up in the open economy think that entrepreneurship is glamorous, but not for them. For them entrepreneurship is something that need to be taken up only after you have had several years of work experience and huge sums of money backing you up. MBA education is clearly a ladder towards a high paying job in one of the big companies. A big company, be it Indian or foreign, gives them that required “brag factor” among their peers and access to large salaries (for example a job with the Day Zero company is perceived to be of much higher respectability than getting a £5 million VC funding for a business plan). Entrepreneurship puts before them the economic challenge of “foregoing the present pleasure of employability with a large company with a large salary vis-à-vis an uncertain but large pay offs in the future”. A very large percentage of them opt for the former.

Sangeeth Varghese Monday, February 9, 2009 at 11:06 PM PT

??????-????.com
xn—-0td7b5djin8a8gxb1f.com
Mobile coupon. Com

I think the mobile web in India will be in English and in native languages.

Here is my best Hindi name..

if we are 50-50 partners, the manager would keep 90% of of the first $250,000 we gross, so they have enough money coming in to run and fund that business. I would get 10%. From 250K-500K, my share would go up to 20%, from 500K-$1 million maybe 30%. Once we get over a million in revenues, the managing partner gets 55% of the gross. The guy who does the work should get the most money.
my email address is steve.epstein AT idnoptions.com

proof is in the pudding….and the first step forward ?????

Steve Epstein Monday, February 9, 2009 at 11:45 PM PT

Sramana,

Honestly speaking, I see things changed to a large extent over last 12 to 18 months. When I came back to India in Dec 2007, I saw the startup community disjointed, however, with startup events like Proto.in, POCC, startupdisco, and many many other local events that get the entrepreneurs together. Not only do they network, many startups have even collaborated with each other to form a win-win partnership.

So while Indian entrepreneurial ecosystem was fragmented 12-18 months back, now the story is quite different…

Arun Tuesday, February 10, 2009 at 12:11 AM PT

Sramana,

I beg to differ with your viewpoint. There is a lot of entrepreneurial activity happening in Bangalore which is heartening to see. One needs to know the circles where these goes on. I believe the ecosystem is developing well and at a good rate.

The only problem I see is that there is no good interaction between the academia and the industry. It does happen once a while however its not widely prevalent as much as it should be.

However this scenario is slowly changing and in a short time from now you will see very good organizations emerge out of India.

Venu Tuesday, February 10, 2009 at 12:51 AM PT

We have to learn to understand, recognize, appreciate and reward individuality. The software biz and the outsourcing biz have taught us to huddle – not to strike out. We first have to put ourselves through the grind – know what it is to persevere – build the stamina physically and mentally. Like Serena Williams, have OCD for something!

Sum Tuesday, February 10, 2009 at 1:26 AM PT

Venu,

According to Pradeep Gupta, Presient of TiE Delhi, and CEO of Cybermedia, “there are 150 incubators, of which 40 are very good incubators”. The IIT Bombay and Madras incubators, Pradeep claims, are excellent.

I’d like to hear from ventures who have been incubated in those incubators … are there any among readers?

I am also very interested in hearing from the Bangalore entrepreneurs who are making headway.

Sramana

Sramana Mitra Tuesday, February 10, 2009 at 11:40 AM PT

I don’t have a macro level view on this (just yet). However, here is one observation for tech startups. A key layer that is missing in the Indian entrepreneurial ecosystem is mid-level management.

If you compare the Silicon Valley ecosystem with that of Bangalore, you’ll find that very few people want to be a “hands-on managers.” Everybody wants to be the “boss,” resulting in too many Chiefs and not enough Indians (cheap pun intended).

This mid-layer is the one that has produced deeply knowledgeable systems architects, product managers, program managers, etc. in the Valley. Perhaps nowhere is it more important than in software where dev environments are changing so rapidly. If you have been hands-off for anything more than a year or two – you might as well be retired.

More observations available on my blog.

Ramneek Tuesday, February 10, 2009 at 12:02 PM PT

Having done several successful startups in India, I still feel there is a massive problem or should I say a series of them

1. The so called funds are a mess, there maybe millions sitting with the Indian VC’s but are the Indian VC’s really startup focused, I mean how many running these VC’s see a vision, they are very low risk, unlike the ones in the US. I am not sure how much money in the US backed startups BUT I know alot of it was a gamble, it had to be. SO in short VC’s need to be a little more open minded

2. VC’s will never in India fund a blue sky idea, unless its been done before in the west they will not fund it, see how many social networks got funded once facebook got of the ground…ask yourself would a idea like twitter or facebook ever have been funded in India

3. There is too much emphasis put on a successful business model, always the numbers, can someone tell me what facebooks business model is, or twitters, again this comes down to the risk

4. Always the problem of PC penetration is brought up, correct me if I am wrong, but when hotmail, netscape, ebay etc started internet was not really booming across the US either, the same goes for the UK

5. Then there is always the buying power, and rural india, and content being relevant, how can the content be relevant unless its is tried, failed and then changed, we all want to come up with the perfect business, how is a startup supposed to do that, take some risk, instead of sitting with money in the bank, after all there are hundreds of people with ideas who are taking the risk

6. the ecosystem is always blamed, BUT I think it does exist, but with the same faces again and again, I was at an event this weekend in london called Launch48, a bunch of people got together to build a company in 48 hrs, awesome, no formal events nothing, just turn up, I know this happens in India, but the main press does not cover it

7. And that brings me to the main press, they will print on the front page of ET if reliance sneezes, but they will not support a startup, UNLESS its an event of their own, so that they get promoted or seen todo something about it

8. Freelance culture in India does not exists, in the UK/US there are more freelancers, people who work on multiple projects, and hence can lend a hand when they want

9. There are startups who have received millions in funding, and others who cannot get 100K, it would be interesting to know what the difference between these is.

10. Large companies copy your idea, look at all the large portals, they have in the last 5 years , built blogs, IM, games etc etc, any good idea they see, instead of supporting it, offering access to their customers, they simply think they can copy it, look at indiatimes miserable attempt at blogging. What they do not realise is that you may copy, but you dont have the passion the original entrepreneur does, why dont you just incubate the idea with them.

11. Startups do not use each others product, this is quite important, if all the startups, VC’s, entrepreneurs, ie the so called ecosystem, ditched old school products and insisted they would only use each others products good/bad, then they would actually be helping each other, eg all startups ditch webex and use dimdim, or all ditch ppt sharing via email, and use slideshare, or some other mobile app or whatever.

12. Incubation, I have not really worked out what this means, but I think something would help, even things like launch48, but do we need offices, telephone lines, nope what we need is a place where hundreds of startups can all work together in one large environment, it creates the energy and stops u feeling alone, why does a VC not just put 10 million into several centers, which can house 20 startups each…

14. Hiring good people is a pain, but again this is a culture thing, and cultures only change if people are prepared to break the mould, so this is not a complaint, but a call to action, stop complaining and take a chance.

15. PR / Mkt comps are useless, particularly the latter, none has a business model which works for startups, they will not even talk to you, I spoke to several…or should I say tried, but all they could come up with was “what’s ur budget”

16. Ideas in India exists, the people are there also, but the problem is the mentors, most who have done it, do not really want to do it again….which is fair enough.

17. The risk is not equally spread, the entrepreneur takes a risk, but does the VC, I say no. this is why we have marriage sites, recruitment sites, and classifieds, something they all understand, try explaining a LBS system to them, and they will say, we have few mobiles with GPS….maybe if the app was there, then a few more would buy them….

18. Find me a VC who would understand investing in a ebay, when internet pen was low, or a facebook when instant messaging was already big, or a twitter when SMS is the “in” thing, or zimbra, when web based email was controlled by yahoo/MS and I’ll show you a VC who will make money in India

Iqbal Gandham

Iqbal Gandham Tuesday, February 10, 2009 at 12:09 PM PT

VC has not succeeded in most countries, the US is an exception. This is partly because the VC fund managers do not have the needed skills (my website has a paper on this) to help their portfolio companies in India. I think the bigger problem is that the high cost of capital given the market’s size discourages entrepreneurs from thinking big or long-term.

Rafiq Dossani, author of India Arriving (AMACOM 2007) Tuesday, February 10, 2009 at 1:33 PM PT

My sense is that few Indian leaders have thought through where new jobs are going to come from in the 21st century – the Indian IT Services sector has benefited from U.S. Companies shifting established jobs from here to there. That only happens once – it is not self-sustaining.

India derives a much smaller proportion of its GDP from exports than China does – Indian companies need to be global players, or they won’t remain competitive.

As you talk to people, ask them when they last visited a Chinese university. Did they know that most top Chinese universities have faculties of entrepreneurship that are vastly superior to those at the best Indian universities?

While India’s entrepreneurial activity index is close to that of the U.S. (around 14%), China’s is at 25%.

Bob Compton Tuesday, February 10, 2009 at 1:54 PM PT

Sarmana, I have mixed views on the question you have raised about Indian Entrepreneurship of not coming together the way it should be.

Firstly i can say from my example and few of my colleagues examples, who are actually working hard to establish themselves as entrepreneurs,that there are few good signs in India today for Entrepreneurs. Where ever i go today i can easily find people talking about opening new business,planning to bring new products to market (however not upto very high standards),building new software,setting up new retail shop etc.
But yes saying this i would now say that road on which we are walking is not an easy and reasons are numerous.Some of them which i can point out briefly:
1)The lack of mentorship and motivation from the environment which we currently work in(the MNCs we are currently employed at).
2)The bureaucracies and attached nuisances for running a business in india.
3)Lack of fund.
4)No social security or society welfare on which you can leave your dependents and take risks in new business.
5)And atlast the mindset of the our society which is that people form non business families can’t be an Entrepreneur. Entrepreneurship in india is always thought as something which runs in blood and can’t be attain through education and learning.

Saying all these,i am still optimistic that things are getting better and i hope for better future for young people like me who wants to bring some change in society and country by bringing Entrepreneurship culture.

Regards,
Rajesh

Rajesh Singh Tuesday, February 10, 2009 at 6:11 PM PT

We need a good dose of education first :
1. Excellence
2. Quality
3. Strength
4. Freedom
5. Individuality
6. Passion
7. Abundance
8. Deep thinking
9. Stamina

MS Tuesday, February 10, 2009 at 8:29 PM PT

I am continuing my earlier discussion, where we have seen that the next big challenge is our current education system.

a) Presence of Forced Uniformity: Though our country takes pride in diversity, when it comes to education we believe strongly in creating and propagating a uniformity. For example, MBA education in India focuses on building a uniform set of students who think alike (for example fresh IT engineers), rather than the diversity path (students from multiple backgrounds of education and work experience) followed by many western B-schools. Indian Colleges and students view that this uniformity helps in better and easier collective employability, compared to a western system, which focuses on individual value add that every student can bring to the system and a collective network of learning. A typical western B-School gives importance to the means, which is constant learning (collaborative learning, team work, individual value adds), compared Indian B-Schools’ focus on the end, which is employability. This probably is leading to their differences in thinking regarding uniformity/diversity of students.

b) Absence of critical thinking: From elementary school onwards students are told to focus on absolute answers and absolute learning rather than a critical evaluation of pros and cons of different approaches. Be it History, Geography or Ethics we are always taught to think in “black or white”, “yes or no”, rather than think critically about the “whys” of every answer. Our system again focuses on creating a set of people who think alike on issues rather than a group of individuals who think and arrive at solutions. This again contributes to our herd mentality, where everyone does what everybody else is doing.

Sangeeth Varghese Tuesday, February 10, 2009 at 10:13 PM PT

Sangeeth, Yes, the whole business of rote learning is a total disaster for creating innovative minds. I fully agree with your analysis above. Sramana

Sramana Mitra Tuesday, February 10, 2009 at 10:39 PM PT

Great question and discussion, Sramana.

My best answer is just that there is a complete lack of people who can face failure in all parts of the ecosystem. We produce great armchair experts, but really not too many people who can face up to reality. We tend to give it a try, and when it doesn’t click immediately, talk our way out of it.

Entreprenurship is about risk and failure. Unless you face full-on the chance that you ( or your investments) are going to fail, that people are going to let you down, that sales will fail to materialize, that customers won’t pay your invoices, you won’t have the rigor in your planning or execution that you need to have, nor will you be able to recover from failure.

I think that old Colonist, Rudyard Kipling, said it best :
” If you can dream – and not make dreams your master;
If you can think – and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
…..
Or watch the things you gave your life to, broken,
And stoop and build ‘em up with worn-out tools ….”

then – why, you’ll be an Entrepreneur, my son. ( ok, so he said it a bit differently).

Jyotsna Pattabiraman Tuesday, February 10, 2009 at 11:18 PM PT

Well, lots need to be done before we can even say ‘entrepreneurial ecosystem’ here in India. However, there is a great potential for things to change. The change will not happen if WE are not involved in it.

NSRCEL (at IIM, Bangalore) has hosted BarCamps which lead to HeadStart (www.headstart.in). HeadStart conducted its first StartupSaturday (www.startupsaturday.in) here and now the movement has spread to 6 cities within a year. Some of you who are interested can attend them. It happens on every second Saturday.

Regarding Incubators, NSRCEL (where I work) has been quite successful in incubating some good companies. However we realise that we can physically incubate only a fraction of those that require incubation. Hence we are going to come up with a “virtual incubation” process so that we can reach out to a larger geographical area.

Many government depts. have realised that angel investing is weak here and have some projects wherein incubators can give support to companies. Currently about 1.5 crores per incubator has been sanctioned (15 incubators). Yes, the amount is very tiny but the wheel is in motion. This amount will increase when more depts. initiate such programs.

All in all thanks to the recession, time is really right for entrepreneurship.

Suresh Tuesday, February 10, 2009 at 11:33 PM PT

[...] And finally, a great discussion on the Indian entreprenurship ecosystem on Sramana Mitra’s blog. http://www.sramanamitra.com/2009/02/03/entrepreneurship-in-india-2/ [...]

Alpha , FICCI-Frames and Sramana Mitra « Larger Than Life Wednesday, February 11, 2009 at 1:00 AM PT

Adding on to Suresh above, I would say that the tepidity in the ecosystem comes down to cultural, infrastructural and financial factors.

Into the cultural factors, I would slot that issues that plague anyone that wants to complete a project in India. Lack of accountability and precision are two of the factors that I hear stated the most often. Entrepreneurs have to overcome these ingrained behaviors not only in themselves but in the people they employ, which can be a frustrating, deeply demanding process.

The next is infrastructural. In this category, I would put physical infrastructure as well as the legal backing to protect small players. In terms of physical infrastructure, traffic snarls, powers outages and the like add to the cost of doing business. And on the legal side, although the requirements from the entrepreneur are immense, there is no protection for the small player in return. I recently heard from a friend who’d invoiced a large, marquee Indian corporate. She had to call several times, literally pestering the company to make their payments. They finally got their check seven months later ! Some would say she was lucky to have received her check at all.

The third is financial. Unless you have a nest egg or are living off your parents, the cost of failure is high, especially in these tough times. Most Indians would rather pull back than risk and lose their all as entrepreneurs. These in turn to very very few people ready to take on this monstrous system, and fewer still who will succeed.

India is not a place for people who are looking for quick wins. As an entrepreneur myself, I feel that only by keeping my eyes open to the truths can I make the right decisions. And yes, it helps to think for yourself, not believe everything you read in the press : )

Jyotsna Pattabiraman Wednesday, February 11, 2009 at 1:47 AM PT

Hi

I forgot to mention

A. Students coming out of uni are really not good, find me a student who can code using RoR in India. This means that “cheap” employees which all VC’s refer to DO NOT EXIST, this is no good cheap labour in India, hence more money is needed NOT less than US startups

B. By the time the poor students become good, they have usually got some big name employer like infosys on their CV’s, which means they again want a higher salary

VC’s need to realise gd people in India are rare, and hence cost more than in the US, not less

Iqbal

Iqbal Gandham Wednesday, February 11, 2009 at 3:59 AM PT

Hi,
Just came across your blog & thought of responding..to start with I did not like your reference -> ” lack of quality tech talent in India. Mediocrity is available in plenty

to bring you up to speed & being not successfull in terms of getting VC’s interested myself here are few pointers i think might be interesting to dicsuss on :

1. no VC in india is interested unless your startup is making some money already to start a dialogue
2. no VC talks unless you have a IIT/IIM background blantly pushing rest talented people
3. no confidence in their own brethern when it comes to having confidence in their technical capabilities ( including your reference about it)
4. people abroad have a notion that we in india are basically a no-brainer breed just coding on US instructions (blame NRN for having started the offshore/outsourced/consulting model)
5. lack of companies allowing innovation & product based initiatives (no product based success stories)
6. no one wants to work on equity model making hiring resources difficult for any startup who has no VC or angel backing
7. lack of marketing/sales experience & knowledge
8. no basic knowledge & government support on how to start a company,
..& many more..

though in a nutshell we should blame our counterparts abroad who are hard selling INDIAN TALENT just because they are easily accessible & cheap labor & not necessarily a POOL OF TALENT….

Vinod Wednesday, February 11, 2009 at 4:08 AM PT

Why it is not coming up! – I tend to disagree with a lot of people here, by saying that it IS coming up !! The sincere attempts by a few are helping many to take on entrepreneurship and take it seriously. I dont mean to say, that the sincere attempts means ‘funding’. No! It just means, the number of people to drive and build the eco-system is increasing which is a good-sign.

What are you experiencing? – I run a startup about an year old. We are bootstrapped, and are burning out of our own pocket and our friends/family pockets too , but have never felt discouraged so far.

I have experienced support from the system – it may be verbal, have met people who try to help in whichever capacity they can. I see blogs like pluggd.in and watblog who are striving hard to keep the flame alive, and give a reason to people to celebrate entrepreurship.

All is not fancy. I have also experienced lack of funds, have experienced our souls getting really angry at people when people ask us.. can you get us some numbers, before we think, we can fund you and that too, in a situation, where neither the investor has any clue of the market numerics.

Bottomline: Our experience on the hottest topic on this system is: the investors have their own limitations, as they also have the pressure to perform and return rich dividends to the partners, and entrepreneurs are also right in their own might , as they are risking their lives, time, and family to build something, which may be the next big thing – u never know.

Keep adding value to your customer, through your product, and basic business sense will see you through – with or without funding…

Deepankar Biswas Wednesday, February 11, 2009 at 5:15 AM PT

Deepankar,

I really like your attitude. I think, one thing that people don’t acknowledge is that the best way to be successful at this stage of the game in India is without being dependent on outside financing.

You are pointing to that … focus on customers. If you deliver value, customers will pay, and at that point, you have revenue and cash, without losing equity.

For the moment, because of the situation in the financial markets, I am asking all entrepreneurs – in India and elsewhere – to try to avoid raising money if they can. It is a total buyers’ market with valuations being very low, anyway.

Do you really want to give up that much of your company so soon?

Sramana Mitra Wednesday, February 11, 2009 at 9:41 AM PT

Innovation from the west is easily adopted in India, but innovation from India, even if it adds a lot of value, is not accepted easily. Can anyone name a single global internet brand from india?

If you build a “me too” product, and have the right management team, you will get funding easily.

If your innovation is “disruptive”, and there is nothing similar in the west, then the VC’s want you to make money first, before they invest in you. Or you should not be so ambitious as to build an international brand, but ready to sell out to the big guys.

We have met a few big multinational VC’s, who have acknowledged that our idea “buzzar.tv’ is disruptive, but are willing to invest in a late stage, and not at an early stage.

What is truly lacking in India, is Indian companies investing in Indian startups, to build Indian brands. But, being Indians, we have this mentality that if you can do it, so can I, so why this high valuation? catch22!!!

christie Wednesday, February 11, 2009 at 10:11 PM PT

Having spent the last 3 years
in Delhi trying to get a start-up off the ground, I can say that there are two
main reasons: 1) The talent in India for the most part was very short-sighted
during the last few years. When times were good, all people cared about was
getting a promotion and more money and not on improving their skills. This is
going to hurt Indians now in a slower economy because they are going to have to
make up for lost time. 2) India has many software engineers and project
managers, but it doesn’t have many product managers. These are the guys that
dream up innovative ideas and figure out how to take them to market. Product
Managers have a pulse on the market and are constantly in front of customers
validating the product ideas and business model. I personally found there was a
big shortage of these skills and this is a big reason India can build other
company’s products, but not its own.

Sunil Bagai Thursday, February 12, 2009 at 10:43 AM PT

[...] a lively discussion going on at Sramana’s blog on what ails entrepreneurship in India. Rajesh Jain and Abhijit Nadgouda have also written about the topic on their own [...]

What Ails Entrepreneurship in India? A Demand Side Perspective | Gauravonomics Blog Thursday, February 12, 2009 at 7:19 PM PT

Hi,

Maybe one of the main readson is that some Indians prefer to work with MNCs and not being an entreprenur simply because they can’t risk failure and loss of income which would directly affect their family source of income and livelihood. (e.g. helping out with sibling’s education, parents healtcare, etc. ).

Shankar Friday, February 13, 2009 at 9:02 AM PT

I apologize for missing your deadline, Sramana. However, hopefully these thoughts will be helpful down the road:

Why is the innovation eco-system stalling?

There have to be three things in ready supply: for free-wheeling innovation to naturally exist:

Entrepreneurship and Innovation as a basis: The U.S. is built on entrepreneurship and out of the box thinking. In India, the educational system builds highly skilled professionals but not necessarily ones that think out of the box. The metrics for success in India, e.g., good grades, a stable job with a brand-name firm, don’t necessarily apply to an entrepreneur’s mind where it is high risk and high reward that matter. That said, I do recognize that there are a lot of ‘entrepreneurs’ in family-owned traditional businesses in India, but that’s doesn’t always translate to innovation in technology companies.

Closeness to the Problem: Innovation is the result of people putting creativity into solving a problem, e.g., taking something like the traditional display ad and making it more effective for advertisers and publishers. In the U.S., whether fortunately or unfortunately, there are problems everywhere to be solved and an immediacy that is clear, e.g., effects of lower emission standards or even issues advertisers have in getting better performance for their spend. I see less ‘new products’ being built in India, but more activity around businesses expanding their markets to India to capitalize on the size.

Money flow: I am not sure how much new VC money is being invested in India but this certainly is a key tenet for fostering innovation. Venture capitalists place bets on namely two things: the basis of the idea (the problem you are trying to solve and how addressable is the market for that solution) and the team that will execute against it.

Why can’t we get beyond outsourcing?

We had some experience working with a development team in India (our management team was based in Seattle and a major part of the development team in British Columbia). We had challenges with that set up, not because of the time zone difference, but mostly because at the time we were early in the development of the platform and doing a lot of “ideation” on the value proposition including validating with customers as to what mattered. In short, we were still in creation mode. The problem we had working with the team in India was that they did exactly what we asked; nothing more or different, and were not really a part of the ‘ideation’. In essence, they did not work collaboratively but only based on direction. Once we changed paths to all development in one place, we had a dramatic increase in productivity and effectiveness.

My point is: To move beyond outsourcing, you have to move go beyond taking orders and move to a broader, more collaborative and strategic engagement. That said, I do see that many professionals of Indian origin with a lot of experience building and growing innovative product companies in the U.S. are now moving back to India to build their own business. Maybe that will spur some innovation over time.

Anupam Gupta, CEO of Mixpo Friday, February 13, 2009 at 9:23 AM PT

I think the problem is immense. Since many people have already commented on the logistics of why entrepreneurship is not working in India. I wouldn’t even go there. However, I think “social attitude” that recognizes and celebrates entreprenurship is lacking in India. Secondly, we don’t encourage entrepreneurship in small towns and cities. Why do we have to judge entrepreneurial ventures only by the scale. There is a lot of entrepreneurial activity in smaller towns. But infrastructure, lack of good education prevents it from growing big. I think our problem in India is that we focus too much on the cities, not that those are not important. But in cities, Indian entreprenurs are competing with multi-nationals and they don’t have the resources to do that. If Indian entrepreneurs will focus on providing services and products to people living in small towns then it may be a while before they reap the real benefits but its a huge market. Look at Reliance – that’s what they did. They revolutionized the mobile sector. It is because of reliance started selling mobile phones to the rural India all the other players started thinking of it as a profitable market.

Priyanka Saturday, February 14, 2009 at 8:45 AM PT

[...] How do we go from here? Posted on February 17, 2009 by Aishwarya I read Atanu Dey’s take on Innovation and Entrepreneurship in India in response to a question put forward by Sramana Mitra on her blog Why is the entrepreneurial ecosystem in India not coming together as well as it needs to? [...]

How do we go from here? « ThinkChange India Tuesday, February 17, 2009 at 6:11 AM PT

Sramana, to begin with, your question is very open to interpretation. What does it mean for an “entrepreneurial ecosystem” to come together? From what you typically write about, and the responses to the post, it could be taken to mean as why the *technology* ecosystem is not coming together.

However, if its entrepreneurial energy that you’re concerned about, just look at the number of small businesses around you – retail shops, restaurants, etc., etc. Their proprietors can teach the rest of us a thing or two about money, finance, and sales! And, of course, this doesn’t consider the powerhouse manufacturing companies which are going toe-to-toe with the best in the world. There is a clear history of successful “startups” in India, which goes all the way back to our craftsmen and trader roots.

However – as far as high-tech startups go, my first hand experience is that the kind of people running these startups don’t think enough about customers, sales, and marketing – i.e., we tend to be too engineering focussed, with a “build and they will come” attitude. Perhaps, if more people with experience in software sales and business development get into the mix, that would change things for the better.

Of course, other problems exist too as mentioned in the discussion above, but you have to keep in mind that the software industry, and the people who work in it, are a generation behind the U.S. While we certainly don’t need (and can’t afford) a generation to catch up, it will take time. Expecting overnight miracles is unrealistic…

Vijay R Thursday, February 19, 2009 at 2:57 AM PT

I have a slightly macro view on this topic. I have not gone thru each comment above so might be redundantly making points already made. But here it is anyway.

I think the fundamental difference and single biggest reason behind the maturity (or lack thereof) of a entrepreneurial ecosystem in India is mainly due to the fact that the (local) target market is not evolved.

Just focusing on the tech market, I don’t think there is a big local market for the entrepreneurs in India and consequently they are not close to their customers. Most of their customers come from the West (with the exception of maybe some entertainment, talent management space). Until that happens, the entrepreneurs will continue to lag in maturity. The advantage for the Silicon Valley entrepreneurs is they don’t have to look far for customers. Also the companies in US are far more open about working with startups and taking risks including large companies (Cisco comes to mind). Companies in India (target market for indian startups) largely risk averse and typically look for large branded offerings that are already mature.

Subraya Mallya Thursday, February 19, 2009 at 10:23 AM PT

Hi Sramana, One issue with Indian entrepreneurs is that they lags the marketing skill. I have been involved with startups where owners were technically very good but had no idea how to merket their product or service. They jumpted into the water without preperation, tried a bit to survive and finally just ran out of money and energy. But one good thing is that they didn’t lost the dream and are ready to jump again. I believe this spirit of never say die will create so many new success stories tomorrow. – Sudipta

Sudipta Das, Entrepreneur Thursday, February 19, 2009 at 10:08 PM PT

http://www.pluggd.in/funding/technology-funding-in-india-sloka-ceo-sujai-karampuri-3772/

This interview pretty much nails the problems plaguing entrepreneurial ecosystem in India – huge disconnect between VC and entrepreneurs.

Mav Friday, February 20, 2009 at 5:55 AM PT

There are several questions that preoccupy the minds of entrepreneurs, academicians, industry bodies and other stakeholders. Some of which are
What are the procedural hindrances that burden new businesses?
Do the present franchise policies protect the franchisees?
Are the present policies promoting/ encouraging entrepreneurs?
What are the elements in the present budget that are promoting entrepreneurship/ discouraging entrepreneurship?
What are the labour laws that are discouraging entrepreneurs?
For failed ventures, are the regulatory labour laws more of a burden to the entrepreneur? Do these laws discourage entrepreneurs to start new businesses?
What are the schemes that the government offers to new businesses? Are entrepreneurs able to access any schemes that the government offers for new businesses?

There is an international conference in the month of June 2009 which aims to discuss questions that effects the ecosystem which encourages or discourages entrepreneurship in India. The conference website is http://www.isb.edu/wced/isb-randconference.

Kavita

Kavita Monani Monday, February 23, 2009 at 4:01 AM PT

Wel, there are a bunch of good hearted souls that are doing thier part in build the so called “eco sysem”

http://www.youtube.com/watch?v=vMaTaC3xV14

Cheers

Jebroni Wednesday, February 25, 2009 at 3:45 PM PT

Ok. Wow. So?

We are very good at analysis. This is what we have been doing, people. We can come up with top 10 reasons why entrepreneurship is difficult in our country.

Question is what am I doing about it? At least, what solutions I have here to offer. Think. Act. Anybody can talk.

Indian Wednesday, March 18, 2009 at 12:30 AM PT

Yes, don’t talk, attend a roundtable with a real business idea, and try to make it happen.

Sramana Mitra Wednesday, March 18, 2009 at 11:00 AM PT

I agree with Dipankar’s point of view here. I think a lot of us who are looking at entrepreneurship are excited because of the “hot” and “sexy” deals that we have heard about. But as it was pointed out in Sramana’s another post these “home run” deals like e-bay, google etc are only top 15-20% of the total pie.

I think India is a country of entrepreneurs, I mean we see them all over, the local paanwalah to our “mom & pop- grocery stores” all are very encouraging tales of entrepreneurship. Though some of us have referred to the typical middle class up-bringing that we have received. “Sweat” “Study” and “Find a good job”. However with changing times the sense of security that our parents got by securing a job (probably that term also needs to change) is gone! Those of us who want to work for the big MNC and believe that our jobs are secured are kidding themselves!!!

Coming back to the topic of entrepreneurship, I am a green horn in this field having been out there for last 18 months, I can share from my own experience that an early stage entrepreneur whether or not from a business family (big or small) background essentially is looking for few things:

1. Proof of concept — I need to know that what I thought as the big idea or customer need is what really exists in the minds of the customers and they are willing to pay for it. I mean the joy of receiving your first cheque from the customer is much more than your first salary!!

2. Guidance— here I would equate with most of our experience during teenage to adulthood…we are full of energy and enthusiasm to take the whole world head on..but what we are also looking for is some words of wisdom which don’t discourage us but educate us about the risks involved and how possibly we can tide over them.

3. enough to keep afloat – myself..family & my dream — this is the real test and have personally been impacted by that. Since I have a family to support (wife & kid) the sacrifices that one expects from them to make for your dream can become “the” nemesis of your relationship and I have seen few other entrepreneurs struggling with this aspect. We know that all these are important to us but it’s the families patience and faith which probably runs out earlier than the entrepreneur’s own and then he/she is left with a choice between the two some choose the dream and some the family.

Now coming to the point of why aren’t we bootstrapping the venture rather than seeking the high cost VC funds, its again partly similar to why the poor farmer in rural India goes to the money lender!

I love my dream but in the initial time that I have been struggling with it I haven’t been able to find the right support/platform and initial business success. I believe VC can bring in the necessary contacts to help me quickly ramp-up my business and also provide with necessary guidance that I have been looking for. Going the debt route with banks though less costly does not come with this added benefit of “guidance”

Our venture is being incubated by an angel investor and at this stage with us looking for first round of funding and hence a bit on incubation. I guess as entrepreneur incubation is more like early stage funding any way, as you do loose a significant portion of the equity to this model with further dilution opportunities with more funding coming in.

Why we still play the game? Well, its not only about the money after all its about having been there and done that.

And I don’t fully agree with the other point being made here about “failed” entrepreneurs not being welcomed in corporate india, if you have learnt your lessons then you are!!!

Amol Pawar Wednesday, April 8, 2009 at 4:13 AM PT

1. The best entrepreneur talent is often seen in the marginal zone – practical upstarts, who have very little to lose and everything to gain.
2. Typically, most of these people have migrated from or have been displaced from their ‘comfort zones’ (home towns, communities, traditional trade etc.) and have started out practically as new identities / faces in their new worlds.
3. Perhaps, it is this very background that provides them the luxury to aim high, freedom to stumble and fall and the poise (or nonchalance) to get up, pick the scattered pieces and start all over again !
4. Tough they seldom have the advantages of education, skill training, access to capital, infrastructure, mentoring, leadership etc., they are able to sublimate because they have no other choice
5. On the other side are the security seeking middle-class (often well educated but ill-trained in life-skills), with starkly different back-grounds and culture, who perhaps fail to become truly entrepreneurial precisely on account of their more advantageous background : Education, comfort in the routine, aversion for risk, fear of failing, distaste for hard-ship, pride, sensitivity and above all, inability to let go of their ‘security blanket’
6. Thus we have a peculiar situation where some with more natural entrepreneurial talents suffer from limited back-up and resources, whereas others, who have more social advantages and support systems actually lack what is takes to be a true entrepreneur.

Sriram Friday, June 19, 2009 at 1:48 AM PT

The biggest reason I feel is fear or lack of courage to take the first step. People look short term! Ours is a ‘poor dad’ (read as Poor Dad from Rich Dad Poor Dad) community – where parents teach kids – study hard, go to college, and then work hard.

I strongly believe their is anything like entrepreneurial talent, if anything is there than it can be entrepreneurial aptitude which builds because of your environment. Lately things have changed and worked out well.

For the just-graduated students it can be summed as “What if my proposed venture fails, I will not even have a job!”.

(Views are personal and seem attacking! But trust me I am a student entrepreneur and should be seen as self-introspection)

Gaurav Parashar Friday, June 19, 2009 at 10:35 AM PT

Lots of good points. But, I think a comparison with silicon valley is unfair. That is the filtered lot of best of the world. Do you think people in Kansas city or Spokane or Stockton are any more entrepreneurial than those in Napur, Coimbatore and Candigarh? Definitely not.

Based on my experiences living in US and India, I think Indians are far more entrpreneurial by nature, and an Indian in US is far more likely to start his own venture than an American in US. When you notice the entrepreneurship centers of the US – Silicon Valley or NYC, it is no coincidence that they are among the most open, diverse & international among US regions. If only Californian borns were starting business in Silicon Valley, there would be no silicon valley.

What we need is such open cities where people from various regions in India and expats from rest of the world can feel confident and collaborate. Bangalore and Bombay are only cosmopolitan centers we have, but they still suffer from a lot of chauvinism (think of anti-Tamil riots in Bangalore and anti-Bihair riots in Bombay).

Then comes social security. Indians have to rely on their families for social security and that puts unusual burden on the working members. Instead, the burden & risk of supporting old and young should be pooled and spread across the society.

I think if we just have an open & risk spreading society, India has the rest of the stuff to lead the way in Entrepreneurship. This is a nation of entrepreneurs who traded with far away lands, and made homes in unknown regions. And this generation of us doesn’t lack the penchant to dream.

Balaji Viswanathan Wednesday, August 5, 2009 at 6:11 PM PT

Sramana,

India is still finding it’s feet, currently looking at only low-hanging fruits.
Entrepreneurship, as an attitude is not imbibed in us and will take time.

As there is no Social Net to fall back upon, when one fails, People do fear to start on their own.

Even who start on their own are the one’s, who maintain good relation with Clients, Snatch Projects and then start.

Might be we’re still concerned about Roj Roj ki Bhook-Pyaas.

As it gets satiated, Men/Women will start realizing there is more than a Campus Placement to be attained.
Then, possibly, we can see…….. what you keep insisting should happen.

I, for one, planned to do on my own, but retiring Dad, Sister’s Education and Marriage, Peer Pressure to some amount were all urgent needs.
So, dreams have had to wait. :)

One more point.
There is so much difference between Average B.S graduate in US and an Average BE Graduate in India.

Engineering Education in India emphasizes Skills and lesser on Application .
I presume, outside, People try to apply knowledge into real-world.

20 year old comes up with Googol, Facebook, unlike the Projects we do here.

Mallik Thursday, August 6, 2009 at 5:50 AM PT

Firstly, India needs ”Good Leaders” to drive the Carnival of Entrepreneurship.

Education system should focus on practical application of skills since school and isolate the concept of gettinng a salaried job.

Also, Indian community needs to encourage entrepreneurship practices.

Revolution is within us. Yes! in everyone of us.

” Entrepreneurs make things happen!!”

Sagar Pednekar Thursday, September 3, 2009 at 9:22 PM PT

Eureka! The International Business Plan Competition, E-Cell IIT Bombay

The Entrepreneurship Cell of IIT-Bombay is organizing EUREKA! The Largest International Business Plan Competition in Asia.

Prizes worth USD 50,000 are to be won with finalists getting a chance to pitch in front of Indian Angel Network.

Teams will get a chance to represent India at the Intel-UC Berkeley Innovation Challenge.

Its simple to participate, just log on to http://www.eureka.ecell.in

ravi1803 Monday, October 5, 2009 at 5:28 AM PT

Who says Indian doesn’t have entrepreneurship, India is big bazzar, biggest in world. Go to any street in India and it is full of peoples, someone is selling something and others are buying it. I think people on this board are confusing entrepreneurship with starting only a software company, it could be service or product. No one is thinking out of this box, shows typical herd mentality. I have not seen any comments about starting manufacturing firm, producing something new like system for factory automation.

I think this herd menatlity and the Indian goverment is a biggest problem .

Sanjay Wednesday, October 7, 2009 at 9:34 PM PT

India Entrepreneurship Ecosystem is coming of age but at a slower pace than expected. The VCs, Angel Investors are interested in funding :
1. Replica Model : Something that has been replicated elsewhere,being replicated to fit in the indian context.Some proven business model like a Matrimonial Portal, Real Estate Portal, trust me there are 100s that come every year, claim to be slightly different in their business model,but lot of them lose steam.

2. Funding the Brands: IITs and IIMs are brandnames, but there are a lot of entrepreneurs who are Non IIT and Non IIMs, from smaller lesser known institutes have better ideas, but lose out on seed funds because they are not from the Premier Institutes. Instilling faith in that case is a very difficult activity.

3. Instant Returns: I have met VCs who think investing money is like playing a card game in casino. They want instant gains and phenomenal dividends.Many of the investors do not have a proper exit plan in place.

4.E Cells of various colleges cater to a very small audience, Mostly from their own institutes and thus narrows the spectrum of entrepreneurs.

I started 3 years back. At that moment , i had modest technical knowledge, some savings but no knowledge of entrepreneurship. The only thing I knew was I wanted to do this since a long long time. I never thought of any other thing as a long term plan. the only plan in the end was to startup.

So one day i did, started freelancing, then outsourcing, and in the span of 2 years built a network, learn the processes of running a company, managing people, finances, building products, because thats what we do, where we need to do the innovations etc. I had plans of putting up a product, but lost a lot money in the recession as 2 of my major customers shut down. That didnt stop me, and we continued, and we are not back to good healthy state. We never sought VC, Angel Money because our previous interactions with them made us feel that we would end up having Reporting Managers in our own company in the name of mentors. Bootstrapping is what we did. Although I agree the downside is we are not able to execute our ideas on time, but we are quite happy that we are self funded and bootstrapped, although we dont own blackberries.

Saurabh Wednesday, December 30, 2009 at 10:51 PM PT

This is the spirit of a true entrepreneur, Saurabh. Keep it up!

Sramana Mitra Thursday, December 31, 2009 at 12:57 PM PT

I was in India for the month of Dec2009. It’s for a business trip. We trained a group of young worker there . We gave them jobs. There will be more job allocate to India next year. What I observed, it’s cheap labor in India. My company want me to go again this year 2010. I smell oportunity in Pune,India. If anyone want to star up small business or have any ideas for new business please let me know. We could make money together. My personal email jongtran@hotmail.com Feel free to contact me I have some capital and i’m open for any new ideas. Best! JET

JET Saturday, January 9, 2010 at 10:02 PM PT

Why aren’t there more entrepreneurs in India?

This question has a negative AND a positive answer:

1) postive: there are plenty. Go to Gujarat, Maharashtra, Tamil Nadu, Punjab, millions of small businesses thrive

2) Negative:

- The country is not startup friendly. Try opening a new bank account: I have a working current account with a bank for 4 years. I wanted to start a new one under a different company name, but th ebank wants all my paperwork all over again. I have lived across 6 major cities in india, and my passport, driving license, service tax number etc are all spread all over. despite having a 4 year relationship with my bank, why would they want all the paperwork ALL OVER AGAIN beats me. Its a pain. i shudder at the thought of starting a new company. heavy bureaucracy.

- the cost of rent vs recovery: the average rent in mumbai is higher than perhaps the average rent in New York city. but the average good fetches less price than new york. its always a challenge to put together enough money for rent. we are shooting ourselves on the foot with where the property prices are going. my friend rented a property to build a small audio studio. leave alone the exorbitant rent, his lease expired after two years and the land lord refuses to renew it, unless there is a preposterous increase in the rent. this guy cant afford it, with the extremely low margins. one feels one is working for the land owner. it reminds me of feudal india, where the zamindar owns the land and the poor hapless farmer tills and toils on it all his life to eke out two meals a day for his family.

- competition driving margins out of the business: if india’s advantage is the huuuuuuuge population, it is also a disadvantage. there are so many players out there that they are willing to drive the margins out of the window. i know a friend’s advertising agency lost a large MNC client because someone was askimg them for under rs 200,000 per month retainer fee. (now if you consider teh cost of rent, the high taxation in india, the cost of air-conditioning, office expenses, salaries etc, can you really manage a half decent profit after rs 200,000 per month?).

- not many willing to fund: there arent too many people willing to fund a startup. of course you will give stories of those who are successful. but for every success story there are perhaps a 1000 which couldnt make it. remember how many people live here in this country?

- feudal culture and old hackneyed thoughts: lets face it. we are a feudal nation. there is no government policy to help the small entrepreneur thrive. unless you have a big name backing you no one is going to take your phone calls either. most of the the business is owned and run by the rich and the powerful., they keep starting new businesses. they drive the property market. they drive the eco system.

- low and un professional quality of tech help: i have had bad experiences here. i had a fantastic tech idea (an online thing) which I ddnt have the money to startup. So i partnered with a techie who promised to code it in return of equity. two years have passed and he hasnt delivered. now he wants equity PLUS money, he claims things have changed. If he had been clear on the money part, then I would not have offered him equity AND I probably would have looked at a proper company. I am stuck. now he wants to hijack my idea. i am scared of sharing any more ideas with anyone. there are millions of techies but all unprofessional, greedy and not with a pioneering spirit.

more soon

saumya Wednesday, February 3, 2010 at 12:49 AM PT

My view about entrepreneurship is rather discouraging I would say. I am a biotech based entrepreneur . I have hardly found anybody encouraging by way angel investments / seed capital etc. Bootstrapping is the only way or the forced way of making it to the entrepreneurial way.
the one diff ,I found b/w the entrepreneur and the entereprenurial manager (CEO) is , if an entreopreneur fails, he looses everything including his undergarment, whereas for a CEO, if he fails and has to be removed , then he will have to be compensated with the hefty package in order to make a smooth exit.
its a strange thing but a fact!!!

raghu Monday, April 12, 2010 at 6:11 AM PT

[...] Power of Ideas, and this post has been itself written as a comment to Sramana Mitra’s very popular post on the same topic.) Entrepreneurship, India, [...]

Lack of Entrepreneurship in India — Whats wrong? Sunday, May 30, 2010 at 12:42 PM PT

Mr kumar ,
I believe I come from the "not so general category " of youngsters wanting to go the entrepreneurial way .
The society , pressure from family about not leaving the tech job , and usual rants about
" life is not that easy" , "selling is very difficult in Inida" are the popular one liners I get when I need to share my "vision" with my family.

Any further insights into the idea's which you have in mind for cultivating this ecosystem would do a world of good .

Arjun Kochhar Wednesday, August 11, 2010 at 4:43 AM PT

completely agree your thoughts……..This mid-layer is the one that has produced deeply knowledgeable systems architects, product managers, program managers, etc. in the Valley…………

biotech training Saturday, September 18, 2010 at 12:08 AM PT

I think the only reason of entrepreneurship struggling to take out its neck is that majority of VC community think IT is the only domain of entrepreneurship where their is scope of high IP creation.

Whereas innovation exists in marketing ,,,, too.

Vikas Shah Friday, October 1, 2010 at 4:37 AM PT

I'm agree with you @spandan. Perhaps indonesia has the same problems as you said (number 3. Lack of acceptability in the society).

Just Feel Free Saturday, March 12, 2011 at 2:23 PM PT

It is hip to work for Infy or Wipro. But it is not hip to struggle, sell, work day and night for your own.

Ada1985 Sunday, May 8, 2011 at 8:37 PM PT

I have been wondering about this problem for quite some-time before i dropped out and began working on my start-up. My specific question was " Why don't we have any global audience serving Website/ product from India? When India has so many talented IT guys and Internet is supposed to have removed/lowered barriers. On internet the audience hardly care where the web-site company is located! (Remember the infamous Dilbert strip " On internet nobody knows you are a dog").

I have a few hypothesis for this apparent anomaly.
1. Lack of Courage/Imagination to do anything truly original?
I think this is probably the main reason. We simply did not try? Compare the start-ups featured in TechCrunch (Mostly Silicon Valley) with those on yourstory.in. Most of the start ups are copy cat of successful silicon valley companies. While most of the TC featured start-ups have some new idea!

2. Lack of Global Vision/ Exposure.
Most of the start-up ideas are too localized in thinking to be suitable for the global audience. Maybe this is because we are too preoccupied with India to get exposed to the outside world.

3. Bad Design, Poor Marketing/Communication.
In a nation of engineers we have undervalue the importance of Arts and the human factor in the design of website/application. It is difficult to find great web designers, artists locally & costs a boatload of money to get it done internationally. Moreover the founders do not appreciate the importance of great UI/UX to invest in it. It is no wonder most of the Indian websites have such shoddy look and feel.

4. No Risk Capital at Seed Stage!
Even to build a decent prototype it takes some money ( you cannot have all the talent in-house specifically design) buy servers/certificates. There are hundreds of entrepreneurial events, camps and competitions but it is all a farce. You waste a lot of time going through the various elimination rounds and at the end of it you get some bull-shit advice but no funding.

Then there are a whole host of other reasons which others have in most cases correctly pointed out in the comments to this post. We can point another 2 dozens reasons why we do not have great web start-ups in India.

But as entrepreneurs, we are supposed to solve the problem rather than merely generating 4 dozen cribs about a thing. Therefore i think the next logical thing would to try to do something about it. Sarvana's 1M/1M initiative is a good try but i feel it would be better if it could also find small seed fund for the ideas or it would become yet another gyan giving venture.

People! Have any ideas on improving the situation?

Amu Friday, November 18, 2011 at 7:37 PM PT

Sramana – great discussion happening here !

Why Startups need to boot-strap – I agree with Kumar. There's no choice.

There are also no heroes. Sangeeth is absolutely right. Day zero is still bigger than seed funding. The mainstream media doesn't make the entrepreneur a hero. This plays into the psyche of the individual and creates a 'get rich fast else die' thinking.

It's not always about money – sometimes a startup needs guidance. Most people will say the same thing over and over again with no clear path of how to reach there. Startups aren't a bunch of idiots – they spend their nights and days thinking about all the wrongs that can happen. Providing a flash light isn't enough – pointing and actually walking does make a difference.

Maybe opening the doors to the Angel's boardroom could be valuable.

Sameer Agarwal Sunday, March 18, 2012 at 11:45 PM PT

Hi Sramana,

Interesting posts and comments!

I still believe that it is a "MINDSET" which makes all the difference. To be or not to be an entrepreneur is solely dependent on the "Mindset" of an individual, which results in subsequent actions or in-actions, in his life. This, of course, is to the best of my belief.

In our part of the world, people take up business (mostly as a trader) when he fails to get a job. People hailing from business families are brought up in an environment where they tend to be conscious about finances, investing and the things alike. To be educated financially is of prime importance, develops at a very young age and to become an entrepreneur or trader in life, only comes as an aftermath.

This is absolutely my personal opinion. In this light do I see your "incubation program", which is unique in many a ways. I may be wrong, but this is what I realized in my 44 years.

Best wishes!

hellosomen Wednesday, March 28, 2012 at 12:50 AM PT

Can someone guide me on what are the steps (legal) that one needs to do while starting a buisness,Say an IT/KPO/BPO industry. I would like to know details on how to get a company register and other formalities that needs to be done as per the Govt India rules and regulations.

Allen Thomas Monday, April 16, 2012 at 3:00 AM PT

There's a great quote that Thomas Edison once said, and I reckon it fits perfectly with the struggles of entrepreneurs, "I have not failed. I've just found 10000 ways that won't work"

Alex Wednesday, May 9, 2012 at 3:54 AM PT

hello,
you really need to believe in your idea in your dream..go for it yes selling is difficult in India but u never know you can be the next game changer.
people will say that you cannot door you cannot achieve your that dream because they dont have anything to do except commenting on others.
India needs the new revolutionary Entrepreneur lets join hands for our country and be entrepereneur.
There 3944 mnc in India we all say that we are independent but are we really??
from the time we wake up in the morning n the time we sleep at night most of the product that we use is of mncs where are we??
(this is just my view point)

Neel Pujara Saturday, July 28, 2012 at 7:14 AM PT
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