A Surge In Enterprisers
Most exciting has been the profound change in cultural attitude towards entrepreneurship
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In 2015, Nasscom published a report that placed India as the third most vibrant technology startup ecosystem behind the US and the UK, and ahead of Israel and China. It identified 4,200 technology startups that employed 85,000 people.
This upsurge in entrepreneurship of opportunity, concentrated in the hotspots of Bangalore, Gurgaon and Powai, powered by technology and funded by a new availability of VC and angel capital, is only to be celebrated.
The issue for India is to spread this new entrepreneurial vibrancy geographically, socially and by sector. To make a real difference to growth, employment and opportunity, India needs entrepreneurs across the land tackling challenges in every sector. Infrastructure, manufacturing and biosciences need to become as replete in startups as e-commerce or data science.
The government, to its credit, has recognised the critical importance of entrepreneurship in economic development and job creation and has prioritised new business formation through the StartUp India and StandUp India programmes. The Prime Minister announced additional government funding of Rs 10,000 crore for early stage businesses.
Availability of equity finance for new businesses is no longer the key issue. In 2016, $15 billion of private risk equity was deployed in India. While this was down on the $23.6 billion invested in 2015, it remains a step change over just a few years ago. Moreover, the fastest growing part of the Private Equity market in India has been the very early stage angel and seed sector. In 2016, 765 companies raised angel equity as reported by VCCEdge.
Most exciting has been the profound change in cultural attitude towards entrepreneurship, especially among the educated young. It is now cool to be an entrepreneur. Moreover, family and even prospective in-laws increasingly find a choice to try a startup an acceptable risk. The fear of failure is lessening and it is getting much easier for an entrepreneur whose business did not work to get back into the job market. While this excitement is fantastic for the country, there is still much further to go to make India the entrepreneurial hub it could be and needs to be to create growth and good quality jobs. The Indian entrepreneurial ecosystem is patchy and immature.
The best data to compare entrepreneurship between countries is the Global Entrepreneurship Index which is published annually by the Global Entrepreneurship and Development Institute (GEDI), a network of business academics. In the 2017 index, India is ranked 69 out of 137 countries. While India is the biggest gainer globally, up 29 places over 2016, this ranking remains well below the true potential. China is 21 places higher in the rankings than India.
India’s strength, on this measure of entrepreneurship, lies in cultural willingness to set up a startup, competitive markets and innovation. The country’s key weaknesses are human capital development, ecosystem networks and ability to absorb new technologies.
How to reconcile this picture of India as a middle-ranking, if fast emerging, country for entrepreneurship with the more familiar perception of India as a true hotspot for startups as reflected in Nasscom’s survey? How is India both a world leader and a laggard in entrepreneurship? The answer, as often in India, lies in the physics of large numbers. In certain sectors and geographies, most especially in tech in Bangalore, India is a true leader in entrepreneurship on the global stage. Sophisticated tech companies are working with colleagues in Silicon Valley and elsewhere to build world-beating new companies offering both product and service solutions.
At the same time, entrepreneurship of ambition is yet to spread in a way that we need to see into more challenging sectors and geographies. Here is a measure of the size of the entrepreneurial prize for India: GEDI calculate from their global database that a 10 per cent increase in India’s score on the Global Entrepreneurship Index would add $3.3 trillion to the economy.
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