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BW Businessworld

Money And Mentorship

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The rate of econo- mic development of a country depends on many factors, but two of them are particularly important. The first, of course, is the kind of policies that the government follows. A business-friendly policy would obviously reap rich dividends. But the other factor — which often gets overlooked — is the kind of entrepreneurial ecosystem that is present in the country. At the end of the day, economic growth depends a lot on new businesses, which add to the GDP and create employment opportunities.
India has had a reasonably rich tradition of entrepreneurship. Certain communities have been known to throw up notable entrepreneurs. The Marwaris, the Gujaratis, the Parsis, the Nadars from Tamil Nadu, and the Reddys from Andhra Pradesh are known for their contribution to India’s business landscape. A recent study pointed out that over three-quarters of the big businesses in the country could be linked to these communities.
When business historians study the greater success of entrepreneurs and the tradition of business in these particular communities, they often identify one point. All these communities have a strong tradition of providing mentoring support and informal finance to budding entrepreneurs from their clan and region.
The US does not have communities known for their entrepreneurial skills. On the other hand, it has many regions — Silicon Valley to name just one — where new entrepreneurs and businesses are created all the time. The Silicon Valley phenomenon of throwing up entrepreneurs is aided by the burgeoning population of angel investors and venture capitalists, who provide both finance as well as mentoring support to people with promising ideas. 
Over the last few years, thousands of entrepreneurs have popped up in India seeking to take advantage of the opportunities being generated by the technology sector, the Internet marketplace and the mobile revolution. Many of them come from non-traditional communities. And many of them flounder and often shut shop because they do not have access to finance and advice from angel investors.
Why does India have such a dearth of angel investors? Principal correspondent Shrutika Verma decided to look into this issue. Read her conclusions in our cover story.

(This story was published in Businessworld Issue Dated 19-11-2012)