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Small Beginnings

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 Bangalore, it is safe to conclude, is no longer the capital of high-innovation garage start-ups in India. Small towns, even villages, are throwing up disruptive business models that address the needs of the heartland. At the vanguard is a new breed of first generation entrepreneurs keen on businesses catering to local markets.
 
 Podcast: Reporter's Diary
 
Start-ups that sprang up less than five years ago now electrify homes in remote villages, provide affordable world-class healthcare in small towns, help firms bring down their pollution, purify drinking water for rural consumers and build affordable houses for the under-privileged. The men and women behind most of these businesses hail from non-metro India — Patna, Hubli, Kanpur, Chandigarh, Nagpur and Ahmedabad, among others. Most of them have boot-strapped their businesses with their own resources or with help from friends and family. 
 
 
This is not the first time that entrepreneurs from the hinterland have taken the lead in creating disruptive business models. First generation entrepreneurs from similar backgrounds created many of today’s large business groups. They came from the pre-information technology era and took advantage of the opportunities that an un-industrialised India offered at the time.
 
The information technology (IT) revolution, which has dominated entrepreneurial activity in the past decade, is not without its merits. It has created numerous jobs and boosted economic growth. But the success of the $50 billion Indian IT and IT-enabled services industry, with its singular outward focus, has also blinkered the vision of a whole generation of entrepreneurs. Instead of paying attention to the ground realities of the Indian market, too many garage start-ups in the past decade have unsuccessfully tried to replicate western business models. The consumer Internet sector stands out as a sore example. Bangalore, Mumbai and Delhi have been the nerve centres of this blind rush to become the Hotmail or Google of India. 
 
VENTURE CAPITAL IS PASSÉ
Start-ups need not depend on venture capital alone to 
finance their ideas. Here are five alternatives.
Government grants such as 
TePP (Technopreneur Promotion Programme)
CGTMC scheme: Collateral-free loans 
from public sector banks
Venture credit: Debt against 
equity from banks
Start-up incubators: Cash and mentoring in
lieu of nominal equity
Business plan contests: No-strings 
attached prize money
Meanwhile, outside the metros, a quiet movement back to the basics has been underway, helped by two factors — telecom penetration and rising income levels. The telecom revolution connected villages to small towns and small towns to larger cities. This, in turn, fostered the building of other infrastructure linkages. So it is easier today for a young entrepreneur in Jaipur to sell farm produce in Delhi or another in Shillong to impart English language training to the eight states of the North-east. Rising incomes, a result of the country’s economic surge, have ensured that the consumer markets are as robust in these small towns as in the metros. Along the way, entrepreneurship has become more acceptable within the middle class in middle India. 
 
 INDIA’S HOTTEST YOUNG 
ENTREPRENEURS
      RANK   WINNER
         1         Dhama Apparel Innovations
         2         Husk Power Systems
         3         Gensol Consultants
         4         SammaaN Foundation
         5         Ideacts Innovations
 EDITOR’S CHOICE
        Wonder Grass
        TRI Technosolutions
        Citizen Media
        iViz Technosolutions
        White Smyle
The most defining feature of this new surge of entrepreneurship is the number of businesses that address social needs. Indeed, some of the most interesting companies that participated in this year’s Young Entrepreneur awards are in this category. There are founders who returned home after graduating from overseas Ivy League colleges or leaving jobs there. There are also young people who have lived and worked in a Kanpur or a Patna all their lives and, put themselves through an equally good education at regional colleges or business schools. Both are driven by an innate desire to put their education to work to better the lot of the less privileged.
 
Their business models find resonance with their markets because of a unique community approach they take to building them — not unlike the collaborative, open source approach. And they are building commercial ventures instead of taking the non-profit route. Many of these businesses may not sustain for lack of resources and support. But they represent the emergence of business models that are disruptive simply because they are about inclusive growth. In the long term, they will have a far more profound impact on the country’s economy that the IT-ITES industry has ever had.
 
snigdha(dot)sengupta(at)abp(dot)in
(This story was published in Businessworld Issue Dated 29-03-2010)