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Next Stop: Middle India
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A conversation I had late last year with a leading investment banker testified to the rise of entrepreneurs from middle India — the Tier-2 and Tier-3 towns inhabited by close to 70 per cent of middle-class India. He said, “We are seeing an increasing number of deals outside the metros, and we believe growth will come from those places. So, we are looking to hire people who can speak local languages fluently, have relationships in smaller towns, are not averse to travelling by train and bus and staying in non-five star hotels.”
India’s secular growth trajectory is being propelled the most by domestic consumption, which, in turn, is being driven by middle India. Thanks to media exposure, telecom penetration, growing linkages with larger urban centres, rising incomes and enhanced distribution and penetration by consumer product companies, aspiration levels here are at an all-time high. Growth opportunities abound across all sectors of the consumer economy. Therefore, it is no surprise that interest in entrepreneurship is rising fast in these areas.
Various studies have shown that representatives of the new middle India share some very interesting attributes. For example, according to studies by Euro RSCG in 2005 and 2007, these attributes include being confident and assertive, more socially aware, proud of being Indian, unafraid of trying the unknown, and belief in the family as the cornerstone of existence. Entrepreneurs emerging from these towns also reflect these attributes.
It is said that entrepreneurship cannot be taught but has to be learnt. In this regard, role models have an important role to play. With awareness about entrepreneurship on the rise, engineering and business colleges in many non-metro towns have also started offering business-related courses. These institutions are also getting exposure to business leaders through the efforts of industry associations and groups such as TiE, which has, for example, recently opened centres in Hubli, Ahmedabad, Pune, Patna, Kochi and Nagpur.
While the hunger, awareness and aspiration levels in entrepreneurs from small towns is as high as anywhere else, there are a few areas where they are facing challenges.
Business skills: They need to build professional, well-governed and large-scale businesses. This requires thinking big, implementing processes and systems, having a team in place and a focused growth plan.
Access to capital: This continues to be an issue. Traditional venture capitalists have no way of identifying and even conducting due diligence on these investment opportunities. At the same time, these entrepreneurs are not familiar with venture capital and how to reach this class of investors. There are no angel funds available; raising money from banks has its challenges; and friends, family and the community can only provide so much capital.
Networking: Building relationships with customers, investors, advisors and mentors, investment bankers, partners; learning and sharing experiences through events and blogs, for example, is more difficult. Many of the entrepreneurs are not Internet savvy and are not aware of how to leverage social media tools.
Clearly, with all energies pushing for change, these challenges can be easily dealt with. In Golders Green crematorium, Hoop Lane, London, there is a statue overlooking the gardens. The statue is of a legendary Indian entrepreneur, born in 1894, and whose name is still among the most venerable Indian businessmen. He had left a small town in Rajasthan, and travelled first to Mumbai and then to Kolkata, the great urban centres of the time, to make his fortune. He went on to establish businesses in jute, sugar, automobiles, tea, textiles, cement, chemicals, rayon and steel tubes.
In tomorrow’s India, a G.D. Birla will not have to travel from Pilani to Mumbai and Kolkata to realise his entrepreneurial dreams; a Palanpur, Patna or Pune would be good enough bases to launch a global empire. The dreams, capabilities and aspirations exist. All that is needed now is resources — financial and non-financial. The good news? It will happen sooner than you or I can imagine.
The author is involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship
(This story was published in Businessworld Issue Dated 29-03-2010)