Startup India, which is ready to stand up and be counted will soon running the global race to win its place under the sun.
Prime Minister Modi’s address on the Independence day was watched keenly and analysed threadbare over last few days for what he said and what he did not.
One of the most important parts of the speech, for its timeliness and strategic importance to national development, was his call for Startup India, Standup India.
The startup ecosystem in the developed world, and particularly in United States, has often been seen as the barometer of country’s appetite for innovation and growth, and its overall entrepreneurial strength.
The ecosystem includes multiple ingredients supporting the entrepreneurs. It includes academia which fosters innovation, angel investors and Venture Capital (VC) investors who will provide the capital, and a vibrant industry and consumer base which will take risk on trying out new products. Above all it requires an optimistic can-do entrepreneurial spirit which allows people to try
and explore new ideas across the spectrum.
In the license permit raj, the entprenerurial and innovation spirit never flowered as the ecosystem was designed to look at profit as evil and kill rather than nurture innovation. Things started slowly changing in early 90s and the IT services industry has made a big difference in creating a large pool of talented people who are tech savvy and are aware of the latest opportunities and trends globally. It took a while for the ecosystem to be formed in Bharat as individuals and companies experimented with products and services and different ideas, for domestic and global market.
Over the last decade or so, things have changed significantly. A large number of VCs have come in the market and taking bets on startups and committing big numbers in investments. The investments in 2015 alone in companies like Flipkart, Snapdeal, Ola, Zomato, Paytm, Quikr have crossed dollar 2.4 billion already which is a huge number by previous standards. Bharatiya startups are giving good competition to startups in other developed economies for funding which was unthinkable a few years earlier. There is lot more which is happening beyond the VC funding though.
The startup scene in Bharat has companies of three kinds. There are companies like Flipkart, Ola, Paytmetc who are founded by tech savvy young technologists in big metros who know the game, who have some relevant experience and can pitch their products and services to VC firms. The focus here is on valuation, right level of funding, and an eye of the right timing of exit for the VCs and sometimes the founders as well. These are the most
visible yet the small part of the overall scene.
The second and larger part is startups in manufacturing and service industries, including from the traditional B and C towns who have abundance of entrepreneurial energy, support from friend and families and the fire and passion to build a business on a large scale. They may not be from IT, but know an opportunity when they see it and have in them to make it work.
Reserve Bank of India (RBI) has announced allocation of 10,000 crore to Small Industries Development Bank of India (SIDBI) for a VC fund. Ministry of Micro and Small and Medium Enterprises (MSMEs) has set up a Credit Guarantee Trust fund with a corpus of Rs 85,000 crore to enable easy access of funds to entrepreneurs. These steps including similar ones from different state governments will go a long way in making it easy for these entrepreneurs to bloom and succeed.
The even larger part is startups created by people from low income group which have potential to succeed, which are not borne out of any desire to build a global brand but simply a creation which was the need of the hour, backed by practical entrepreneurial wisdom and hard work. The focus is on doing their best on a daily basis and slowly
and surely it evolves into a large enterprise.
Modi’s significant announcements about encouraging the 1.25 lakh bank branches to offer a loan to dalit, woman and a tribal to help them start will be the ideal catalyst for this third type of startups and entrepreneurial ventures. So in all the three types of startups, we now see a happy combination of private sector enablement and government empowerment and funding which will accelerate the entpreneurial energies of Bharat.
Anirudh Joshi (The writer is Expert of Business, Technology and Governance)