‘Entrepreneurship Is An Aspiration Today’
The startup ecosystem in India has undergone a massive makeover in the past few years. What are your views on the transition?
The word entrepreneur, in itself, has undergone a huge transformation. Today, it is a lot to do with people’s aspiration. If you compare the current startup ecosystem with that of the past, it has changed drastically. By past, I don’t mean too long ago. I am referring to the recent past – may be five years ago. Today, the best and the brightest in the country are willing to take all the risks required to become entrepreneurs. This was not the case even in years like 2010 or 2011. It’s interesting to see that entrepreneurship is increasingly emerging as a career option for the youth today and that is a changing trend. While entrepreneurship has become an aspiration, it is platforms such TiE [The Indus Entrepreneurs] and IAN [Indian Angel Network] that make it easier especially for first generation entrepreneurs to understand the nuances of starting up on their own. Besides, the government’s push in the past few years is also motivating the youth. You see, what is important in entrepreneurship is the initial funding. While startup platforms across the country help mentoring those with innovating and path-breaking ideas, they also help them in raising capital. That is crucial.
But, is there a problem of plenty all of a sudden? The me-too-businesses are mushrooming. What is the solution? What about the exit environment for VCs?
The total capital available (venture capital money) and the total number of new-age entrepreneurs should be seen in the context of total GDP and total population. When you compare that to developed nations like the US, it is miniscule. We, in India, have mammoth scope and opportunity. As far as me-too-businesses are concerned, they will exist for a while. That’s the nature of venture capital or startup industry. The current situation in India is particularly interesting – it’s giving rise to entrepreneurship in hordes. A time will come when the best ones will scale up and the not so great ones will fade. As far as exits are concerned, they are picking up. While the investment horizon is typically 5-7 years for a VC investor, we are seeing lots of exits even before time.
You just mentioned the US. What would you differentiate entrepreneurship in India with that of the US?
Well, it is way too different. If you see entrepreneurial opportunities in India, it lies in sectors such as healthcare, education and biotechnology, among others. In the US, these sectors are already developed. Take healthcare for instance. The doctor-patient ratio in India is abysmally low [as per a report jointly published by KPMG and Ficci in 2016 1:7000], while healthcare in the US is way too developed. They also have huge penetration when it comes to health insurance. Similarly, in the education sector in India, there is a huge gap that needs to be filled in terms of teacher-student ratio. In our country, opportunities lie in different sectors when compared to the US. There, perhaps, opportunities lie is selling products more innovatively to customers online.
You spoke briefly about the opportunities. But, what are the key challenges in the market today?
Well, there are a few. The startup ecosystem is fairly new in the country so it’s rather obvious that there will be a few teething issues. The government, on its part, is doing a lot to foster entrepreneurship. But, there are a few things that can be taken into consideration to facilitate more VC participation. Currently, there is an angel tax on several private investments. Since startups have very few sources of mainstream funding, the government could perhaps look at reducing or removing the angel tax. Besides, there are also some issues pertaining to crowdsourcing that could be relaxed. Currently, as per Indian company Law, a venture can’t send out information to over 200 people while seeking private capital. This becomes particularly difficult when one is looking at crowdfunding.
