On the state of Indian entrepreneurship

A couple of weeks back I wrote this piece for The Mint newspaper on the state of Indian entrepreneurship.

It has been 17 years since I quit my marketing job in a well known MNC to embrace the topsy turvy world of entrepreneurship. At that time it was rare for a somewhat educated young Indian to pursue a career that did not offer the security of an assured monthly pay check. Those of us who decided to take the road less travelled were considered oddballs by people of my parents’ generation: “Arre Sanju itni acchi naukri mein tha, IIM ke baad ye sab karne ki kya zaroorat thi”, was the question my parents would often be asked.

The contrast with the early 1990s is visibly stark now. Just a month back, Hitesh and I spoke at the Tie Entrepreneurial Summit in Delhi attended by more than 1,600 people—many of them start up entrepreneurs and an equal number aspiring to be entrepreneurs. Every month at our company we get dozens of requests for mentoring, funding, partnerships and alliances from young entrepreneurial companies. The start up scene in India is buzzing.

Today, when I meet parents of young entrepreneurs they don’t hesitate to tell me--and it’s with a tinge of pride--that their child is doing a start up with a couple of his friends from business school: “aajkal start up ka bahut trend chal raha hai, you know.” It is now socially acceptable, perhaps even respectable, to be a struggling entrepreneur.

In 2008 we can expect this trend to continue unless there is a global meltdown like the one in the year 2000.

There are a number of other, related changes that have also taken place. Organisations such as Tie have created a platform where start up and wannabe entrepreneurs can network, learn and receive mentoring from successful entrepreneurs, investors, consultants and domain experts.

An entire entrepreneurial eco system has sprung up.

Venture capital is now available. Of course not everyone has the good fortune to get funding—but at least it is available for most good teams and good ideas. Two decades ago there was only one real VC firm in India—TDICI which went on to become ICICI Venture. It was very early days—we had never actually met anyone who had received venture capital (we just read the odd article about it in business magazines), we did not understand it and did not know how to go about getting it—and therefore never even considered it as a source of funding. We struggled for months to get an OD limit of Rs30,000 from Bank of India—and we got it mainly because the manager was a nice guy who felt sorry for us—by all banking norms we did not deserve it. Finally we raised VC 10 years after I had become an entrepreneur.

A very recent trend is the emergence of Indian investors into VC funds. Up until now VC firms would raise money overseas and invest in Indian companies. Now wealthy Indians are investing both as angels and also into VC funds. I expect this trend too to gather momentum in 2008.

As a consequence of all these changes a new class of entrepreneurs has emerged in India—well educated, first generation and with experience in the best in class companies. It is these entrepreneurs and the companies they build that will be one of the major engines of growth for the Indian economy in the decades to come.

Today, almost every business school in India has an entrepreneurship cell and actively promotes it as a viable career option for its students. Twenty years ago entrepreneurship was a fringe movement at business schools. It is now mainstream. However, even as more fresh business school graduates are likely to become entrepreneurs in 2008, it will be tough for most to get funding since investors value experience, domain expertise and a proven track record.

To them and to others who want to become entrepreneurs, I would like to say that today there are role models for young entrepreneurs to emulate and to get inspiration from—right here in India and not in Silicon Valley. When you are starting out you are hopeful about the future but you are also afraid of the uncertainties. And rest assured as an entrepreneur you will face adversity and your commitment will be tested.

We struggled for 13 years before we could call ourselves somewhat successful. At times like this it is good to talk to people who have been through the entrepreneurial journey a few years before you. This kind of emotional support can keep you going when times are tough—for the greatest success factor for most entrepreneurs is persistence, not brilliance. Keep at it long enough and sooner or later you will get lucky, is what I say.

2008 is just a beginning.