Covering Entrepreneurial Ecosystem

In last couple of years, I covered entrepreneurship and solution innovations in India.
Recently one friend suggested me to share all stories on this blog. Keeping his noble suggestion in mind I am sharing few stories and interviews. Your comments and feedback are welcome…

relauncHER: Positive Impact on Women Professionals
After a yearlong study of women careers, Jyotika Singh founded relauncHER in order to remove the barriers and biases related to career breaks and stop penalizing women for the difficult choices they have to make. In an interview, Jyotika highlights several issue related to women’s employment in India: (13 November 2013)  http://www.saharasamay.com/business-news/entrepreneurship/676542554/relauncher-creates-a-positive-impact-on-women-professionals.html

Social Innovation at Work in India
After more than six decades of Independence, the excluded majority in India is grappling with intractable problems where grinding poverty is worsening their conditions. In this backdrop, BMVSS ventured into this segment to reduce social hardship with clear social vision and commitment. (09 November 2013) http://www.saharasamay.com/business-news/entrepreneurship/676542192/social-innovation-at-work-in-india.html

Entrepreneurs in Each Region Should Share their Experiences: Vivek Wadhwa
In an exclusive interview, Vivek Wadhwa, a leading global thinker, sheds light on innovative solutions to plug loopholes. (04 November 2013)  http://www.saharasamay.com/business-news/entrepreneurship/676541850/entrepreneurs-in-each-region-should-share-their-experiences.html

Jugaad is crucial for India: Dr Jaideep Prabhu
Dr Jaideep Prabhu is director of the Centre for India & Global Business at Judge Business School, University of Cambridge, UK. Prabhu is co-author of Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth. In an exclusive interview with Samay Live, Prabhu sheds light on various issues related to entrepreneurship development in India. (02 November 2013) http://www.saharasamay.com/business-news/entrepreneurship/676541756/jugaad-is-crucial-for-india.html

Skill Development by Startups
A lack of suitable skills and unorganized nature of employment created tricky situation for the households in various pockets of urban India. But in last few years, several startups with fledgling ideas ventured into this nascent segment to lag the gap. (October 2013) http://www.linkedin.com/lite/external-redirect?url=http%3A%2F%2Fwww%2Esaharasamay%2Ecom%2Fbusiness-news%2Fentrepreneurship%2F676541048%2Fskill-development-by-startups-in-india%2Ehtml&urlHash=pthw

Energy for All
Clean cooking solutions in developing countries like India are very much an unexplored terrain. In order to provide such solution, new enterprises are venturing into this terrain in the last few years. (29 October 2013) http://www.saharasamay.com/business-news/entrepreneurship/676541402/clean-cooking-solutions-in-india.html

Contributing to the Common Good
India has just entered into social entrepreneurship movement to explore newer and innovative solutions to address the most compelling socio-economic challenges. These young entrepreneurs from all over India are contributing to the common good.  (27 October 2013)
http://www.saharasamay.com/business-news/entrepreneurship/676541055/india-has-just-entered-into-social-entrepreneurship-movement.html

Green Businesses
Sheer amount of electronic gadgets from cheap to high-end have infiltrated every day live in India. Its toxic constituents are posing a big challenge of a different kind where e-waste cycling industry is largely unorganized. At this juncture, some startups have ventured into this uncharted terrain to address growing challenges of e-waste. (26 October  2013) http://www.saharasamay.com/business-news/entrepreneurship/676541045/e-waste-recycling-activities-in-india-2013.html

A New Wave of Social Enterprises
In a bid to provide clean drinking water, a new wave of social enterprises emerged and showed an unleashing potential to tackle social-economic hardships. Such change makers are inspiring the coming generation to tackle the world’s one of the toughest social and environmental challenges.  (October 2013) http://www.saharasamay.com/business-news/entrepreneurship/676541258/a-new-wave-of-social-enterprises.html

Pursuing a Passion
Young students are capable to handle pressure, but maturity is still lacking due to lack of exposure to startups, business and entrepreneurship ecosystem. Article sheds light on the entrepreneurship ecosystem from funding to entrepreneurship development programmes in India.  (October  2013) http://www.saharasamay.com/business-news/entrepreneurship/676541156/the-entrepreneurship-ecosystem-from-funding-to-entrepreneurship-.html

Thriving ‘Kandum’ Business

In Raguvir Nagar of West Delhi, as you walk through the shanty lanes you can easily witness a thriving informal sector. Wherever you look, you can find the heaps of used clothing at centre of business activities. Contrary to previous predictions of eventual demise of this sector at the global level, the informal economy has emerged in new guises.
Kailash who runs a unit of stitching and along with his family he manages to earn the considerable sum and his entrepreneurial endeavor enables a comfortable life. They buy used-clothing from the households that are useless for those people. After loosening stitches, they re-stitch them into various sizes before sell to the traders at nearby Purana Kapada Market.
Mohan  (45 year old) a school dropout from Uttar Pradesh who came in Delhi about 20 years ago with having seventy rupees in pocket now he possessed a piece of land which priced at 75 lakh.  Since then, Mohan is a regular peripatetic trader at Mandi and business of this used clothing gave him everything. Mohan narrated his success story to me. He added that he prefers embroidered garments and jeans. And prices of these embroidered cloths are much higher.
It is not an isolated story of entrepreneurial spirit at back of rubbles but this locality is a cradle of such numerous entrepreneurs. They are blooming on a principle – the fine stitch and the more money and further that is improving overall employment scenario. Same locality is also important for another reason. The government is running a cash transfer initiative instead of food grains through public distribution system but growing entrepreneurial spirit enabling them as self-dependent. They are aware of such initiatives.
When I ventured into nearby Purana  Kapda Vikray Market ( one of the largest  market place for used-clothing) there were forty  to fifty thousand  people, roughly. They vied for lying cloths like trousers, sarees etc. Some of workers were sorting cloths very fast. This market opens at 2 am daily and closes at around 1 pm after floor mopping and cleaning.
There are two types of workforce involved in this market one is self-employed and second one is wage employed. Under the self-employed category, whole families work together and toil for more than eight hours a day. On the other hand, there is another group of people who shorts cloths at piece rates. All most all market participants belong to Gujarat.
If you are regular for some times but you have not enough money to pursue your business then you can borrow easily form informal sector here known as Kishtiya. However, this business does not require a lot of money. Traders come here from Alwar, Gurgaon,  Rohtak  and all nook and corner of Delhi.
However there are no exact figures or data on involving work forces. Traders pay 3 rupees per gathar and if you are buyer of cloths then you will pay five rupees per gather.
These are not survival activities. It provides employment, goods and services for low-income groups. Anonymously these “ultimate entrepreneurs” are contributors to the economy as whole but they are invisible to the glitzy but it does not dampen their enthusiasm.

Entrepreneurship & Indian Policies

In an interaction with a faculty at the leading entrepreneurship development institute lamented over uncertain policy issues related to entrepreneurship. And he said that we don’t have comprehensive entrepreneurship policy at the Union level, it is a policy for MSMEs. In this backdrop, I will shed light on various policy pronouncements by the Union Government in India which is based on publicly available sources.
“The importance of the MSME sector in the growing Indian economy has long been recognized; so also has the fact that the MSME sector faces several major hindrances to growth such as complicated bureaucratic registration procedures, accessing finance and working capital loans from banks and other institutional sources, accessing information and management skills.”(1)

A research study by International Finance Corporation (IFC) stated that the Micro, Small and Medium Enterprise sector is crucial to India’s economy. There are 29.8 million enterprises in various industries, employing 69 million people. The sector includes 2.2 million women-led enterprises (~7.4 percent) and ~15.4 million rural enterprises (51.8 percent). In all, the MSME sector accounts for 45 percent of Indian industrial output and 40 percent of exports. Although 94 percent of MSMEs are unregistered, the contribution of the sector to India’s GDP has been growing consistently at 11.5 percent a year, which is higher than the overall GDP growth of 8 percent. (2)
(Above mentioned figures are based on the Government data and IFC.)

Since Independence to the Sixties, Indian policy makers emphasize on the socialist model of development. During that time span, the Government provided a favorable condition for the State Owned Enterprises (SOEs) in India and the then political leadership leveled them as ‘Temple of Modern India’.  In this backdrop, the Union Government pronounced some policy measures in order to accelerate industrial growth. But the small scale industries remained ignored at the large extent.

The first industrial policy in Independent India announced in April 1948. In order to meet industrial requirement, the Union Government announced industrial policies 1956, 1980 and 1991 which is closely associated with business activities in India. Finally, the Union Government enacted the Micro, Small and Medium Enterprises (MSME) Development Act in 2006.

 

INDUSTRIAL POLICIES & SMALL SCALE INDUSTRIES

Industrial Policy Resolution, 1948: The Policy aimed at outlining the approach to Industrial growth & development. It emphasised the importance to the economy of securing a continuous increase in production and ensuring its equitable distribution

Industrial Policy Resolution, 1956:  Under the Policy the role of State was given more importance as an engine for accelerating the economic growth and speeding up the industrialization as a means of achieving a socialist pattern of society.

Industrial Policy Statement, 1973:  The thrust of this Policy Statement was an identification of high-priority industries where investment from large industrial houses and foreign companies were permitted.

Industrial Policy Statement, 1977:  The Policy emphasized on decentralization and growth of small scale industries

Industrial Policy Statement, 1980:  The Policy einusaged promoting competition in domestic market, technology upgradation and modernization. The policy laid the foundation for an increasingly competitive export based and for encouraging foreign investment in high-technology areas.

Industrial Policy 1991
The main objectives of the Policy were as follows:

• To maintain a sustained growth in productivity and gainful employment and attain international competitiveness.
• Self-reliance or building up the ability to pay our import bills through our own foreign exchange earnings and developing indigenous capacity in technology and manufacturing
• Pursue sound policy framework encompassing encouragement to entrepreneurship, development of indigenous technology, dismantling of the regulatory system
• Development of capital markets and increasing competitiveness
• Spread of industrialization to backward areas through appropriate incentives, institutions and infrastructure investments
• Encourage foreign investment and technology collaboration
• Abolish monopoly of any sector or any individual enterprise in any field of manufacture except on strategic and military considerations and open all manufacturing activity to competition
• Ensure that public sector plays its rightful role in strategic areas of national importance.
• Protect the interests of labour, enhance their welfare and equip them to deal with technology Change
Source: http://eaindustry.nic.in/handbook_200809/Chapter%201.pdf

 

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 seeks to facilitate the development of micro, small and medium enterprises. It provides the first-ever legal framework for recognition of the concept of “enterprise” which comprises both manufacturing and service entities. It defines medium enterprises for the first time and seeks to integrate the three tiers of these enterprises, namely, micro, small and medium.

The Act also provides a statutory consultative mechanism at the national level with balanced representation of all sections of stakeholders, particularly from these three categories.

 

Source: http://pib.nic.in/release/rel_print_page1.asp?relid=46960

This Act emphasized on various issues related to MSME Sector. These are access to financing, skill development, access to market, competitive technology and quality improvement.
In order to promote entrepreneurship in India, several ministries started programmes for intended beneficiaries. Some of them are successful in achieving desired goal but many of them are struggling at the ground level.

National Science & Technology Entrepreneurship Development Board (NSTEDB)
The National Science & Technology Entrepreneurship Development Board (NSTEDB), established in 1982 by the Government of India under the aegis of Department of Science & Technology, is an institutional mechanism to help promote knowledge driven and technology intensive enterprises. The Board, having representations from socio-economic and scientific Ministries/Departments, aims to convert “job-seekers” into “job-generators” through Science & Technology (S&T) interventions.

Major Objectives of NSTEDB
To promote and develop high-end entrepreneurship for S&T manpower as well as self-employment by utilising S&T infrastructure and by using S&T methods.
To facilitate and conduct various informational services relating to promotion of entrepreneurship.
To network agencies of the support system, academic institutions and Research & Development (R&D) organisations to foster entrepreneurship and self-employing using S&T with special focus on backward areas as well.
To act as a policy advisory body with regard to entrepreneurship

The programmes are broadly classified into the following areas:
Training programmes
Entrepreneurship Awareness Camp (EAC)
Entrepreneurship Development Programme (EDP)
Faculty Development Programme (FDP)
Technology Based EDP (TEDP)

Institutional mechanisms for entrepreneurship development
Innovation and Entrepreneurship Development Centre (IEDC)
Science & Technology Entrepreneurship Development (STED) Project
Science and Technology based Entrepreneurship Development (i-STED)
Science & Technology Entrepreneurs Park (STEP)
Technology Business Incubator (TBI)
Information dissemination
Source: http://www.dst.gov.in/scientific-programme/st-nstedb.htm#2


National Scheduled Castes Finance and Development Corporation(NSFDC)
NSFDC was setup by the Govt. of India on February 08, 1989 with the name National Scheduled Castes and Scheduled Tribes Finance and Development Corporation (NSFDC) . It was incorporated as a fully owned Government Company under Section 8 of the Companies Act, 2013.

VISION: Fighting Poverty through Entrepreneurship.
MANDATE: Providing concessional finance for setting up of self-employment projects and skill-training grants to unemployed SC persons living below Double the Poverty Line.
NSFDC: NSFDC is an institution under Ministry of Social Justice & Empowerment, Government of India for financing, facilitating and mobilizing funds for the economic empowerment of persons belonging to the Scheduled Castes families living below Double the Poverty Line. NSFDC finances income generation schemes for the target group through the State Channelising Agencies (SCAs) nominated by respective State/UT Governments.
BROAD OBJECTIVE: NSFDC is the apex institution for financing, facilitating and mobilizing funds from other sources and promoting the economic development activities of the persons belonging to the Scheduled Castes living below double the poverty line.
It has been assigned the task for financing, facilitating and mobilizing funds for the economic empowerment of persons living below Double of the Poverty Line (DPL). It provides financial assistance for income generating schemes for the target group through state Channelising Agencies (SCAs) which are nominated by respective State/UT Government.

This is managed by a Board of Directors with representation from Central Government, State Scheduled Castes Development Corporations, Financial Institutions and non-official members representing Scheduled Castes.
Source: http://www.nsfdc.nic.in/


The Khadi and Village Industries Commission (KVIC)

The Khadi and Village Industries Commission (KVIC) is a statutory body established by an Act of Parliament (No. 61 of 1956, as amended by act no. 12 of 1987 and Act No.10 of 2006. In April 1957, it took over the work of former All India Khadi and Village Industries Board.

Objectives
The social objective of providing employment
The economic objective of producing saleable articles
The wider objective of creating self-reliance amongst the poor and building up of a strong rural community spirit

Functions
The KVIC is charged with the planning, promotion, organisation and implementation of programs for the development of Khadi and other village industries in the rural areas in coordination with other agencies engaged in rural development wherever necessary. Its functions also comprise building up of a reserve of raw materials and implements for supply to producers, creation of common service facilities for processing of raw materials as semi-finished goods and provisions of facilities for marketing of KVI products apart from organisation of training of artisans engaged in these industries and encouragement of co-operative efforts amongst them. To promote the sale and marketing of khadi and/or products of village industries or handicrafts, the KVIC may forge linkages with established marketing agencies wherever feasible and necessary.

The KVIC is also charged with the responsibility of encouraging and promoting research in the production techniques and equipment employed in the Khadi and Village Industries sector and providing facilities for the study of the problems relating to it, including the use of non-conventional energy and electric power with a view to increasing productivity, eliminating drudgery and otherwise enhancing their competitive capacity and arranging for dissemination of salient results obtained from such research.
Further, the KVIC is entrusted with the task of providing financial assistance to institutions and individuals for development and operation of Khadi and village industries and guiding them through supply of designs, prototypes and other technical information.
In implementing KVI activities, the KVIC may take such steps as to ensure genuineness of the products and to set standards of quality and ensure that the products of Khadi and village industries do conform to the standards.
The KVIC may also undertake directly or through other agencies studies concerning the problems of Khadi and/or village industries besides research or establishing pilot projects for the development of Khadi and village industries.
The KVIC is authorized to establish and maintain separate organisations for the purpose of carrying out any or all of the above matters besides carrying out any other matters incidental to its activities.
Source:http://kvic.org.in/index.php?option=com_content&view=article&id=257&Itemid=147

 

Dairy Entrepreneurship Development Scheme (DEDS)

Dairy/Poultry Venture Capital Fund scheme was started in December 2004 with an outlay of Rs. 25.00 Crore.  The fund was released during 2005-06 for the first time for implementation of the scheme. This scheme has been fragmented into two separate scheme viz. Dairy Venture Capital Fund & Poultry Venture Capital Fund from the financial year i.e. 2008-09.
Dairy Venture Capital Fund Scheme (DCVF)) was evaluated by Centre for Management Development (CMD) Thiruvanthapuram, Kerala and final report was submitted by them in the year 2009.  The modification was made under the scheme on the basis of recommendation made in the independent evaluation study done by CMD, changes suggested by the beneficiaries, implementing agency (NABARD) and lead banks.  In the EFC meeting held on 24th June, 2010 under the Chairmanship of Secretary (ADF ,it was decided to modify the Dairy Venture Capital Fund and change it’s name to Dairy Entrepreneurship Development Scheme to make the scheme more effective through  wider coverage, enhanced component-wise outlays and by including new components for assistance under the scheme. The scheme DVCF came to a close on 31st August, 2010. The new modified scheme DEDS was started from 01.09.2010 with an outlay of Rs 250 crore during the 11th Plan.

Objectives of the Scheme
Setting up modern dairy farms for production of clean milk
Encourage heifer calf rearing for conservation and development of  good breeding stock
Bring structural changes in unorganized sector so that initial processing of milk can be taken up at village level.
Up gradation of traditional technology to handle milk on commercial scale
Generate self-employment and provide infrastructure mainly for unorganized dairy sector.

Pattern of assistance
Entrepreneur contribution (Margin)-10% of the outlay (Minimum)
Back ended capital subsidy –25% of the outlay – general category (33.33% for SC/ST farmers)
Effective Bank Loan – Balance portion/Minimum of 40% of the outlay.
Government of India will provide 25% back ended capital subsidy to General category and 33.33% for SC/ST farmers of the cost of project subject to its component wise ceiling which will be adjusted against the last few instalments of repayment of bank loan.

Implementing Agencies: National Bank for Agriculture & Rural Development (NABARD) will be the Nodal Agency for implementation of the scheme. Commercial Banks, Co-operative Banks and Regional Rural and urban Banks will implement the scheme. The scheme is open to organized as well as unorganized sector.

Target group/beneficiaries: The Department has proposed this scheme for dairy development and the eligible beneficiaries of the scheme are agricultural farmers, individual entrepreneurs and groups of unorganized and organized sector. Group of organized sector, includes self-help groups, dairy cooperative societies, Milk unions, milk federation, etc…This scheme shall also help in employment generation at village level as well as Dairy Co-operative Society level.
Source: http://dahd.nic.in/dahd/deds.aspx

 

National Bank for Agriculture and Rural Development

National Bank for Agriculture and Rural Development (NABARD) was set up on 12 July 1982 with the mandate to achieve rural prosperity through credit and related activities. Recognizing the importance of the Rural Non-farm Sector (RNFS) in the faster economic development of rural areas, NABARD had taken a number of initiatives, both with refinance support and promotional assistance, for development of this sector. Of these, Rural Entrepreneurship Development Programme (REDP) is a major promotional initiative, which aims at developing enterprise and creating employment opportunities in rural areas.

Rural Entrepreneurship Development Programme (REDP)
Rural Entrepreneurship Development Programme (REDP) is one of the important NFS promotional programmes supported by NABARD for creating sustainable employment and income opportunities in a cost effective manner for the benefit of educated unemployed rural youth.

Objective: Developing entrepreneurial and activity-oriented skills among unemployed rural youths willing to set up small/ micro-enterprises by assisting Voluntary Agencies (VA)/ Non- Governmental Organisations (NGO)/ Development Agencies (DA)/ RUDSETIs etc. with good track record in conducting REDPs. 

Features and Coverage of REDP
REDP comprises 3 distinct phases, viz., pre-training, training and post-training phase. The success of the programme depends on the strict adherence to these phases.

(i) Pre-training
Detailed survey for identifying potential business activities/ market, publicity, awareness creation and motivational campaign, Coordination with various agencies – especially banks, Government  Department Formation of Selection Committee, Project Monitoring Committee, Selection of trainees etc… 

(ii) Training
The duration of the programme is 6-8 weeks. Training module comprises : Achievement motivation, Opportunity identification and guidance, Knowledge on supporting agencies and schemes, Preparation of project reports/profiles, Management of resources (men, material, money), Marketing aspects, Book-keeping/Accounting. In case of technical/ activity based REDP, inputs on technical aspects/ skill development/appropriate technology will be included. Case-studies on potential activities, field visits, practical work, visit to successful units, etc., to be integral part of training programme

(iii) Post-training
Facilitating credit linkages for setting up units and Escort services to trainees for atleast two years.

Eligible Institutions
NGOs / Voluntary Agencies / Development Agencies and RUDSETI type institutions. NABARD provides promotional assistance to capable agencies with good track record and professional competence to successfully implement REDP.
Source: http://oldsite.nabard.org/nonfarm_sector/pp_de_redp.asp

Small Industries Development Bank of India (SIDBI)
Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of Indian Parliament, is the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged in similar activities. 

Business Domain of SIDBI
The business domain of SIDBI consists of Micro, Small and Medium Enterprises (MSMEs), which contribute significantly to the national economy in terms of production, employment and exports. MSME sector is an important pillar of Indian economy as it contributes greatly to the growth of Indian economy with a vast network of around 3 crore units, creating employment of about 7 crore, manufacturing more than 6,000 products, contributing about 45% to manufacturing output and about 40% of exports, directly and indirectly. In addition, SIDBI’s assistance also flows to the service sector including transport, health care, tourism sectors etc …Source: http://www.sidbi.in/?q=about-sidbi

 

RAJIV GANDHI UDYAMI MITRA YOJANA

It is a scheme of Promotion and Handholding of Micro and Small Enterprises under the Ministry of MSMEs.

Eligibility
Under RGUMY, financial assistance would be provided to the selected lead agencies i.e.  Udyami Mitras for rendering assistance and handholding support to the potential first  generation entrepreneurs. Following agencies/ organizations can be appointed as the lead  agency i.e. Udyami Mitra:
i. Existing national level Entrepreneurship Development Institutions (EDIs).
ii. Micro, Small and Medium Enterprises Development Institutes (MSMEDIs)/  Branch MSMEDIs.
iii. Central/ State Government public sector enterprises (PSEs) involved in  promotion and development of MSEs e.g. National Small Industries Corporation (NSIC) and State Industrial Development Corporations etc.
iv. Selected State level EDIs and Entrepreneurship Development Centers (EDCs) in public or private sectors;
v. Khadi and Village Industries Commission (KVIC).
vi. Special Purpose Vehicles (SPVs) set up for cluster development involved in entrepreneurship development;
vii. Capable associations of MSEs/SSIs;
viii. Other organizations/training institutions/NGOs etc. involved in entrepreneurship development/ skill development.
Source: http://rgumy.nic.in/RGUMY/rgumy_doc/RGUMY_ENGLISH_Booklet_revised_11052010.pdf

 

REFERENCE

(1) http://www.isb.edu/faculty/shamika/MSME%20chapter_Shamika%20Ravi.PDF

(2) Micro, Small and Medium Enterprise Finance in India
A Research Study on Needs, Gaps and Way Forward (November, 2012) by International Finance Corporation (IFC)

Journey of Entrepreneurship

In India, entrepreneurship is becoming a popular subject among students, faculties and researchers. Increasingly, many people ranging from policymakers to media are emphasizing that entrepreneurship is the key to economic development.

The word “Entrepreneur” is a French derivation. In 1755, Richard Cantillon first introduced the term. Cantillion‟s entrepreneur is someone who engages in exchanges for profit; specifically, he is someone who exercises business judgment in the face of uncertainty.

Writing in Harvard Business Review, Geoffrey Jones and R. Daniel Wadhwani said, “During the 1940s and 1950s business historians pioneered the study of entrepreneurship. The interdisciplinary Center for Research on Entrepreneurial History, based at Harvard Business School which included Joseph Schumpeter and Alfred Chandler, and its journal Explorations in Entrepreneurial History were key institutional drivers of the research agenda. However the study of entrepreneurship ran into formidable methodological roadblocks, and attention shifted to the corporation, leaving the study of entrepreneurship fragmented and marginal. Nevertheless business historians have made significant contributions to the study of entrepreneurship through their diverse coverage of countries, regions and industries, and – in contrast to much management research over the  past two decades – through exploring how the economic, social, organizational, and  institutional context matters to evaluating entrepreneurship.”

Since then literature on entrepreneurship has developed and expanded its horizon after interacting with economic theories and business histories. In the following text, I will discuss various theories on entrepreneurship which is postulated by leading experts and economists.

Jean-Baptiste Say: Father of Entrepreneurship
Jean-Baptiste Say was the second author to take an interest in entrepreneurs. He regarded economic development as the result of venture creation, and hoped the English Industrial Revolution would spread to France (Say, 1815, 1816). Cantillon and Say regarded entrepreneurs as risk-takers basically because they invested their own money.

In Cantillon’s view, entrepreneurs bought a raw material – often a farm product – at a certain price, in order to process it and resell it at an uncertain price. Entrepreneurs were therefore people who seized opportunities with a view to making profits, and assumed the inherent risks. Say drew a distinction between the entrepreneur and the capitalist, and between their profits (Say, 1803; 1827: 295; 1815; 1816: 28-29; Schumpeter, 1954: 555).
In doing so, he associated entrepreneurs with innovation. He viewed entrepreneurs as  change agents. He himself was an entrepreneur, and became the first to define the  boundaries of what an entrepreneur, in the modern sense of the term, actually is.
Schumpeter (1954) admitted that a major part of his own contribution was to tell the Anglo-Saxon community about the world of the entrepreneur as described in the writings of Jean-Baptiste Say. As Say was the first to lay a foundation for the field, we have described him as the father of entrepreneurship (Filion, 1988).1
It is perhaps interesting to note that what Say did was basically to draw together two major trends of thought of his time: that of the physiocrats and that of the Industrial Revolution in Great Britain. He was a great admirer of Adam Smith (1776), whose ideas he brought to France, and of the English Industrial Revolution (Say, 1816). In fact, he tried to establish a framework of thought that would enable the Industrial Revolution to move across the Channel to France. He applied the liberal thinking proposed by Quesnay, Mercier de La Rivière, Mirabeau, Condorcet, Turgot and other physiocrats as a means of developing farming, to the entrepreneur.

Joseph Schumpeter on Entrepreneurship
Joseph Schumpeter is seen as the foremost theoretician of entrepreneurship. In addition, Schumpeter, whose “creative destruction” is as famous as Milton Friedman’s “there is no free lunch,” is increasingly recognized as a major economist, often given the same stature as John Maynard Keynes.

Schumpeter spent the last twenty years of his life as a Professor of Economics at Harvard University. English-speaking readers may be familiar with some of his works, especially The Theory of Economic Development and the classic Capitalism, Socialism, and Democracy. However, very few of Schumpeter’s key texts on the entrepreneur and entrepreneurship have been available in English. (2)
W. Michael Cox and Richard Alm write, “Joseph Schumpeter (1883–1950) coined the seemingly paradoxical term “creative destruction,” and generations of economists have adopted it as a shorthand description of the free market’s messy way of delivering progress. In Capitalism, Socialism, and Democracy (1942), the Austrian economist wrote:
The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. (p. 83)

Although Schumpeter devoted a mere six-page chapter to “The Process of Creative Destruction,” in which he described capitalism as “the perennial gale of creative destruction,” it has become the centerpiece for modern thinking on how economies evolve. (4)
Innovation by the entrepreneur, argued Schumpeter, leads to gales of “creative destruction” as innovations cause old inventories, ideas, technologies, skills, and equipment to become obsolete. The question is not “how capitalism administers existing structures…[but] how it creates and destroys them.” This creative destruction, he believed, causes continuous progress and improves the standards of living for everyone.(3)

In online version of Library of Economics and Liberty, Timothy Sandefur stated: “According to Schumpeter, the process of technological change in a free market consists of three parts: invention (conceiving a new idea or process), innovation (arranging the economic requirements for implementing an invention), and diffusion (whereby people observing the new discovery adopt or imitate it). These stages can be observed in the history of several famous innovations. The Xerox photocopier was invented by Chester Carlson,5 a patent attorney frustrated by the difficulty of copying legal documents.6 After several years of tedious work, Carlson and a physicist friend successfully photocopied a phrase on October 22, 1938. But industry and government were not interested in further development of the invention. In 1944, the nonprofit Battelle Corporation,7 dedicated to helping inventors, finally showed interest. It and the Haloid Company (later called Xerox) invested in further development. Haloid announced the successful development of a photocopier on October 22, 1948, but the first commercially available copier was not sold until 1950. After another $16 million was invested in developing the photocopier concept, the Xerox 915 became the first simple push-button plain-paper copier. An immense success, it earned Carlson more than $150 million.8 In the following years, competing firms began selling copiers, and other inventions, such as the fax machine, adapted the technology.”
Sandefur further added, “Schumpeter limited his analysis of innovation to its economic aspects, but Friedrich Hayek pointed out that the same process takes place at the level of social mores and political philosophy. Hayek and his contemporary Karl Popper developed the political theory of the “open society,” stressing the importance of innovation for the discovery and testing of social values. In Hayek’s words, “the existence of individuals and groups simultaneously observing partially different rules provides the opportunity for the selection of the more effective ones.”10 This process, however, creates discomfort as well.” Friedrich Hayek was leading economist. He popularized the Austrian School in economic thinking and various towering figures are associated with this school.

Israel Kirzner and Entrepreneurship
Israel Kirzner(born 1930) refined the academic understanding of entrepreneurship and postulated concepts of entrepreneurial alertness and discovery. His book, Competition and Entrepreneurship criticizes neoclassical theory for its preoccupation with the model of perfect competition, which neglects the important role of the entrepreneur in economic life. His contribution to entrepreneurship is widely recognized.
Russell S. Sobel said in Liberary of Economics and Liberty, “In contrast to Schumpeter’s view, Kirzner focused on entrepreneurship as a process of discovery. Kirzner’s entrepreneur is a person who discovers previously unnoticed profit opportunities. The entrepreneur’s discovery initiates a process in which these newly discovered profit opportunities are then acted on in the marketplace until market competition eliminates the profit opportunity. Unlike Schumpeter’s disruptive force, Kirzner’s entrepreneur is an equilibrating force. An example of such an entrepreneur would be someone in a college town who discovers that a recent increase in college enrollment has created a profit opportunity in renovating houses and turning them into rental apartments. Economists in the modern austrian school of economics have further refined and developed the ideas of Schumpeter and Kirzner.”
For more than three decades, Professor Israel M. Kirzner has developed the economic theory emphasizing the importance of the entrepreneur for economic growth and the functioning of the capitalist process. In his theory building on entrepreneurship, Kirzner links the idea of the highly individual skills and knowledge of man with the entrepreneur of Ludvig von Mises, Kirzner’s teacher and mentor. He has thereby become the single most important scholar in modern Austrian economics. In the 1970s and 1980s he was instrumental in laying the foundation for a new research community in Austrian economics and the theory of the competitive market process.
Kirzner spells out a theory of the entrepreneurial market process that fills the theoretical gap in traditional price theory. The entrepreneur is posited as the prime mover in the economic system and as such s/he is alert to gaps in the market and enticed by the lure of pure profit. The gaps discovered by alert entrepreneurs are continuously closed through arbitrage. The market is depicted as an unending process of the entrepreneurial discovery of opportunities for mutual gain from exchange.(5)

David C. McClelland and Entrepreneurship
In Journal of Enterprising Culture, Louis Jacques Filion wrote in 1997, “For the purposes of this paper, the term “behaviorists” includes the psychologists, psychoanalysts, sociologists and other specialists of human behavior. One of the first authors from this group to show an interest in entrepreneurs was Max Weber (1930). He identified the value system as a fundamental element in explaining entrepreneurial behavior. He viewed entrepreneurs as innovators, independent people whose role as business leaders conveyed a source of formal authority. However, the author who really launched the contribution of the behavioral sciences to entrepreneurship was undoubtedly David C. McClelland.”
According to Filion, McClelland did not define entrepreneurs in the same way as the rest of the literature. His definition was as follows: “An entrepreneur is someone who exercises control over production that is not just for his personal consumption. According to my definition, for example, an executive in a steel-producing unit in the USSR is an entrepreneur.” (McClelland, 1971; see also 1961: 65)

Filion further added, “In fact, McClelland’s (1971) work concentrated on managers of large organizations. Although he is strongly associated with the field of entrepreneurship, a careful reading of his writings shows that he never made a connection between the need for achievement and the decision to launch, own or even manage a business (Brockhaus, 1982: 41). McClelland also identified the need for power, but he paid less attention to this aspect in his later work, and it is less well-known. A number of researchers have studied need for achievement, but nobody seems to have obtained conclusive results that associate it with entrepreneurial success (Durand and Shea, 1974; Hundall, 1971; Schrage, 1965; Singh and Singh, 1972).”

To be continued…

REFERENCE 

(1) http://web.hec.ca/creationdentreprise/CERB_Backup-12-mai-2008/pdf/1997 05EPIEntreprenology.pdf
(2) http://www.sup.org/book.cgi?id=17858
(3) http://www.econlib.org/library/Enc/CreativeDestruction.html
(4) http://www.econlib.org/library/Enc/bios/Schumpeter.html
(5) http://www.eaward.org/web/2006_Israel_M_Kirzner.aspx

Covering Entrepreneurial Ecosystem

Recently one friend suggested me to share all stories on this blog. Keeping his noble suggestion in mind I am sharing few stories and interviews.
In last couple of years, I covered entrepreneurship and solution innovations in India. Here I am posting few stories and interviews. Your comments and feedback are welcome…

relauncHER: Positive Impact on Women Professionals
After a yearlong study of women careers, Jyotika Singh founded relauncHER in order to remove the barriers and biases related to career breaks and stop penalizing women for the difficult choices they have to make. In an interview, Jyotika highlights several issue related to women’s employment in India: (13 November 2013)  http://www.saharasamay.com/business-news/entrepreneurship/676542554/relauncher-creates-a-positive-impact-on-women-professionals.html

Social Innovation at Work in India
After more than six decades of Independence, the excluded majority in India is grappling with intractable problems where grinding poverty is worsening their conditions. In this backdrop, BMVSS ventured into this segment to reduce social hardship with clear social vision and commitment. (09 November 2013) http://www.saharasamay.com/business-news/entrepreneurship/676542192/social-innovation-at-work-in-india.html

Entrepreneurs in Each Region Should Share their Experiences: Vivek Wadhwa
In an exclusive interview, Vivek Wadhwa, a leading global thinker, sheds light on innovative solutions to plug loopholes. (04 November 2013)  http://www.saharasamay.com/business-news/entrepreneurship/676541850/entrepreneurs-in-each-region-should-share-their-experiences.html

Jugaad is crucial for India: Dr Jaideep Prabhu
Dr Jaideep Prabhu is director of the Centre for India & Global Business at Judge Business School, University of Cambridge, UK. Prabhu is co-author of Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth. In an exclusive interview with Samay Live, Prabhu sheds light on various issues related to entrepreneurship development in India. (02 November 2013) http://www.saharasamay.com/business-news/entrepreneurship/676541756/jugaad-is-crucial-for-india.html

Skill Development by Startups
A lack of suitable skills and unorganized nature of employment created tricky situation for the households in various pockets of urban India. But in last few years, several startups with fledgling ideas ventured into this nascent segment to lag the gap. (October 2013) http://www.linkedin.com/lite/external-redirect?url=http%3A%2F%2Fwww%2Esaharasamay%2Ecom%2Fbusiness-news%2Fentrepreneurship%2F676541048%2Fskill-development-by-startups-in-india%2Ehtml&urlHash=pthw

 

Energy for All
Clean cooking solutions in developing countries like India are very much an unexplored terrain. In order to provide such solution, new enterprises are venturing into this terrain in the last few years. (29 October 2013) http://www.saharasamay.com/business-news/entrepreneurship/676541402/clean-cooking-solutions-in-india.html

Contributing to the Common Good
India has just entered into social entrepreneurship movement to explore newer and innovative solutions to address the most compelling socio-economic challenges. These young entrepreneurs from all over India are contributing to the common good.  (27 October 2013)
http://www.saharasamay.com/business-news/entrepreneurship/676541055/india-has-just-entered-into-social-entrepreneurship-movement.html

Green Businesses
Sheer amount of electronic gadgets from cheap to high-end have infiltrated every day live in India. Its toxic constituents are posing a big challenge of a different kind where e-waste cycling industry is largely unorganized. At this juncture, some startups have ventured into this uncharted terrain to address growing challenges of e-waste. (26 October  2013) http://www.saharasamay.com/business-news/entrepreneurship/676541045/e-waste-recycling-activities-in-india-2013.html

A New Wave of Social Enterprises
In a bid to provide clean drinking water, a new wave of social enterprises emerged and showed an unleashing potential to tackle social-economic hardships. Such change makers are inspiring the coming generation to tackle the world’s one of the toughest social and environmental challenges.  (October 2013) http://www.saharasamay.com/business-news/entrepreneurship/676541258/a-new-wave-of-social-enterprises.html

Pursuing a Passion
Young students are capable to handle pressure, but maturity is still lacking due to lack of exposure to startups, business and entrepreneurship ecosystem. Article sheds light on the entrepreneurship ecosystem from funding to entrepreneurship development programmes in India.  (October  2013) http://www.saharasamay.com/business-news/entrepreneurship/676541156/the-entrepreneurship-ecosystem-from-funding-to-entrepreneurship-.html

EDI: Rise of New Intellectual Power

In 2011, the Economist wrote a piece in its well-known section (Schumpeter) on emergence of think-tanks at the global platform from emerging countries like India.

“The rise of new economic powers is inexorably bringing the rise of new intellectual powers, too. For decades American think-tanks have ruled the world. They have the finest facilities, the cleverest scholars and the best lunches. They have defined the terms of the global debate and provided America’s hard power with a halo of soft power.
This is still largely the case. But emerging-market think-tanks are growing rapidly, promising to broaden the global debate. The big ideas of the future are increasingly likely to come from them.” The Economist

This is indeed good news for all. In this backdrop, Solution Innovation Review (SIR) narrates story of an Indian institution – the Entrepreneurship Development Institute of India (EDII) which is popularly known as EDI. How this Ahmedabad-based institution is imparting knowledge related to entrepreneurship development and nurturing budding entrepreneurs from various developing countries?

Recently, Dr Suleiman Mohammed – director of Centre for Entrepreneurship Studies at Abubakar Tafawa Balewa University Bauchi at Nigeria attended Faculty Development Programme in EDI.

Speaking to Solution Innovation Review (SIR) Suleiman said, “To start with, EDI is really doing much towards alleviating poverty and increasing general welfare of individuals across developing countries through disseminating entrepreneurial knowledge and skills. For instance the FDP, I have just attended at the EDI is full of experiences (knowledge and skills) that,  if well utilized, will go a long way in creating entrepreneurial mindset among young students of higher institutions of learning through their lecturers.”

EDI was set up in 1983 as an autonomous institution.  It is promoted by financial institutions like IDBI Bank, ICICI Bank, IFCI, SBI and Government of Gujarat.  It has emerged as a leading institute for entrepreneurship development and training in India and around the globe.

EDI offers two unique Post Graduate Programmes under its Centre for Entrepreneurship Education & Research.  It has several training programmes  for national and international participants. EDI implements projects for the state governments, central government and international organisations.

Key Areas

Entrepreneurship in the SME Sector
Intrapreneurship
Innovation, Incubation & Entrepreneurship
Social Entrepreneurship
Family Enterprise
Gender and Entrepreneurship
Sectoral Entrepreneurship

Highlighting recent trends, Suleiman said, “Generally about entrepreneurship development in developing countries, it appears that many nations are not giving it the priorities it deserves even though it is the only way out from the chronic unemployment syndrome evident in their economies. For instance, if Europe and America can pay attention to entrepreneurship to the extent that today small entreprises can constitute bulk of their employment and revenue sources then why we in developing countries will not do that?”

Similarly, Gimo Delfim Fumo from Mozambique (Africa) who attended an entrepreneurship development programme at EDI echoed a similar view and he recognised role of institutions in well being of people from various geographies.

In this backdrop, Sunil Shukla, chief faculty of EDI told solution Innovation Review (SIR),  “At EDI, we know only one thing that is entrepreneurship and we define entrepreneurship as a state of mind not only limited or confine to income generation activities.  It relates to way of thing. If he or she have entrepreneurship mind set they can excel.”

Shedding light on various initiatives, Shukla said, “We have about dozens programmes scheduled every year where we attract about 500 plus participants from outside the country every year. We have our international affiliate offices in South East Asia – Cambodia, Laos, Myanmar and Vietnam.  We have our own office in China.  We are in process of setting up similar EDI affiliate entrepreneurship development centres in Central Asia and five such centres in African countries. That’s why I said we know entrepreneurship only.”

On being asked about funding ecosystem for budding entrepreneurs in developing countries, Shukla said, “Certainly, that is a core issue for entrepreneur. Some time back, we have done a study on entry barriers to entrepreneurship. Initial support and credit linkages emerged to be one of the bottlenecks which keep youths away from businesses.  So finance is necessary.  Lack of funding is a bottleneck and something needs to be done.”

Crowdfunding for Entrepreneurship Development: An Indian Context

In era of increasing role of social networking sites, crowdfunding is becoming a buzz word.  It is emerging as an alternative source for raising funds in several countries. People from various hues are using social networking sites to raise funds for various reasons. This write-up will shed light on crowdfunding focused on entrepreneurship development. Further it will unfold various models of crowdfunding  and regulatory mechanism in India.

Recently, International Organization of Securities Commissions (IOSCO) released report on risks and benefits related to crowdfunding.  Title of this working paper is Crowd-funding: An Infant Industry Growing Fast. India is also a member of IOSCO.

According to this paper of IOSCO, “Crowd-funding is an umbrella term describing the use of small amounts of money, obtained from a large number of individuals or organisations, to fund a project, a business or personal loan, and other needs through an online web-based platform.”

Types of crowd-funding:

Crowd-funding can be divided into four categories:

Social lending/donation crowd-funding,

Reward crowd-funding,

Peer-to-peer lending and Equity crowd-funding

(Note: Peer-to-peer lending and equity crowd-funding comes under Financial Return Crowd-funding.)

The working paper identifies the main benefits of Financial Return Crowd-funding

(FR crowd-funding) as the following:

• Provides a boost to economic growth through flows of credit to SMEs and other users in the real economy

• Fills a credit gap left by banks

• Offers lower cost of capital/high returns, leveraging off a lower cost basis

• Provides a new product for portfolio diversification

The main risks are:

• Risk of default

• Platform risk

• Risk of fraud

• Risk of illiquidity

• Risk of investor inexperience

(Source:Crowd-funding: An Infant Industry Growing Fast)

Crowd-funding should not be confused with micro-financing (for example, such as the Grameen Bank style of micro-lending). Microfinancing is predominately a bank based exercise, whereby the bank is the sole provider of the loan, is the originator of the loan and bears the risk of the loan. As such, it does not draw on the principles of many investors funding small parts of a required capital need.

In order to strengthen entrepreneurial ecosystem, Ruchi Dana from the Stanford Graduate School of Business started PikAVenture. It is India’s first crowd funding platform.  PikAVenture provides legal advice, consulting and incubator services to entrepreneurs.
Ruchi interacted with several leading personalities and change makers in India. Once Ruchi said to this writer, “There is no formal bridge between budding entrepreneurs and successful entrepreneurs who make not only students but all aspiring entrepreneurs miss out on active guidance and able mentorship. In addition, lack of active venture capital firms and weak network of angel investors makes budding entrepreneurs really struggle to get seed funding or any sort of early stage financial aid. Also, entrepreneurship comes with fair degree of risk and struggle.”

Similarly, Milaap is working in areas of education & training, energy, enterprise development sanitation and water. Milaap is a Hindi word for ‘unity’. It was started in June 2010, by three young entrepreneurs in an attempt to change people’s concept of giving. Generally they focus on students, small businesses, women and families who need a small amount of capital to for betterment.

Its investors include First Light Ventures, Jayesh Parekh, Jungle Ventures, Lionrock Capital, Rajiv Madhok, Toivo Annus, Unitus Seed Fund and Vijay Shekar Sharma.

India is not new to such initiatives and Indian history is replete with several attempts for noble cause where changemakers adopted it as solution to tackle common problems. One can say that earlier it was sporadic in nature, now it is becoming more apparent which requires a proper policy framework.
As of now, we don’t have elaborate guidelines on it. According to media reports, Indian regulatory bodies are working on it. Crowdfunding practices in India are at the nascent stage. Its full potential is yet to realise.

Entrepreneurial Spirit in Gujarat

Recently I visited Ahmedabad to attend a Faculty Development Programme (FDP) in Entrepreneurship Development Institute of India (EDII).  During a discussion in the class, one teacher shared roaring success stories of Ahmedabad-based micro-entrepreneurs. How they started their venture and their ways to tackle tough situations or their business tricks? Such stories of courage compel us to meet and interact them. Story of reaching the door steps of those entrepreneurs is also interesting.
First of all we (I and Krishan) decided to visit shop of Jasu Ben Shah. We as outside reach a shop which claims that its original shop. They gave menu and we found that name at the menu is different from what they have written on the board. Suddenly we asked clearly…where shop of Jasu Ben Shah Pizza is. Then they shared detail about this shop. We visited their and talked to attendants. They shared various things with us happily. We ate Pizza which was very tasty. I never ate such kind of Pizza which was completely Indianised. There was a Jugaad stove which was running on Kerosene oil (I think) and it was about five feet long. I never saw such kind of stoves earlier.
Then we visited well known Panwala – Ashok Pan House. It is located in the middle of city. Entire family owns and run various shops in this city. They have a chain of shops. These shops are neat and clean. He said that we reduced some items in the recent past. We make some of products when people place order for them. Taste of his Paan was very nice.
Finally we visited to shop of Indu Ben KhakharawalaIt’s located in other part of city. Shop was packed with customers. They were demanding various kinds of homemade stuffs. Majority of buyers were women. To sum up, truly Gujarat is replete with numerous micro entrepreneurs. Their entrepreneurial spirit is commendable in India. They think positively even during a crisis. Such charterers depicts grace and guts of Gujarati culture.
Writing an introduction in a book – “Dhandha: How Gujaratis Do Business”  well-known Bollywood actor Amitabh Bachchan rightly said, “Business acumen is something that Gujaratis seem to inherit rather than acquire.”

Billions of Micro Entrepreneurs

Chaadni Chowk and adjoining areas in Delhi is well-known for its ecosystem. Here roads and streets are narrow but business activities are extremely intense. Entrepreneurs do businesses in a range of segments like spices, grains, garments, books, sweets and many more.

Few months back, I ventured into this area and I reaslised that a revolution is taking shape in this Walled City, unfortunately that is ignored by many. Entire business activities are revolving around the pushcarts (Dhakka). This frugal innovation or Jugaad innovation is lifeline for entire area. Labourers supply goods and products at their door steps. Further they make food and tea. They sit at their carts or discuss various things in spare time and sleep in night.  Roughly, there are about one lakh pushcarts in these areas. One pushcart engaged three people. However, there is no estimation or data on people involve in this trade.

In these areas, there are numerous wage workers who migrated from various states due to a lack of gainful employment. Expanding such pushcart business in the walled city is attracting such unskilled labourers. Further it meets a local demand.  

It is a single wooden carrier for goods which is appropriate for narrow streets. These pushcarts are prepared by local carpenters. Almost all pushcarts are distributed from nearby Singhara Chawk for commercial purposes. There are various dedicated shops for repairing these pushcarts.

There is a hierarchy among owners of pushcarts. Some owners have 10 pushcarts, some of them have 100 pushcarts and even big owners have 1,000 pushcarts. They provide services to shopkeepers.

One pushcart has carried about 10 to 15 quintile Nag (just like carton) and involves three to four people. Each labourer receives a 350 to 450 per day. It can carry an array of items like salt, flowers, spices, frozen fruits and bundles of cloth etc.

Labroures carry salt in the early morning, and then they carry transport goods at the night, they categories themselves accordingly products like salt, spices, flowers etc.

Some well-off labroures have their own pushcarts in Singhra Chawk. But increasing inflation is putting enormous pressure on them. They survive by hustling on the streets and on the mercy of authorities. Anyone can easily understand the absence of social safety nets and lack of unionism among this heterogeneous and vulnerable workforce.   

Using frugal innovation or Jugaad innovation, the Dhakka business is gaining momentum in these enclaves. Its strengths are low capital requirement, higher employment generation and ecofriendly nature of transportation in narrow streets. However, in existing setup, it is an absolute domain for male labourer. 

Entrepreneurial Ecosystem in India: Challenges Ahead

Sam White is co-founder of Promethean Power Systems. It is a thermal battery technology start-up that enables cold-storage of perishable foods where power supply is erratic such as villages in India. This revolutionary battery eliminates the need for a diesel generator when chilling milk at the village level. In communication with Solution Innovation Review (SIR) Sam says that hiring is our biggest challenge.

This is not an isolated case and entrepreneurs in India are facing several challenges. In this backdrop, Solution Innovation Review (SIR) identified challenges after talking to several entrepreneurs and experts. Some of them are funding, hiring, legal issues and lack of infrastructure.
Starting a company is simultaneously the most thrilling, motivating and rewarding thing one could do as well as the most exhausting, stressful and painful thing. On can say that the rewards are many and the challenges are many.

Speaking to SIR, Valerie R Wagoner Founder & CEO, ZipDial told, “The biggest challenge any entrepreneur has to growing a company to be a big success is in scaling and always staying ahead of the curve. Early on, we kind of worked on an incentive model for sales people, where in they could earn more of incentives and less of fixed pay. That did not work out. We now have sales people with good amount of fixed pay topped up with better incentives.”

ZipDial is a mobile engagement and analytics platform, especially embracing the needs and behaviors of emerging market consumers and advertisers.
“Second, we had a tough time in hiring our company secretary. Since we failed to do the due diligence, we ended up trying and testing many a firms, finally zeroing down on one. Even in basic compliance matters, one should always remember that you get what you pay for. Don’t be cheap because you’ll get cheap quality.”

“Regarding India specifically, there are challenges in any market, but there are not any unsurmountable hurdles in growing our business from India. In fact, we are proud that ZipDial is truly a “from India” start-up “going global”. India has been a fantastic market to prove out the model as we continue expanding in to Southeast Asia and eventually other regions. Overall, this is an exciting time to do business in India.”

Shedding light on entrepreneurial ecosystem in India, Amit Grover, founder of Nurture Talent Academy told SIR, “Right at the beginning, challenge for startups is to come up with correct product and on time. Knowing customer preferences in a country like India is very difficult – here people drive a BMW and eats Vada Pav on roadside!”

Grover said, “Besides, there are no advanced or reliable information, studies, and statistics available on various issues. So that entrepreneurs have to rely on gut feeling. Once a product is made, the next challenge arises in marketing it – TV and newspaper are having maximum reach but are out of reach for a startup. People do not like trying new things as customers and similarly dealers/channel partners, so it takes time to establish in market. After this comes funding challenge, where angel investors act like devils during negotiations! As the startup grows, talent and hiring becomes a challenge as candidates want more money without understanding startup’s business or culture.”

Grover further added, “Most MBA and engineering students are trained on ‘personality’, ‘interviewing skills’, ‘resume writing skills’ which is completely stupid way of training and distorts thinking process of young students towards jobs and placements. So, overall startup challenges keep changing from time to time as per stages of growth.”

Echoing a similar view, Digbijoy Shukla, an entrepreneurship evangelist told Solution Innovation Review (SIR), “There are several challenges for startups in India: Raising early stage financing – especially when you do not have a proof of concept or very early revenues. Also collateral free debt financing is a major challenge for companies in the scale up stage. Going to Market – getting customers in a competitive environment is very challenging. As a startup you have very limited budgets and hence it becomes challenging.  Hiring – Quality team is a challenge and to attract and retain talent as a start-up is a big issue since they can’t offer competitive salaries or have the brand.  Legal- Lot of ambiguity around taxation and licensing, a lot of startups in the food business, financial inclusion etc is more sensitive to regulatory issues.”

On being asked about challenges towards startups, Manika Premsingh Founder of Orbis Economics said, “In terms of my experience as an entrepreneur, the challenges have been thankfully small, partly because of the nature of the business and partly because of the business model itself.

Orbis Economics provides content and research to clients across countries, customised to their requirements. We have so far not felt the need to raise funding, and given the services oriented nature of the business, there are hardly any legal/regulatory issues. We typically hire on a project basis, though we are increasing the number of permanent hires too, thankfully, we do find good resources available. And, incidentally, good telecom/IT developments have helped us immensely.”

Manika added, “I think challenges to the entrepreneurial eco system are softer in nature – like having a community or hub of entrepreneurs who you can share and discuss with, or the place we are in in the business cycle, where demand is less than it would be during boom years, and hence entrepreneurs have to strive harder. My sense is that there are more issues faced around legal or infrastructure for small manufacturing companies.”

Riti M D founder of a corporate training firm – RMG Learning told Solution Innovation Review (SIR), “I have not looked for funding so far. Investing myself in what I believe in. There is enough and more skilled talent for us to hire. We don’t need infrastructure. We are a corporate training firm.”

To sum up, one can say that challenges towards entrepreneurs and startups are changing from one sector to another sector. In some sectors, entrepreneurs are unable to find an appropriate talent. But it’s not an issue of others. Similarly, funding is not an issue for all. Many entrepreneurs are starting their ventures from their own capital. But one can say that getting customers in a competitive environment is really a challenging task.