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The Extinct Indian Entrepreneur

Red Herring released a list of 20 entrepreneurs under the age of 35. There was one Indian Anurag Dikshit but not a single Indian from India. My take on this issue is the explosion in the job market with Multi-nationals and Indian companies on a hiring spree. You have to be in some sense a radical to ignore the comfort of getting a job and jump into starting a company. Another personal observation, even though there are a lot of VCs in India there is an acute shortage of angel investors in India. VCs pretend to be angel investors and waste the precious time of many budding entrepreneurs asking questions and documentation to be provided that is actually required in the first round of fund raising. Many who pursue a business in India are the ones who get funded by family or informal channels. Many of the businesses are just filling up for infrastructure bottlenecks rather than building new products or services. Banks also provide loans only if you can provide collateral, so the ones that can borrow money are ones that have some property or have money. So our nationalized and private banks will only lend money to those that have money not innovative ideas. I really call upon high networth individuals with good management experience to allocate some money to pure angel investing and mentoring young entrepreneurs. Instead of putting all their money in fixed deposits or pushing up the valuation of established businesses in the stock market or fuelling the irrational real estate boom. In Pune lot of the social discussions are around real estate just like Silicon Valley was abuzz with tech stacks in 97-99 boom. So if you are young, with a good idea, no high networth relative, no personal collateral you might as well take up a job and make the Indian entrepreneur a rare species possibly extinct.

21 thoughts on “The Extinct Indian Entrepreneur”

  1. Great , Shrikant,

    I agree with you completly. End of the day let us do something where cash get generated and pump in to wanted do. Big IT entreprenuers has to put some of their money, some time it surprise it hardly needs few 10 lacs to get start some basic product and get break even in one year. These is hardly a big money for HNW investor. Now ICICI is coming out with some sort of innovative funding if you are having good banking records, which can leverage few of your burden. But still lot to be done on that front.

  2. Apart from the financial and infrastructural issues one also needs to understand that despite a sea of change in the indian mentality towards wealth and wealth generation, initiatives especially risky ones like entrepeneurship are still viewed with skepticisim,which further dissuades a lot of people and puts a social blinder on them.
    At the same time, if i look at it from a different perspective then wading through all this is what differentiates an entreprenuer form the spectator
    🙂

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  4. The extinct Indian entrepreneur thought is a thought-provoking one. I have always tried to be in touch with India’s tech and retail sector, to the extent that I can. There seems to be a real dearth of disruptive startups planned, funded and executed by Indians. I hate this as it could be a real poison for the economy in the medium to long term. The 5-10% of these companies which will last beyond the first couple of years will create value not only for the principals but also for the economy in general. I don’t even mean the hundreds and thousands of jobs created over time, but pioneering strongholds in self-carved niches.

    Moving forward, these companies will be shaped by their internal and more importantly, external communities which will drive greater value out of the ever-evolving business models. Google today is no longer really thought of as ‘Search Technology’ company, rather heralded as the poster boy of a Media Company that it is. Documenting and indexing anything it can get its paws on, this beast is positioning itself to connect the remaining 5.4 billion sharing our planet. I imagine that the developing and under-developed economies will be able to harness the unpredictable network effect of these indigenous startups beyond what we dreamed possible. From bidding on airplane seats on the way to the airport or paying utility bills on the cell phone while listening to a Re.1 download of Zakhir Hussain’s jam session with Ravi Shankar, nothing seems imposible or improbable.

    There are certain emerging pockets of hope such as the ‘Band of Angels’, an investors’ group focused on early stage tech and media ventures. These organizations need to be more accessible and hopefully will shed more light on investing and the benefits of incubating rather than stuffing the mattress. Almost every Indian is aware of the money floating around in the private sector, but the scarcity that a first-time entrepreneur finds for the same is frightening. And as I have noticed, as have others, people will continue to choose comfy chairs whether it be in MNCs or in their family’ age-old business. Not that there’s anything wrong with that.

  5. I read both your article and your comment on my blog (http://radventure.blogspot.com/). Your points are quite true. Angel funding is a gap in the system today, and VCs are not (and should not pretend to be) the solution to bridge that gap. VCs like us do a limited amount of seed funding in the US, but a lot of this tends to be with repeat entrepreneurs or people we’ve funded in the past who come back as EIRs to start new companies. This repeat entrepreneur things is an obvious chicken-and-egg situation in India and doesnt help anyone.
    There are nascent attempts to bridge this gap, including the band of angels mentioned in Abhimanyu’s comment, incubators at IIT/IIM campuses, organizations such as TiE, ISA etc. But I agree with you that we have a long way to go. Like all others, we VCs will also do our bit to bridge this gap. For people like me, this is both an area that would give personal fulfilment, and over the long term professional benefit of a richer set of tech companies at the series A stage.
    Do let me know when you are in Mumbai. Would be good to meet up with a fellow Intel-alum!

  6. Have a look to this Silicon Valley Ecosystem in building….

    “If you want to become a techno-entrepreneur but feel that you need some grooming, some help, then NirmaLabs is the perfect place to be…..”

    NirmaLabs is an Incubation centre with a difference. The basic idea is to identify individuals with technical knowledge and experience with entrepreneurial traits, bring them to NirmaLabs campus, and “groom” them to evolve project plans for high tech wealth generation ventures. The candidate will pay fee for the grooming program. NirmaLabs is recreating the Silicon Valley ecosystem, here in India.

    After grooming (6-months), candidates are expected to come out with a business plan, which if selected, will be incubated at NirmaLabs. NirmaLabs will invest Rs. 20 Lacs as seed fund during incubation. Apart from that one can get benefit of contacts/resources of people associated with NirmaLabs. Each member of team will also get stipend of Rs.8000/- per month while incubation. Two projects are currently being incubated at NirmaLabs.

    If every thing goes well, and incubation is successful then they will help finding an Angel Investor/Venture Capitalist (VC) to finally start up a venture with equity of NirmaLabs, VCs, team, etc. The best part is support of team running NirmaLabs, a coterie of well networked, high worth entrepreneurs. The focus will be on high tech entrepreneurship. Its high risk high gain game.

    If you want to know more and want to know my experience with NL, pls download one of these pdf documents :

    * http://www.nirmalabs.org/download/nirmalabs_with_photos.pdf (1.12 MB)
    * Visit http://www.nirmalabs.org

  7. Could not agree more with all on this borad. I am learning about the tough times that budding entrepreneurs go through, in a hard way. I am an entrepreneur who has been trying to make it for the last six months. But all I get is why dont u fly down and meet some interested VC’s, never works. They are in it for the quick buck and not for a long term relationship.

    One other thing that I have seen is that VC’s want nothing short of another google to look at a company. But hopefully better days would come for the indian entrepreneur

  8. It is a very good article, I am an enterprenuer myself. Came back to Bangalore rejected job offers and decided to start a new trend in India (which I know will very soon pick up fast). Several meetings with the so called VCs, they say 25 lakhs is too less and when I ask for 5M$$ they say that i should ask my firends first and then come to VC. What i found out is that there is no Venture funding activity in India at all!! investment is made only for expansion plan and not for the business model. to crown this there are no options like SBIR in the USA or Start up Grant as in Germany and S’pore for enterprenuers.

    May be when my company becomes profitable, i will have a seed fund which will have the following selection criteria:

    Promoter should be average in academics (say first class but not distinction),
    NOT from IIT/IIMs,
    Work experience of atleast 4+ yrs in relevant field.
    Seed funding requirement not exceeding 50 Lakhs.
    Good communication skills,

  9. Dear Naveen, I really appreciate the plan but why the point of the Promoter not being from the IITs/IIMs. I believe a lot of bright ideas do in fact originate in these institutions.

  10. Dear all,

    I have recently set up my Private Equity & Venture Capital consulting outfit SEQUEL VENTURES in Mumbai. I am on a lookout for either incubating myself / finding other interested investors for a sound technological idea in the IT / ITES / Media / Biotech sector.

    Just don’t fret…I have excellent contacts in Mumbai, Bangalore and US and all that you need to do is contact me with your brilliant idea…I can help you in getting started in a way which is least intrusive and most satisfying…just be straight with your business plans and that’s all is required…!

    Best wishes,

    Krish
    ++ 98193 43817

  11. Dear Krish,

    I am an entrepreneur from Mumbai, and have been looking out for seed funding for my existing venture in the field of IT education.

    I would really like to take you up on your offer, and meet you some time soon. Will give you a call and then fix up a time.

    Thanks

    Prateek

  12. Hi,

    I am based out of the US and have talked to friends and have raised about $ 1 million for an angel investment fund based out of India.

    Currently I am in the process of locating the right kind of legal folks who could advise me on making the fund operational. Any referals?..

  13. Very True,
    I was going thru all the angels listed, came across ‘Band of the Angels’ who claim to be different than others, and are ready to fund start ups with 50 to 100 lacs, but the best part, that in thier own write they have mentioned that if someone wants to get in touch with them he should go out of his way to find them as they have no e-mail id or contact number, and if the person can find them then he will get the funding, give me a break man…. whats the differance between finding them and providing collateral sec to any banker or pvt financer, i know that your ideas in india cannot be funded , so pals just forget it n give up, people here only talk big but dont have the guts to fund or trust an idea, if one funds a IT company all will follow the same……… all loosers…..

    Thanks for allowing us to leave a comment n take out all thats there in us…

    Cheers!

  14. Who else can understand the relevance of the word that I found on this article. Being a dreamer myself, (I am a student, about to finish my Masters in Business Administartion), I ran from pillar to post to get my eduaction loan sanctioned from various nationalized banks in m y locality. I wanted a Rs. 3.5 lacs loan, so that I dont have to put a collateral. But it was all in vain. SBI declined me the loan at the last moment, despite that my father was ready to mortgage my 14 lakh house, with papers ready in his hand!!!

    If that was for education, I still wonder how am I going to achieve my dream of being an entrepreneur. I think it wil need another dream!

  15. Hi,

    I have views on several chats.

    1. Band of angels. I found a mail ID of a couple of them. One responded that he would forward it to other angels, since he did not have time in that idea. There was no further response.

    2. Indian Americans somehow come to fund Indian companies either in BPO, or in some kind of back-office jobs, or so-called end-to-end-solutions or body-shopping, otherwise called by some SW coolies. Some even write on their website that they want low-value massive scales proposals from India.

    Good! However, is that the spirit of the Silicon valley? Where are funds to promote product-inventions in India? Where are angel funds, even after patents filed?

    What is the patent status of most of the VC funding into indian companies?

    In the 21st century should such funding be called technology funding?

  16. Looking for angel investor for a cold formed and machined component project who could invest 25 lacs and offer collateral to Bank up to 100 Lacs liquid assets.The project cost is 2.5 Cr. and being executed in Belgaum Karnataka.

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