The much anticipated launch of Start-up India this weekend has generated palpable excitement. With
Silicon Valley heavyweights flying down for the launch, an unprecedented demand for seats at the
event, the initiative is already being applauded. But, I’m a little concerned.
I have no doubt that the Modi government understands the “nafa-nuksan” fundamentals of business.
Yet, start-ups are not your regular business and fostering entrepreneurship goes far beyond investments
and returns. So, while programs such as ‘Make in India’ or ‘Digital India’ followed straightforward
principles of business promotion, Start-up India is a little more complicated. It needs to break all
templates to get it right.
Having built and nurtured start-ups, I have a very personal interest in the initiative. Indian start-ups are
hungry and impatient. They have been waiting for a long time for the government to recognize the
Cambrian “entrepreneurial explosion” worldwide and play an active part in encouraging its spread
across India. There has been no dearth of ideas and innovation. But until now, as experienced in the
Indian IT industry, the start-up universe has succeeded largely despite the government. Now that the
government is diving into these exciting waters, albeit a little late, it is imperative that they get it right.
The recipe of success starts with recognition of six important elements of this change.
First, that we are playing catch-up. Leave Silicon Valley aside, a simple comparison with Israel shows
that despite the Indian market being 150 times bigger in size by population, both countries invest the
same amount in their startups – around $5 billion a year, of which 95% comes from outside India. Thus,
it is not going to be easy and neither will it happen overnight. We need to patiently walk the long road
to build an Indian ecosystem that does not blindly emulate Silicon Valley. This initiative needs to be
uniquely tailored to amplify the strengths of our local environment to help start-ups leap frog ahead.
Second, we have to be cognizant of the fact that we are in a globally competitive environment and thus
have to respond relative to the options that exist around the world. India today has to compete with
some very aggressive start-up ecosystems. Take São Paulo for example, where its government program
‘Startup Brazil’ invests about $50,000 in each venture it approves. Or Seoul, where the government is
not only offering a matching grant of $500,000 for $100,000 in investment received; it has also launched
a Born2Global hub providing easy access to services and opportunities to interface with other startups
to foster a community of innovation in the “creative economy.” Start-up India will have to go far beyond
these to remain competitive for investors. Needless to say, loosening the red tape or creating digital
one-stop approval window is necessary condition; however these would not be enough.
Narrow the Focus
Third, the key to getting the best outcome is to narrow the focus on a few areas where India could
create a strategic competitive advantage at global scale. Playing catch up through small-scale
manufacturing is a long and difficult road in competition with large-scale highly automated global
manufacturing hubs. India’s success over the last decade has been around the creation of $100 billion
globally competitive services business. Thus, a startup ecosystem focused on leveraging this advantage –
along with innovative adoption of technology to solve problems of a large pool of population – would
set us up for success. What we need is a slingshot aimed at turning the momentum and not a broad
based spray and pray approach with a hope that something may stick!
Fourth is gaining an understanding who these start-up entrepreneurs are? In my experience successful
Entrepreneurs are irrational and unreasonable; inquisitive and intuitive; intractable and disruptive.
These are qualities that make them unique. In India however most of us were taught from very early
years to save-not-spend, play safe and tow the line, largely because of the economic struggles of our
preceding generation. Thus as a society do we really want more “entrepreneurs”? Do we know how to
create them? Do we know how to encourage them when we find them? Do we know how to make
heroes of them by celebrating their ideas and innovation and not their wealth and opulence? Therefore,
while the importance of fostering entrepreneurship as an economic development strategy is widely
recognized, the programs often fall short at recognizing the socio-cultural headwinds.
Government as a Catalyst
Fifth is the role of the government. What’s needed? At the very start, the government should see its
role as a catalyst of change and not a driver of change. It should create an enabling environment that
bridges the distance between theory and the real world – one that creates an ecosystem of taking risks
rather than averting risks. The government must keep in mind that it is only one part of this ecosystem.
A start-up ecosystem is in fact a dynamic network comprising a variety of players orbiting the
entrepreneurs. This includes investors, mentors, incubators, co-working platforms, entrepreneurship
development networks, academia and even change-makers. Together they enable cultural shifts that
make being “unreasonable” and “disruptive” more palatable in the business environment.
The government has to be the gravitational force that keeps all the pieces moving in harmony, not just
by removing the roadblocks of bureaucracy, but also providing access to resources that help startups
raise capital, find the right insights, expertise and experience, and enter new markets. An excellent
example is that of Rwanda, where progressive government policies helped lift the country out from the
economic turmoil following its tragic genocides, to catapult it from a low 143rd rank in the World Bank’s
Ease of Doing Business Index to an impressive 62nd in 2016 – far higher than India’s 130th position.
Law of small numbers
Lastly, even before the launch of ‘Startup India’, it must be clear that the goals and metrics of success
are different in this landscape. It is not essential to exponentially grow the number of startups. It would
be better instead to deep dive into identifying the high potentials in strategic areas, assist them in
scripting a big win, and celebrate it. “Even one success can have a surprisingly stimulating effect on an
entrepreneurship ecosystem,” writes Daniel Isenberg in the Harvard Business Review, coining this effect
the “Law of Small Numbers.”
Over the years and through my experience, I have seen Indian optimism drive the backbone of its selfstarting
entrepreneurial culture. The launch of ‘Startup India’ is another great example of this. But like
everything in this vibrant country – this will also have to be done in a way we have never done things
before. I am sure with some smart thinking and some optimism, Startup India would make India
The original article was published by QUARTZ India: http://qz.com/594422/will-modis-startup-india-be-enough-for-our-hungry-and-impatient-entrepreneurs/
Posted: Nov 30 ,-0001 by admin