Entrepreneur (E): How can an entrepreneur work around the issue of the lack of quality seed capital?
Ashok Ganguly (AG): Most successful entrepreneurs started off with seed capital invested by family and close friends. This varies from region to region, but it is fairly widely practiced.
E: How can we tackle the issue of lack of mentors in the India’s rural areas?
AG: There’s no easy solution to that. People with good ideas, high energy and strong will power commence work on their own steam. They could, of course, benefit from mentors—a rare species in rural areas, but they aren’t entirely absent.
E: Does India lack incubator programs?
AG: In India, incubator programs have grown quite dramatically in the past few years. It is a response to the recent burst in entrepreneurial activities. This, and the increasing levels of innovation, are the two important drivers in the Indian economy’s growth story.
E: It’s said that there is a lack of quality talent in India; mediocrity is in plenty. Do you agree?
AG: I entirely disagree with that. Although it is true that much more can be done in this regard, India has the largest talent pool of bright people.
E: If India does offer some of the greatest opportunities of this century, why aren’t mentors from the diaspora active here?
AG: People from the diaspora are cut off from the Indian reality. Most of them would like to do good for the country, but they really don’t know how to.
E: What needs to be done in our education system so that young minds start thinking ‘out of the box’?
AG: There is a lot that needs to be done to improve and widen the Indian educational system. Evidence suggests that entrepreneurship is triggered in individuals with a certain profile and background. But can entrepreneurship be taught? I am not sure.
E: How important do you think family support is for entrepreneurs in India?
AG: Family is one of the most important sources of support in the case of a large number of successful entrepreneurs.
E: Does the half-baked liberalization and license raj create problems for entrepreneurs?
AG: There are certain states, such as Orissa, where the system of a single-window clearance has worked very well. Some of the best practices from various states could be spread across the country.
E: The biggest opportunities currently lie in providing services for SMBs and rural/semi-urban consumers. How do we get entrepreneurs from the urban areas to start looking at this segment?
AG: Many rural and small town entrepreneurs are starting their own businesses. But high-tech solutions are the only viable ideas; there are many others, too, that will continue to emerge from human ingenuity and will
progress successfully.
E: Is it necessary now to create a distinctively different Indian ecosystem and not try and emulate the one in Silicon Valley?
AG: We should stop our preoccupation with Silicon Valley. India’s entrepreneurial map is not limited to Silicon Valley-like activities; it also includes many wider and deeper developments.
THE NKC AND ENTREPRENEURSHIP
Acknowledging the growing impact of entrepreneurship on wealth-creation and employment-generation in India, the National Knowledge Commission (NKC), in its recommendations, suggested sweeping changes to policy, institutions and mindsets to spur the growth of new startups.
The NKC study on entrepreneurship explores the factors that have promoted entrepreneurship in India, and those that could further facilitate greater growth of free enterprise in the country. This report compliments earlier NKC studies and recommendations on innovation, vocational education and training. The study found that entrepreneurship flourishes as a result of a combined input of some key ‘triggers’, such as a helpful business environment, access to early-stage finances, education, individual motivation and some socio-cultural factors.
The report also said that accelerating the growth of entrepreneurship in India would require the support of multiple stakeholders: the government, financial institutions, educational institutions, incubators, chambers of commerce, entrepreneurial networks and associations, and also the entrepreneur’s family and the larger community.
Certain recommendations of the report—such as the introduction of Limited Liability Partnerships (LLPs) that ensure flexibility and low costs of operation while limiting personal liability—have now become a reality. The LLP Bill 2008 paved the way for an alternative corporate business vehicle that provides the benefits of limited liability and lets companies organize their internal structure as a partnership based on an agreement, thus helping startups.
SOME OTHER KEY RECOMMENDATIONS OF THE NKC STUDY ARE:
1] Supportive business environment:
Ashok Ganguly (AG): Most successful entrepreneurs started off with seed capital invested by family and close friends. This varies from region to region, but it is fairly widely practiced.
E: How can we tackle the issue of lack of mentors in the India’s rural areas?
AG: There’s no easy solution to that. People with good ideas, high energy and strong will power commence work on their own steam. They could, of course, benefit from mentors—a rare species in rural areas, but they aren’t entirely absent.
E: Does India lack incubator programs?
AG: In India, incubator programs have grown quite dramatically in the past few years. It is a response to the recent burst in entrepreneurial activities. This, and the increasing levels of innovation, are the two important drivers in the Indian economy’s growth story.
E: It’s said that there is a lack of quality talent in India; mediocrity is in plenty. Do you agree?
AG: I entirely disagree with that. Although it is true that much more can be done in this regard, India has the largest talent pool of bright people.
E: If India does offer some of the greatest opportunities of this century, why aren’t mentors from the diaspora active here?
AG: People from the diaspora are cut off from the Indian reality. Most of them would like to do good for the country, but they really don’t know how to.
E: What needs to be done in our education system so that young minds start thinking ‘out of the box’?
AG: There is a lot that needs to be done to improve and widen the Indian educational system. Evidence suggests that entrepreneurship is triggered in individuals with a certain profile and background. But can entrepreneurship be taught? I am not sure.
E: How important do you think family support is for entrepreneurs in India?
AG: Family is one of the most important sources of support in the case of a large number of successful entrepreneurs.
E: Does the half-baked liberalization and license raj create problems for entrepreneurs?
AG: There are certain states, such as Orissa, where the system of a single-window clearance has worked very well. Some of the best practices from various states could be spread across the country.
E: The biggest opportunities currently lie in providing services for SMBs and rural/semi-urban consumers. How do we get entrepreneurs from the urban areas to start looking at this segment?
AG: Many rural and small town entrepreneurs are starting their own businesses. But high-tech solutions are the only viable ideas; there are many others, too, that will continue to emerge from human ingenuity and will
progress successfully.
E: Is it necessary now to create a distinctively different Indian ecosystem and not try and emulate the one in Silicon Valley?
AG: We should stop our preoccupation with Silicon Valley. India’s entrepreneurial map is not limited to Silicon Valley-like activities; it also includes many wider and deeper developments.
THE NKC AND ENTREPRENEURSHIP
Acknowledging the growing impact of entrepreneurship on wealth-creation and employment-generation in India, the National Knowledge Commission (NKC), in its recommendations, suggested sweeping changes to policy, institutions and mindsets to spur the growth of new startups.
The NKC study on entrepreneurship explores the factors that have promoted entrepreneurship in India, and those that could further facilitate greater growth of free enterprise in the country. This report compliments earlier NKC studies and recommendations on innovation, vocational education and training. The study found that entrepreneurship flourishes as a result of a combined input of some key ‘triggers’, such as a helpful business environment, access to early-stage finances, education, individual motivation and some socio-cultural factors.
The report also said that accelerating the growth of entrepreneurship in India would require the support of multiple stakeholders: the government, financial institutions, educational institutions, incubators, chambers of commerce, entrepreneurial networks and associations, and also the entrepreneur’s family and the larger community.
Certain recommendations of the report—such as the introduction of Limited Liability Partnerships (LLPs) that ensure flexibility and low costs of operation while limiting personal liability—have now become a reality. The LLP Bill 2008 paved the way for an alternative corporate business vehicle that provides the benefits of limited liability and lets companies organize their internal structure as a partnership based on an agreement, thus helping startups.
SOME OTHER KEY RECOMMENDATIONS OF THE NKC STUDY ARE:
1] Supportive business environment:
Make it easier to conduct business by consolidating and simplifying processes, improving delivery time and curbing corrupt practices. In particular, prioritize the MCA-21 project and ensure the following:
• Make single-window clearance meaningful.
• Introduce a Single Composite Application Form for all clearances.
• Introduce a Single Unique Company Number for company, tax and social security registrations.
2) New institutional mechanisms:
• Set up commercial courts to deal with commercial disputes and to speed up contract enforcement.
• Establish a Global Technology Acquisition Fund for Intellectual Property (IP).
3) Facilitate information flows:
• Create ‘one-stop shops’, web-based portals and information handbooks for entrepreneurs. (NKC proposes to set up an all encompassing website on Entrepreneurship as a one-stop portal.)
• Widely publicize risk management tools, such as the SME Rating Agency (SMERA), Credit Appraisal and Rating Tool (CART), Risk Assessment Model (RAM) and improve information flows through the Credit Information Bureau India Limited (CIBIL).
• Increase awareness of the Credit Guarantee Fund Trust Scheme (CGTSI) and ensure visibility and access of the ‘Central Plan Scheme Monitoring System’ (CPSMS), which has been proposed in the annual budget for the year 2008-09.
4) Access to early stage financing:
• Make single-window clearance meaningful.
• Introduce a Single Composite Application Form for all clearances.
• Introduce a Single Unique Company Number for company, tax and social security registrations.
2) New institutional mechanisms:
• Set up commercial courts to deal with commercial disputes and to speed up contract enforcement.
• Establish a Global Technology Acquisition Fund for Intellectual Property (IP).
3) Facilitate information flows:
• Create ‘one-stop shops’, web-based portals and information handbooks for entrepreneurs. (NKC proposes to set up an all encompassing website on Entrepreneurship as a one-stop portal.)
• Widely publicize risk management tools, such as the SME Rating Agency (SMERA), Credit Appraisal and Rating Tool (CART), Risk Assessment Model (RAM) and improve information flows through the Credit Information Bureau India Limited (CIBIL).
• Increase awareness of the Credit Guarantee Fund Trust Scheme (CGTSI) and ensure visibility and access of the ‘Central Plan Scheme Monitoring System’ (CPSMS), which has been proposed in the annual budget for the year 2008-09.
4) Access to early stage financing:
Banks, venture capitalists, angel investors, etc. need to be more proactive in assessing the business opportunities generated by Indian entrepreneurs.
5) Incentives for seed capital funding:
• Establish a secondary market for smaller companies, which provides exit options to the seed stage investor and value addition for
the entrepreneur.
• Create new instruments and institutions for startup funding, involving multiple stakeholders (public and private).
6) Business Incubation For Entrepreneurs (BIE):
5) Incentives for seed capital funding:
• Establish a secondary market for smaller companies, which provides exit options to the seed stage investor and value addition for
the entrepreneur.
• Create new instruments and institutions for startup funding, involving multiple stakeholders (public and private).
6) Business Incubation For Entrepreneurs (BIE):
Develop and put in place a comprehensive BIE policy to increase quantity, enhance quality and increase access to financing.
7) Industry-academia synergies:
• Enact a uniform legislation for publicly funded research, which would grant IP rights for successful results of research to universities/research centers and also entitle the inventor to a share of the royalties from commercialization.
• Enable PhDs/researchers to set up commercial entities while engaged in universities or professional employment, as well as encourage universities/research organizations to establish commercial enterprises that are based on their
new inventions.
8) Entrepreneurship education:
7) Industry-academia synergies:
• Enact a uniform legislation for publicly funded research, which would grant IP rights for successful results of research to universities/research centers and also entitle the inventor to a share of the royalties from commercialization.
• Enable PhDs/researchers to set up commercial entities while engaged in universities or professional employment, as well as encourage universities/research organizations to establish commercial enterprises that are based on their
new inventions.
8) Entrepreneurship education:
Make Entrepreneurship a core subject in business schools and explore possibilities of setting up specialized entrepreneurship schools at the undergraduate and postgraduate levels.
9) Vocational Educational Training (VET)/Skill development should be modernized by formalizing:
• Performance-based training and assessment
• Innovative delivery models
• Incentives to states
• Skills in spoken and written English as a priority
• A transparent, industry-based certification system
• A transparent rating system for VET institutions
10) Promoting entrepreneurial culture:
9) Vocational Educational Training (VET)/Skill development should be modernized by formalizing:
• Performance-based training and assessment
• Innovative delivery models
• Incentives to states
• Skills in spoken and written English as a priority
• A transparent, industry-based certification system
• A transparent rating system for VET institutions
10) Promoting entrepreneurial culture:
Reward and recognize successful entrepreneurs—right from the local to the national level—and
also formally recognize entrepreneurial networks and associations
also formally recognize entrepreneurial networks and associations
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