With over 4,200 new-age companies, India ranks third after US and UK, among global start-up ecosystems, according to a Nasscom report titled Start-up India: Momentous Rise of the Indian Start-up Ecosystem released in October 2015. India had 3,100 start-ups in 2014 which is expected to grow to 11,500 start-ups in 2020, according to a report by Microsoft Ventures and Venture Intelligence.
The millennial who is starting-up is a 20 year-old today.
What are the reasons for the fast-growing pace of the start-up system in India? Vikash Jain, partner and director, Boston Consulting Group, and Professor Dr Kaustubh Dhargalkar, associate dean, Business Design and Innovation, Welingkar Institute of Management Development and Research decode the reasons for India's exponential growth in the sector:
Technology as an enabler: Technology has simplified the way business is done. There is no need for conventional retail, or distributors to go-to market. Entrepreneurs can access the market through the internet because everything is now tech-enabled. This is radically different from what it was a decade or more ago when entrepreneurs had to seek and convince retailers, distributors, etc to stock the product or service. The internet has make it accessible and easy to directly approach the consumer. The entrepreneur is thus not at the mercy of the middle-men. Direct selling is a wonderful option available to him now.
Risk-taking abilities: Technology has also helped in fostering a 'can-do' attitude across classes in the country towards entrepreneurship. A decade ago, on campus interviews, there were hardly 0.5 percent students interested in entrepreneurship. That number is growing with two to three percent students opting for entrepreneurship this millennium. For some of these students who come from sound economic backgrounds, there is no compulsion to earn money immediately after completing their studies. So, even if there is no steady income, their parents are able to look after them. This enables risk-taking. This has helped the start-up ecosystem. Some students take up a job and also simultaneously start-up.
Social entrepreneurship: Social entrepreneurship has grown, thanks to a lot of students coming from Tier III, IV cities. If one were to look at the composition of IIT-Bombay campus, for instance, there are a lot of students now who come from non-metros. This was not the case two to three decades ago. These students have faced real problems at the grassroots-level and are eager to solve these issues. Earlier, social entrepreneurship was not seen as a lucrative proposition. However, that is not the case today.
Availability of funds: There are more avenues to raise funds today than 25 years ago. Earlier, an entrepreneur had to go to the stock market to raise money. However, the concept of seed funds, angel funds, crowdfunding, VC funding etc has made it easier to start-up today.
Ease of communication: Communication has changed the way business is being done. It has led to lesser costs being spent arranging for meetings etc because of access to better technology. Earlier, if a meeting was to be held in another city, someone senior had to fly down to that city and stay in a hotel — all these expenses have been done away with due to Skype, conference calls and video conferencing.
Improving financial systems: In the 1980s and 1990s, stock market scams were the big thing. However, with improving financial systems, the number of such scams have come down. Sebi regulations are very strict and the system has become transparent. The share price of a company is a good reflection of the financial performance of the company.
Career options: Earlier, a student who did well in his studies opted to go in for medicine or engineering. Business was the option of those students who did not fare well in their studies or whose family was in business. This has undergone a sea change. There are a number of colleges and B-School that have centres of innovation like IIM-Ahmedabad — it has a Centre for Innovation, Incubation and Entrepreneurship; Nasscom has 10,000 Startups. All this has made entrepreneurship accessible and possible.
Vibrant ecosystem: Though nascent, there is a vibrant eco-system which is supportive of entrepreneurship. There are companies that can loan office space, furniture etc. So even if someone has nothing but an idea, he can still start-up as the ecosystem is very supportive.
No stigma about failures: There are a considerable numbers of failed start-ups in the Indian start-up ecosystem. However, there are institutions and others who are willing to give people a second chance. The number of people willing to give up steady, well-paying jobs to get into entrepreneurship has risen this millennium. There is no stigma about failures in the start-up ecosystem.
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Updated Date: Dec 31, 2015 12:20:25 IST