Recession Time: Opportunity Time

Courtesy: The Economic Times

The message was loud and clear — the time has come. The ongoing recession is the best time to start out and the nation should let go of its hang-ups about business and government, business, media and civil society should come together to ensure that a billion ideas bloom. An elite panel at the The Power of Ideas discussion in Delhi (topic: Ecosystem for Innovativeness in India and Is Jugaad a Means of Disruptive Innovation?) threw up diverse ideas to create the right ecosystem for entrepreneurs. If a former bureaucrat-turned-head of India’s biggest car maker-turned entrepreneur wanted government policies to promote small companies instead of protecting them, a serial entrepreneur who is now seeding enterprises wanted a radical socio-economic shift, wherein the next-door aunt wouldn’t disapprove if one were to give up his job and start a venture. In an ecosystem, which is skewed towards the regular 9-to-5 office routine, an individual leaving his cushy MNC job to venture into something innovative is considered foolish. “And that is why the condemnation of a new idea needs to be done away with and success stories need to be blown out of proportion; failures need to be looked at as stepping-stones if India has to create entrepreneurs,” said Raman Roy, managing director of BPO firm Quatrro, and one of the pioneers of India’s BPO industry. And indeed, it was evident from the Indian’s inclination for jugaad that he/she had an entrepreneurial streak.

It was necessary that people with ideas be given the right ecosystem to turn their jugaad into appropriate technology and then, into business propositions. Said the former head of auto-maker Maruti and now MD of Carnation Auto, Jagdish Khattar: “It is difficult for start-ups to thrive in an environment where it had no governmental support in terms of policy and with little or poor infrastructure. Although some sectors, particularly information technology, have spawned entrepreneurship without any help from the government that model cannot be replicated in manufacturing. “Manufacturing has to depend on the government for facilities whereas IT does well because the government has no role to play in it,” Mr Khattar said. “Infrastructure will vary from industry to industry and for some sectors, it can be critical.” In the US, entrepreneurship is the real driver of the economy. Angels invested $29.4 billion in over 57,000 early stage startups, which comes to an average of $0.51 million per deal. VCs, on the other hand, invested $26.1 billion in 3,912 startups in the same year at an average of $6.7 million per deal.

In India, on the other hand, of the $19.5 billion that was invested by VCs and PEs combined (excluding angels), less than 6% went into startups. But interestingly, though the volume of deals might be significantly lower, the average VC deal size is much larger in India. $1.3 billion was invested by VCs in 2007 across 75 deals, at an average of $17.3 million per deal, which is almost three times that in the US, in the same year. “There are no figures available for angels in India but we at the Indian Angel Network have invested close to Rs 20 crore in about 15-16 early-stage startups,” said Saurabh Srivastava, founder IAN. The discussion revolved around the concept of jugaad (a unique approach to innovation in India) and how it can lead to a disruptive change in businesses. Fortis Healthcare chairman and MD Shivinder Singh said, “We are at a stage where pieces of innovations are coming up.

We are in the process of putting the pieces together. There has to be trigger point where people can go out and say ‘I want to do it’.” Indians are genetically known to be ntrepreneurial. “In fact, every second guy is a jugaadu,” he said. The biggest difficulty Mr Singh faces in his standardised hospitals is the fact that everyone wants to do things differently.

That’s not entrepreneurial. But the inclination for doing things the jugaad way is a prerequisite to being entrepreneurial. “One major way of strengthening the ecosystem is to engage industries with universities like they do it in the US. Even the idea of sponsors coming to universities is not entertained in India,” Mr Singh said. Mr Srivastava insisted that industry should come in full support of entrepreneurs. “You need a scenario where entrepreneurs can get funding, encouragement and mentoring. We have to make it easier for startups to operate. Today, it is easier for a large company to operate than a small startup,” he said. Mr Khattar had a suggestion for the government to pitch in with support. “Like the education cess, why doesn’t the government create a similar fund for entrepreneurship?” he asked.