Opportunity Galore For Indian Startups To Spread Their Wings
In an expansive conversation with StartupCity Sanjay speaks to us about the current state of the Indian startup eco-system.
Q. Traditionally, people in India have looked for government jobs that provide employment assurance and retirement benefits, in short, a safe future. Is the youth of India ready to let go of the risk aversion and take the entrepreneurial plunge?
A. Need for security is a basic human instinct. Most of us from India have always followed the route of finding that security in jobs and traditionally jobs in Government or public sector have provided that security. People would work their entire life and be there till retirement. I remember my own Dad following that all his life till he retired and encouraged me and my siblings to do the same. Unlike these days, the competition back then was not so tough, that one had to succumb to it. The 70's and 80's were one of the best times when the people were content and satisfied with the basic need with a minimalistic life.
As Indian economy opened up and globalization took off with the technology revolution, the entire world witnessed the rise of India and with it the youth of India have improved in their risk-taking abilities.
Situation now has changed. Risk taking has now become the core quality for most of the youth in India. I have seen people leaving their settled jobs and are also now exploring their "entrepreneurial" side. India has become the Land of Rising Entrepreneurs. The U.S. boasts of 23 million small businesses. With 48 million MSMEs India has more than twice as many.
Q. Do you think the government's push for Atmanirbhar Bharat and promise of easy credit will help Indian youth shed some of their risk aversion? Do you see the necessary policy changes being made to make the slogan a reality?
A. Looking at the uncertain times, I feel that the "Aatmanirbhar Bharat" has been one of the most promising programmes by the Indian government. This has opened ways for the small scale and medium scale industries to give hope and breath to survive amid the pandemic.
Prime Minister Narendra Modi is a big proponent of small business growth. With his initiatives of Make in India and Atmanirbhar Bharat, he is encouraging entrepreneurs to improve the quality of their products in order to better compete in the global marketplace.
Although, some businesses have experienced difficulty in raising capital, and India must loosen some of its strict regulatory practices. Access to credit is critical to business growth, yet most Indian entrepreneurs start out with minimal capital, which hurts their potential. In this scenario the promise of easy credit will encourage young entrepreneurs to dream big.
For the policy changes, government is definitely giving the required attention to various sectors and we can hope that the policy amendments can take place as per the need of the hour. Like aviation and hospitality have been badly impacted due to pandemic, we can witness them under losses and the government is looking at relaxed taxation, which could be quite helpful for them.
Knowing that the uncertainty is here to stay for a long period, the best that we can hope right now is for the government to curb some measures for the drowning sectors to help them stay afloat.
Q. The government is going big on Start-Up India. Where is the Indian entrepreneurial aspirant going to start from when there is no seed funding?
A. According to recent research data, the Indian government is strongly relying on the startups to flourish. Looking at the facts and data by Inc42 India has about 27,916 startups which exist as on Feb 2020. In reference:
• Indian startups have raised over $11 Bn in 2019 (as of November 30, 2019), across 736 deals which took place.
• In 2018 some of the startups had raised $9.57 Bn across 717 deals.
• The funding amount and deals in Q3 2020 remained relatively low on a year-on-year basis, but the funding amount in Q3 2020 surged 167% compared to Q2
These aren't just mere facts the numbers are on the higher side, denoting the higher responsibility and the contribution of India towards global economy. The funding has always been around and there are VC's, Angel Investors, who are ready to invest in the right talent and setup. Since technology is rapidly changing and also there are newer ways to showcase technology offerings be it AI, ML, AR, VR or Gamification India has always had the right boost and the power to show the change it is to the world.
Of course, all these numbers are from new generation of technology- based startups. Availability of credit facility for starting even a non-tech startup will go a long way in promoting true entrepreneurship in India.
Q. At a time when Indian M&A market is so dull, is Start-Up India really possible?
A. The pandemic did result in disruptions in production and consumption spending across the globe during April and May. Such negative impact is expected to result in some contraction in GDP and undoubtedly result in a recession in the 2020-21 FY. The GDP is expected to contract by 6.3 per cent year-on-year.
Irrespective of the negative short-term blows from the pandemic, foreign direct investment into India has remained buoyant. A major boost to investor confidence comes from new FDI announced during 2020 by US technology companies like Google, Facebook, Amazon and now Walmart.
A major boost to investor confidence comes from new FDI announced during 2020 by US technology companies like Google, Facebook, Amazon and now Walmart
India's weaker section has been in need of a push for digital transformation and the pandemic did that. India all of a sudden in the post pandemic world has become a lucrative market for investments and is attracting leading global multinationals in technology and e-commerce.
As per market researchers like IHS Markit, India is expected to accelerate the growth of e-commerce and the retail consumer market landscape over the next decade. They forecast India's consumption expenditure to double from USD 1.6 trillion in 2020 to USD 3.2 trillion by 2030.
Now the worst is behind us and the recovery is going to be faster than expected. By the end of December, the economy is expected be at the pre-COVID levels for most sectors. India is emerging towards its real position of becoming the third largest economy and fastest growing one in Post-Covid era.
I have read reports and can also speak through my experiences that India is likely to overtake Japan - the third largest economy in the world by 2050. A study published in the medical journal Lancet stated that India will continue in this position till 2100.
This brings in a great opportunity for Indian Startups to spread their wings and look for acquirers not only from India but in global markets too. No one can ignore Indian market but at the same time Indian talent should not restrict itself only to India. Ecommerce deals and several others in EdTech, acquisitions by Google, Facebooks venture in AI and ML are all signs of a greater prospect ahead for Indian Startups.
The time is now, and the startups should also build themselves to sustain the business rather than just focus on M&A.
Q. People in India's Tier 2 and Tier 3 cities have data. It seems like that's all they have. You have been in the Silicon Valley for so long, what do you think these cities can do to nurture entrepreneurs?
A. Whether it is Tier 2 or Tier 3 city, or a metropolis, what is more important is to understand who can be an entrepreneur? To me a person can be an entrepreneur even while working in a mail room or working in a front desk, you can be a farmer and an entrepreneur. The whole entrepreneurial game is more about attitude than aptitude.
As someone who has not only built a lot of businesses, but also invested and nurtured many, I would say people need to focus on what drives their cities. Look for a problem that is looking for a solution, and when you find it start building your ideas around solving those problems.
From the infrastructure perspectives, those cities need good incubators, access to capital, some experienced hands to nurture budding entrepreneurs and universities for access to talent. I will suggest every experienced entrepreneur to rise up to help at least 5 more companies in their cities and provide them capital. The time has come for us to help others instead of waiting for government.
Q. India has been the world's software giant and yet we don't really have an Indian app that has succeeded in creating a global buzz. Why has Start-Up India failed to make an impact?
A. I will not write-off Indian Start-Ups. Yes, there have been more failures than success, and less innovation than copy-cats but all is not lost. When the right product is introduced in the market at the right time, there are less chances of failure. I saw in the payment industry India was able to leapfrog even countries like US with their indigenous products suited for local markets.
For anyone thinking in line of creating a buzz should remember that users must be trained to work the technology, to accept it, and to use it. Just what Steve Jobs, the Apple genius did. Users, he knew, must be ready to accept new technology, have a use for it, and be willing to pay for it. That's why instead of inventing things and then selling, he created the products keeping in mind the users needs.
From my own experiences of success and failure, I took away the understanding that technology is primarily user-centric, meaning that the latest, most advanced technological marvel may not be the most successful. People want technology that they can use, quickly, fitting into their existing lives as it belongs there. Else it would never succeed,
Q. Are there any lessons India can take from America in this regard?
A. The other name of America is `land of opportunities', and rightly so, especially when it comes to America's love for small businesses. I have seen the like for gumption it takes to invest one's entire savings to follow the American dream as they say here. This is the kind of attitude everyone needs to imbibe. I am not saying you should put everything at stake but have the right attitude to follow your dreams. Its ok to fail, as failures are the stepping stones for success. It goes back to becoming a risk-taker as we talked about in the first question.
Also, the Americans will not shy away from working more hours and make less money if they believe in their idea. As Indians, especially after the pandemic, I think, we should start imbibing America's view of seeing small businesses as the backbone of a middle-class way of life, instead of thinking in line of only seeking jobs. We can always do the job and be an entrepreneur too.
Q. The American Dream has seen a lot of upward mobility. Do you see that happening in India with a greater entrepreneurial push?
A. Definitely! I feel now is the time to make most of the dreams that many of us had of owning or building a business. I am always there to support anyone who wishes to build on a worthy idea and is passionate on achieving them.
I think majority of the entrepreneurs who you see these days, they are not born, they are not taught, to me, they are released from within. I am one of the best examples for anyone who developed that entrepreneurial push.
After graduating from Delhi College of Engineering, working for about 10 years both in India and in US, I realised I wanted to do something different. Though it took me 10 years to realize what I wanted to do, but for those reading me right now they need not wait for that long, because these days and times are different, and you can start thinking about entrepreneurship right from your college days.