As India enters its 75 th year of independence, it is time to acknowledge the contribution the country has made to the global entrepreneurial ecosystem.
From an emerging market, we have consolidated our position as one of the fastest-growing markets for emerging tech companies. The Indian start-up ecosystem is the third largest in the world today with over 100 unicorns (valuations of US$ 1 billion or more) emerging in the last decade. In 2022 alone, 42 technology-led start-ups have joined the coveted unicorn club. What is noteworthy is that these startups span across sectors and industries ranging from fintech to agri tech to health tech and many more, attracting global investors and venture capital. Backed by government initiatives and support, the Indian entrepreneurship story is making waves globally, too.
However, it is important to reflect and understand how the Indian start-up ecosystem has evolved.
Evolution of an ecosystem
Like most economies and cultures, entrepreneurship has been an integral part of the country for centuries. India’s current entrepreneurial ecosystem is a result of three waves of entrepreneurial activity with distinct focus areas – information technology (IT), consumerism and innovation. The success of Indian IT businesses over the years has empowered the country’s middle class. As the economy liberalised, incomes grew and more capital was available. This resulted in increased consumption and the advent of smartphones ensured that the Internet was easily accessible, causing models around e-commerce, specialised retail and hyper-delivery networks to become popular.
Over the last two decades, India evolved from being an IT services and business process outsourcing hub to becoming a significant R&D centre for multinationals, with new business models being created almost daily. I believe the next wave of unicorns is going to be much more diverse and will focus on cutting-edge technologies like robotics.
The talent landscape has also changed dramatically. As recently as eight or 10 years ago, most of our entrepreneurs emerged from business families. Today, that is not the case and many of our young entrepreneurs are not from business backgrounds.
So, what is it that has changed?
In my mind, education has played a very important role in driving the growth of most businesses. It has enabled the leveraging of digital and various other technologies, playing a very important role in creating a vibrant business environment. The emergence of new avenues of funding has also changed the landscape. Earlier we only had banks that provided working capital, but now we have non-banking financial companies (NBFCs), angel funders, private equity and venture capitalists. I strongly believe that if you have a good business, potential prospect, or project, it will not be difficult to raise money.
The willingness to fail has also increased substantially, which is a very good sign because not all businesses are going to succeed. Education provides one with a safety net so one can always go back to the drawing board or the job market if one’s business plans do not materialise.
A lot of Indian business models are also emerging from studying global trends and observing what happens in other countries. For example, I went to New York about five or six years back and I made it a point to see what new products or services were being developed. One of them was AllBirds–a company developing footwear from natural materials. A few months later, I saw a similar company in India doing the same thing.
Therefore, when a business model is based on a similar concept established abroad, the key factor is to be a first mover here.
Looking back at India’s history of developing entrepreneurs, only two industries have truly gone global–IT and pharma. For up and coming Indian businesses to scale new heights globally, we must leverage something we are good at. For example, Bangladesh has done better in garment production for factors such as cheaper cost of labour. India’s strength is a pool of highly educated individuals. We need to move away from positioning ourselves as a place that only provides cheap labour–countries like Bangladesh and Vietnam are already doing that.
I believe that we need to move up the value chain to succeed globally and develop products that require high-end manufacturing. Because India’s talent pool is much more skilled and educated, it provides a huge opportunity. Secondly, focusing on products that are inherently Indian such as yoga, tea and Ayurveda. A lot of global trends are emerging in these areas–especially after the pandemic where there has been an increased focus on wellness. However, I do not envisage these businesses getting as big as IT and pharma.
When I started my business, I quickly found out that the learning curve is much steeper. However, as your business grows so does your role. From doing things yourself, you must be willing to get things done or delegate work. I find that today many entrepreneurs are not able to do that. My mantra has always been that you recruit talent that is better than you.
As our country celebrates its 75 th Independence Day, my wish is for entrepreneurs to be liberated from the fear of failure. I think we need to celebrate and learn from failures and empower our youth. I am keen on experimentation, removing the fear of failure and prototyping, rather than doing things on a very big scale. Value addition with profitability, and not valuation, must be the guiding light for entrepreneurs.