India’s entrepreneurial and startup culture has yet to reach its full potential, but the report card is good, for the most part.
Infosys co-founder and former CEO NR Narayana Murthy has often narrated the tale of his celebrated entrepreneurial journey. One anecdote stands out: He had to wait for an entire year to get a simple telephone connection, and three years for a licence to import computers. Murthy, who founded one of India’s largest software services firms in 1981 with six colleagues and seed capital of $250 that he borrowed from his wife, has used this story with great effect to demonstrate just how adverse the environment was for a young professional trying to venture out on his own more than three decades ago.
Much has changed in India since then, especially after the economic liberalisation in 1991. Fixed-line phones, wireless smartphones, laptops and tablets offering voice and data connection are readily available and at competitive rates. Not only has the improvement in connectivity and communications aided traditional businesses such as manufacturing, it has also spurred an entire generation of new-age enterprises: Ecommerce firms that leverage technology to reach customers in areas that weren’t physically accessible before.
The environment for entrepreneurial freedom in India—where an individual or a group of individuals can come together and start a business of their choice and grow it in scale—is far more conducive now than when Murthy was starting out.
Not only has technology made life easier, enterprises are attracting more of private equity (PE) and venture capital (VC) funding as they seek to grow. According to the India Private Equity Report 2015 by consulting firm Bain & Company, the total value of PE and VC deals in India grew by 28 percent year-on-year to reach $15.8 billion. This is nearly six times the value of PE/VC deals reported in 2005.
Evolving public sentiment backs this data. Harsh Goenka, the 57-year-old chairman of RPG Enterprises (a $3.6 billion-conglomerate with interests ranging from automotive tyres to information technology), says that in recent years, there has been an acceptance and celebration of entrepreneurial spirit in India. “We have made a lot of progress from the days of the licence raj. However, there are many obstacles that still remain, including bureaucracy, tax and corruption,” says Goenka, a second-generation industrialist.
India’s budding entrepreneurs agree with him. Pranshu Pandey, the 26-year-old co-founder of language learning startup, CultureAlley, describes a growing and vibrant ecosystem, in terms of both VC funding and support services. She believes that the situation today has improved from what it was three years ago when she started out. “In 2012, getting seed funding was difficult. We were lucky since we had family support, but I would think to myself that there could be so many brilliant business ideas that soon-to-be graduates from various engineering or business schools may have, which won’t materialise due to lack of funding. [In those days] investors wanted the business to gain some sort of traction before committing capital,” says Pandey, whose startup helps people learn languages through audio-visual and interactive lessons via a digital app.
And while the situation may have improved, it is still behind Silicon Valley in the US, where investors will back entrepreneurs more readily even if their venture is only at the idea stage.