In recent times, many Indians have left their comfort zones to start their own venture. What was a trickle a couple of years ago is slowly but surely turning into a steady stream. In the past few months, I have seen a variety of professionals, including inter-alia alumni of the premier technology and management institutes in the country, erstwhile employees of the big four audit and consulting firms, chartered accountants, lawyers, engineers, doctors, scientists with a PhD and many more starting their own venture, attempting to raise venture capital for this. All this in Namma Bengaluru … so imagine … how it must be in the rest of the country.
In the past, many of the entrepreneurs in India came from business families and those traditionally in the business sector and not from the knowledge sector. The success of entrepreneurs in the IT (Information Technology) and ITES (IT enabled services) sectors has paved the way for others to follow and we find the spillover effect in other areas too. These range from education to health and fitness, from sports to art and culture, from bio technology to telecom, from retail to media, from security and risk management to… the list is endless! You then realize that there is obviously more to this wave of entrepreneurship in the country than meets the eye.
This is a healthy sign. For the country to get the next generation of globally competitive business successes, we need more companies across different industries, addressing different opportunities and verticals, providing solutions to address different customer pain points, meeting a variety of customers’ needs.
The other interesting feature about the current wave of entrepreneurship is the way in which companies are promoted and funded. Sometimes, the thrust for setting up a new business is internal to the promoters, sometimes external. To elaborate, sometimes the initial idea for the new enterprise is that of the entrepreneur(s). At other times, investors identify market opportunities to be tapped. These include venture capitalists, high networth individuals and corporates.
In the first case, a person or a group of persons with a business idea come together. They invest some money of their own and sometimes get external funding either as debt or as equity or as a combination of the two. In the other scenario, an investor group (or an individual investor) identifies a possible market opportunity and gets a team of persons to run the business. While the first, entrepreneur led model, is the one many of us in India are familiar with, we are increasingly seeing companies set up with the investor group taking the lead.
In this second scenario, typically, the investors have a significant equity stake in the company and the other key members, from the CEO to CTO to CFO, get varying ownership stakes. The stakes depend on multiple factors, including inter-alia the experience of the team brought in, their domain knowledge, the networks and connections they bring to the table as well as the funding requirement for the project over the next few years, based on a projected growth path. The growth path projected is, in turn, dependent on assumptions made regarding market size, ability of the new entity to attract customers and capture market share. Equity stake and ownership is also dependent on financial payout to key team members in terms of salary and other benefits and the individual’s risk taking ability. While some persons may want to play safe and get larger salary and lesser stake, others may be willing to risk a smaller salary with a larger stake. While being an entrepreneur is never easy and comes with its own set of challenges and pains, the environment in India today, is much better than ever before for persons to view this as a serious option to a career. Funding and more is available, as compared to a few years before. We have networks that entrepreneurs can leverage upon.
What has not changed, however, is that entrepreneurship is still not for everyone, there is a fair amount of risk involved. Potential entrepreneurs must weigh options with care and gauge their ability to handle risk before taking the plunge. Like the volatility in financial markets across the globe in the recent past has shown us; there is no guarantee of success and wealth. Becoming an entrepreneur is not a short cut to fame and money! If those are the primary reasons why one wants to be an entrepreneur, then one needs to think some more before taking the plunge. The market for entrepreneurship is opening up and there is opportunity in multiple spheres, in a variety of ways for those who want to try their hand at running their own business. There is a difference this time around in this wave of entrepreneurship. Nobody said it was easy…but perhaps… it is easier than in the past!