Entrepreneurship - The new religion of developed India Role of institutions

Over the centuries, religion has been playing a powerful role in our daily lives. The issue has been with multiple religions, with multiple gods and associated beliefs. How can we leverage the power of religion for human emancipation, something that can build an inclusive and equitable society? We hoped that education would do this job, but in vain.  Seems that economic equality can do this job for us. When people can’t respect each other as human beings, we need a new god, success in life, and the economic well-being, that comes along with it. It is not just about money, but the way people make that money. Comparatively, achievers gain more respect than politicians in entrepreneurship. Success in academics and sports is quickly forgotten. The world is full of forgotten artistes, but the continued entrepreneurial success in every walk of life remains in the societal memory and is respected forever.  

What we see today is the emergence of this god. But the societal faith is lacking. People are yet to believe in this new God, which can truly free us from many of the societal ailments, including poverty. Many people still think of the government and education as their way to economic freedom only to be disappointed frequently; this needs to be changed. Compared to sports, performing arts, and liberal arts, entrepreneurship is much more doable and does not take decades of dedicated practice. A start-up can become reasonably successful in 3 to 5 years of its launch, provided it is able to survive that long. How can we ensure this survival which will build the necessary faith and the following for this new religion of entrepreneurship?

This is where the ecosystem plays an important role. Just like any religion with its institutions, temples, scriptures, rituals, festivals, events, sermons, governance, government support, and prayers; we need to build a similar ecosystem for entrepreneurship. Just a few buildings as incubators won’t be sufficient. How do we build this ecosystem? How can we create these locations and turn them into tourist attractions which drive and promote this new faith?

This is the first of a series of articles highlighting all the necessary elements of the entrepreneurial ecosystem. At a high level, we need institutions, actors, processes, funding, technology, industry support, and markets (customers). We would also need to promote different types of start-ups including for-profit, collective enterprises, social businesses, e-commerce, and even non-profits. Each of the articles would be discussing one of these core areas and its components.

The role of institutions is a very important aspect of start-up success. The institutions include Banks, Non-Banking Financial Institutions, Venture Capital funds, incubators, accelerators, universities, R & D institutions, and government institutions.

Banks and NBFC have been traditionally funding businesses and are more inclined to support well-established businesses than start-ups. Their system of funding is risk-averse by nature. Hence, even when they are willing, the cost of the capital from them is substantially high and the repayment starts immediately. Very few of them offer collateral-free loans, despite existing policies; this needs to change. An easier way could be to create mutual funds focusing on start-ups where willing investors can invest freely for a fixed duration. Based on the success of the funds, the investors can expect high returns. This can help democratize access to these risky investments with the necessary risk management measures in place. Another important policy measure could be an increased period of moratorium if the student who takes an education loan wants to launch a start-up.

VC funds are not many in number and they are not easily accessible. They are scouting the market directly, rather than creating a feeder system by nurturing angel networks. There are many wealthy people who can enter the market as angel investors for seed funding. VC funds can train and coach angel investors, encouraging them to be seed investors. This will ensure that the VC funds get early access to promising ventures.

The role of incubators has degenerated into office space providers, except in a few cases. Incubators and accelerators should function as sub-ecosystems, which they seldom are. When the start-ups get access to everything they need at these incubators and accelerators, their success rates can increase.  

Universities play a major role in building the necessary entrepreneurial mindset and skills. However, very few universities have entrepreneurial education programs and incubators. Universities can also play a more active role in outreach programs at the local schools to build enthusiasm and awareness about entrepreneurship. This can provide a good mileage for attracting new students.

R&D institutions keep generating new technological innovations. How many of them are commercialized? How many of them have market potential? This focus should be brought in along with a dedicated role of TCO – Technology Commercialization Officer. TCO will play the role of educating prospective entrepreneurs and businesses about the possibilities of using new technologies developed by the institute.

Finally, the role of government institutions is a critical success factor. The government should not treat the MSME and start-ups as one and the same. While the tax sops and other such initiatives are welcome, the most important aspect is not to design policies targeting only certain segments of the society based on caste and other divisive considerations. People will develop faith only when there are no special privileges accorded to selected groups. The necessary governance and oversite processes must be made effective through the necessary institutions in terms of IP, law, and providing transparency.

These are some of the aspects related to institutions, which would help in building a vibrant start-up ecosystem. The next article would be focusing on various actors.

About the Author

Flt.Lt. Sridhar Chakravarthi is an experienced organizational change coach and consultant with over 30 years of leadership experience in various industries. He believes in the possibility of exponential growth for individuals, start-ups, and mature organizations. He empowers them to achieve exponential growth by bringing agility into their mindset, processes, and behaviours. He is an authorized training partner for Enterprise Agility University, runs his company “Coach for Change” and lives in Bengaluru, India.

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