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At 14, Irfan Alam was managing a stock portfolio worth Rs 40 lakh for his father’s friends. By the time he was 17, the boy from Bihar was itching
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to start his own bisiness. The idea came to
him during a rickshaw ride home from college in Begusarai.
“I
was hot and thirsty but there wasn’t a drink to be found. Then it struck
me that the rickshaw-puller could easily become a mobile vendor stocking things
like mineral water and juice,” says Irfan. He fine-tuned his business plan
at IIM-Ahmedabad.
The enterprise, Samman, was born in 2007,
transforming the humble rickshaw into a marketing engine. Alam’s
customized rickshaws not only offered smoother rides; they became vehicles for outdoor advertising. The rickshaw-pullers, who were given uniforms, identity
cards and vehicles for free, could earn extra by selling everything from
newspapers to mobile-recharge coupons. The start-up now boasts a fleet of 2,500
across Bihar, UP and Jharkhand.
It has also pedalled its way into an
ongoing national competition to identify India’s hottest start-up. Run by
the National Entrepreneurship Network (NEN) and the Tata group, the contest has
shortlisted 30 Indian enterprises, including Samman — from the nearly 600
entries. The five winners will be announced at the end of February. For NEN, a
not-for-profit initiative that nurtures budding entrepreneurs
, the contest is
part of the broader role it wants to play in building an entrepreneurial
ecosystem in India.
There is a reason for this. In risk-averse India,
where job security is prized, the entrepreneurial spirit has been restricted to
a few communities. But that may be changing. The NEN contest shows how: 65% of
the nominated entries are first-time entrepreneurs; 76% belong to families sans
a business background. Four of the 30 finalists belong to tier-2 cities such as
Patna, Kota, Belgaum and Patiala.
But Bangalore still emerges as the
country’s start-up capital. Here, many feed their start-up dreams even as
they work in the swanky local offices of global companies. These entrepreneurs
are like Siva Prasad Cotipalli. He quit a plum marketing job with Oracle to
found a start-up. “Instead of wondering how my business would fare, my
mother worried about whether I would ever get married,” says Cotipalli,
whose company, Dhanax, started as a two-man, internet-based microlending outfit.
But the downturn and subsequent layoffs by big companies have improved his
prospects in the marriage market. “Quite a few of my entrepreneur friends
have found matches recently so I, too, have hope,” he
jokes.
Not only are would-be in-laws softening towards grooms who
don’t have Infosys or IBM on their business card, Siva says the downturn
has many benefits for new ventures. “Though some start-ups will find it
difficult to find funding, there are other advantages such as the availability
of good talent at good rates and reduced rental costs.” At Dhanax, several
of the newest employees have joined straight from college.
Another
sign of the growing cachet enjoyed by entrepreneurship is to be found on IIT and
IIM campuses. “Internships with start-ups were always an option for
students at IIT-Bombay but this year, they are part of the placement
process,” says Ankit Agarwal, MD of IIT-B's entrepreneurship cell. As many
as 20 start-ups have taken part in the placement process, which is still in
progress. “The pay isn’t as good as the McKinseys but students
realize that the experience will prove very useful if they want to strike out on
their own later,” he says.
IIT-Bombay is also hosting Eureka!
India’s biggest business plan competition, which gives the winner a chance
to pitch his idea to venture capitalists. These are the people who generally
bankroll newish firms.
Mohanjit Jolly is a venture capitalist who
moved from Silicon Valley to Bangalore in search of that needle-in-the-haystack
idea that the trade calls the “home run”, i.e. a company that is
“game changing”. He is still looking. “The brilliance and
passion are here. What is needed is an ecosystem like Silicon Valley, which has
a combination of investors, academia and support-businesses. That didn’t
happen in the Valley overnight and it won’t happen here in a hurry.”
But the journey has begun, says Jolly, executive director of Draper Fisher
Jurvetson.
Might it hit a roadblock because of the global downturn?
Venture capitalist firms clocked a little more than 125 deals worth $740 million
during 2008, down 15.53% compared to 2007, according to data from Venture
Intelligence, a firm that tracks such activity. “The number of deals will
surely go down but those who are truly driven will get the backing they
need,” says Jolly, adding that he has seen more business plans in the last
three to four months than he did in early 2008.
His advice to
start-ups: Think big. “For most, Rs 20 crore is a meaningful trajectory
but why not aim for a Rs 300-crore business over the next three to five
years?”
It’s the success stories that will make Indians
dream big. “We need more heroes — the guys who have shown that it is
achievable,” says Rajesh Srivathsa, managing partner of Ojas Ventures,
which invests in early-stage tech start-ups. Start-ups also require angel investment, a rare resource in the Indian market. Deal sizes at this stage are
usually in the Rs 20-30 lakh range. “In Silicon Valley, angels take on the
role of identifying and funding new start-ups. India needs more of them,”
says Sridhar Mitta of The Indus Entrepreneurs (TiE), a global network that
fosters entrepreneurship.
Lack of funds, however, didn’t deter
Hiten Turakhia and his three friends from founding Librarywala.com,
India’s first completely online book library, which also figures in the
Tata-NEN shortlist of hottest start-ups. The self-funded enterprise, launched in
Mumbai, started off slowly; today it has more than 5,000 members. “We have
already expanded to Bangalore and Pune and are looking at other cities,”
says Turakhia, who is managing director of the venture.
From a
booming domestic market to a growing entrepreneur ecosystem, Indian start-ups
have plenty going for them. Now, all they need is a business culture that views
failure as a badge of
honour.
