By Manoj Kumar
Entrepreneurism has become critical to modern India’s identity and self-image. But an enabling ecosystem for startups trying to solve socio-economic and environmental challenges is still in the works.
At the stroke of the midnight hour on August 15, 1947, the challenges confronting the new nation were too big to be drowned out by the euphoric celebrations. After decades of colonial rule and the drain of wealth, the nation had to be rebuilt. In those early decades, India’s economic development was largely dependent on the public sector and centralised planning. As the economy grew, our industrial development gathered momentum with gradual entry of the private sector in some of the industries from the 1950s to the ’80s. Alongside heavy industries and infrastructure, the country also witnessed the Green and White revolutions.
From the ’80s onwards, the services industry started to make its presence felt globally and the ’90s saw a profusion of Information Technology companies and BPOs turning India into the world’s back office. Post-90s, as India’s economy opened up and started to integrate with the global markets, the private sector experienced a whirlwind of growth.
During the last decade, we have seen a new wave of growth, a growth where change agents are entrepreneurs who are leading the start-up revolution, trying to rewrite the script of a New India. The Startup India! There is widespread recognition now that Entrepreneurship is a powerful driver for economic growth, employment, and prosperity and entrepreneurs can transform India into a country of job creators instead of job seekers. With new start-ups taking birth every day, India has emerged as the third-largest start-up ecosystem in the world. This thriving ecosystem includes more than 300+ incubators and accelerators and 1000+ institutional investors and angel groups. The Government of India has set up Start-up India as a flagship initiative, intended to build a strong and inclusive ecosystem for innovation and entrepreneurship. 30 states already have start-up promotion policies. Entrepreneurism is gradually becoming an important element of modern India’s identity and self-image. Several Indian innovators and entrepreneurs have shown the mettle in undertaking entrepreneurial risks by identifying amazing new business opportunities that came along with the access and availability of the Internet and advances in telecom, cloud computing, sensors, and data science.
This revolution is also fueled by the strengthening of private capital markets, which have been evolving with an increasing appetite to underwrite early-stage start-up risks, especially the ones chasing business models built on consumer internet and digital platforms. As digital capabilities improved and connectivity became omnipresent, technology applications showed tremendous potential to radically change nearly every sector of the Indian economy. It soon became evident in the way new businesses models like e-commerce, food delivery, digital payments, and other on-demand services flourished. Between 2016 and 2020, over $63 billion of venture capital was invested in Indian technology start-ups. 2019 saw over $34 billion injected into innovative digital firms, and while the ongoing Covid pandemic had initially impacted the investment appetite of venture capitalists, 2020’s outlook remains relatively bright, if the recent data on 20+ startups entering Unicorn Club this year is any indicator. Not surprisingly, digital/tech-enabled start-ups have dominated the funding landscape in India. In the country’s early-stage segment ($2.5 billion), the largest chunk of funds went to start-ups specialised in SaaS and AI technologies, followed by online businesses and platforms.
However, the concerns with which the journey began in 1947 continue to exist alongside the story of India’s transformation. Our progress on poverty elimination and human development parameters requires more action. Some of the most difficult and complex problems continue to challenge us in areas like agricultural productivity, climate resilience, air, water, and soil pollution, water resources, waste and sanitation, education outcomes, housing, energy access, disability, and access to affordable healthcare. These are tough problems and require multiple stakeholders across academia, government, NGOs, and the private sector to collaborate and deploy resources effectively and efficiently. This also requires sustained R&D with a focus on transitioning science and technology innovations from the lab to market to people and the planet.
But there is a new and quiet revolution that is already taking shape across the country – the emergence of a new generation of innovators and entrepreneurs who have challenged this myth of market failure by taking the risk of venturing into some of the most difficult socio-economic and environmental areas. This is just getting started with a realisation that deep science and technology innovations can pave the way for lasting solutions to some of our problems. At the core of this revolution is the desire to deliver impact through the creation of successful and scalable business models. This is getting further accentuated by the fourth industrial revolution that is already blurring the boundaries between the physical, digital, and biological worlds with a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies. The new market-creating potential of these technologies is immense and open to human imagination.
This new generation of entrepreneurs is willing to leverage the benefits of translational research to build, iterate, pilot, and scale their solutions. Some of these entrepreneurs are not hesitant to dedicate their entrepreneurial mission to create solutions that can drastically improve millions of lives who have fallen through the cracks. Some have demonstrated early success in creating impact, attracting customers, and, in some cases, even scarce risk capital.
The last 75 years belonged to the pioneering efforts of the public sector, private sector, and non-profits. We are optimistic that the next 75 years will be led by the powerful combination of science and technology innovations and entrepreneurship. New disruptive innovations are required to solve some of the most critical problems in a sustainable and scalable manner, create new markets and further accelerate India’s growth trajectory. A small but critical minority of bold thinkers with audacious goals, extraordinary resilience, and flawless execution are already emerging as the makers of New India.
Let us support these innovators and entrepreneurs to build, iterate and grow their dream companies with a focus on social, economic, and environmental impact. This is possible through an innovation curation and venture development approach that enables and supports start-ups to solve complex societal problems, identify or create new markets, catalyse economic activities, generate more jobs, drive community upliftment through enhanced and predictable livelihoods and significantly improve health and education outcomes. We must integrate the innovation and investment ecosystems, expand, and democratize capital markets and curate a portfolio of market-ready and investible start-ups with an objective to influence the human development indicators and contribute to mass prosperity, wellness, and climate action.
Happy Independence Day!
The author is Founder and CEO, Social Alpha