100,000 Startups: Are we there yet?

In my previous blog, I discussed that entrepreneurship is not an option but a necessity for India. I also tried to quantify this necessity, which is 100,000 startups that in turn can generate ~50 million jobs, the current unemployed population of India. Thus, the next question is how ready are we to facilitate starting 100,000 startups? In this blog, I will share my views on this question.

I remember reading two years ago that Indian middle class does not encourage entrepreneurship. The reasons for this reluctance to entrepreneurship are not purely economic. So what are the factors that repel general Indians from entrepreneurship? Sanjay Anandram from seedfund has described the situation succinctly: The three reasons why Indians like to stay away from entrepreneurship are: (i) fear/rejection from family and friends, (ii) lack of seed capital and (iii) lack of awareness.

In my opinion, the biggest of the three reasons is lack of awareness about the entrepreneurial process. For instance, entrepreneurship is a subject in the curriculum of only business related courses. Entrepreneurship is not taught in pure sciences, engineering, medicine, pharmaceutical, agriculture, law etc. and all the non-business majors. In contrast, the focus is always on getting a good job in a good company or a government job. Hence, students usually plan their time in studying for competitive exams like GRE, GMAT, CAT, IAS or are busy with interview preparation, resume writing etc. It is not a surprise that recruitment agencies and soft skill training is a thriving business! Thus, the whole educational and social system “conditions” us to think like and be an “employeE” rather than to think like or be an “employeR”!

The lack of entrepreneurial awareness leads to entrepreneurial fear. This fear is primarily the fear of failure and financial loss that leads to risk aversion. Given that > 90% of startups fail, this risk aversion is not totally unwarranted. However, it is important to distinguish the “actual” versus the “perceived” risk. The actual risk is inherent in the entrepreneurial career and is impossible to avoid. However, it is possible to manage the perceived risk through entrepreneurial education. Also, such education will help understand the difference between the actual and perceived entrepreneurial risk. I propose that including entrepreneurial education in the curriculum is a must to manage the perceived risk and encourage entrepreneurship in India. The entrepreneurial pedagogy can be classroom based lectures and case studies as well as hands on experience through internships in startups (early, mid and/or late stage). Thus, a combination of theory and practical training in a startup atmosphere will expose students to the actual risk and its management rather than fearing the perceived risk.

Despite lack of entrepreneurial courses in Indian educational curriculum, we do see a few good examples for entrepreneurial encouragement. For instance, some of the Indian Institutes of Technology of India have started entrepreneurship cells, 10000 Startups by NASSCOM and changes in government policies. Prime Minister Narendra Modi has already given a mega boost for entrepreneurship by reducing the bureaucracy and red tape and starting the Skill India Mission. Such measures are creating a very favorable environment for entrepreneurship. Thus, India is witnessing a meteoric rise in startups. For instance, $5 billion were invested across 300 startups in the year 2014. And, it seems that 2015 will beat 2014 in attracting investment! The Q1 of 2015 has already witnessed ~$2.4 billion, which is 3x the funding that was seen in Q1 of 2014! No wonder Indian startups have been reviewed as the fastest Asian fundraisers! This momentum is due to only a handful (remember we are 1.2 billion!) of Indians who dared to take a different path. I am tempted to speculate how many more startups will we see if entrepreneurship is encouraged in Indian educational curriculum?

Finally, how close are we in starting 100,000 startups? Well, in my opinion, we are just warming up!