Entrepreneurialism in India: The Opportunities & Challenges
This guest post, part of our August BRICs Editorial Theme, is by Shoba Purushothaman, a serial entrepreneur who recently relocated to India to start a new venture.
Just over two years ago, I decided to take my hunt for adventure to new pastures by exploring the launch of a new venture in India, a country I had visited several times but never lived in. Although my ancestors once came from India, that was several centuries ago and I had no family there. Prior to kick-starting my India journey, I had spent more than a dozen years in New York City as an entrepreneur.
What can an entrepreneur who has had only limited exposure to India find?
- If you can bring a high level of professionalism and be focused, you are already ahead of the game in a market that has a shortage of both these key ingredients of entrepreneurial success. With so many different market opportunities emerging in India today, many entrepreneurs get seduced into attempting too many concurrent ideas and doing well in none.
- Though India has no lack of entrepreneurs and talented ones at that, there are many sectors where expertise is still lacking or that are still very nascent. So, niche entrepreneurs who have a product, service or IP developed elsewhere are able to enjoy first mover advantage in the domestic market, which because of its sheer size offers meaningful opportunity.
- Generally low consumer expectations because of a lack of high quality alternatives can also mean you don’t necessarily have to re-invent the wheel to grab a large market opportunity - you can be successful by doing something much better than the existing incumbent.
- Setting-up and getting a product/service to market can be relatively inexpensive in India. While there are caveats to this, in general labor and basic costs can be a lot lower than in a developed market even after factoring in various inefficiencies.
Start-ups can get a product to market and often reach a break-even point to demonstrate proof-of-concept with a fraction of what it takes in a market such as the U.S. or Germany. My own experience shows that a back-of-envelope calculation on the capital it takes to get a start-up in India to a level where you can truly start to scale is anywhere between $100,000-$250,000. Getting to a similar milestone in the U.S. would be north of $500,000 or even $1M.
What are some rules of the road that will serve you well?
- Do primary research yourself. Having spent a couple of years now working on our venture we’re even more convinced that it wouldn’t have been possible to rely on analyst reports or anyone else to report back on market opportunity, access and go-to-market strategy. Reading between the lines and taking it all in yourself is part of the critical process in a market with little transparency and standards to rely on.
- Be on the ground to pump the flesh and meet & greet. Make India’s hierarchical and status-conscious DNA work for you by taking the time and trouble to network and build business relationships with senior people yourself. I was amazed to find it easy to connect with many experienced and successful business people and other industry experts by simply reaching out. People will give you that first meeting pretty easily in India but they aren’t likely to bother with a B-school intern you might put on the case.
Being front & center yourself has several potential payoffs:
- The idea that a foreign entrepreneur would choose to come to India to start a business is almost universally viewed as a compliment to the country’s opportunity (even if you sometimes wonder if you are nuts!) and stokes national pride – and people can go out of their way to help make things happen and share valuable insight.
- But most of all, Indians love to talk. Spending an hour with someone can very often yield amazing market intelligence that you simply cannot get through other means.
Finally, be prepared to go through a painful process to recruit talent. Yes, it’s worse than you think!
- Several factors impact putting your initial team together – one, there’s a general skills gap which means really good talent is much sought after and consequently out of price reach of most start-up budgets. The scarcity of talent and the willingness and ability of large MNCs, consulting firms and a slew of other big name entities to lure status-hungry Indians to join them by offering big titles and corporate perks exacerbates the talent hunt. And, Indians are generally conservative and the prospect of joining a brand new company that they haven’t heard off is not something that the average Indian finds attractive.
- And all that even before you get to the hiring hassles caused by the cultural, work ethic & value systems’ differences between India and a more developed economy like the U.S.!
As India’s economy increases its profile and share of the global economy, I have little doubt that more and more entrepreneurs from far-flung places are likely to find it too compelling to stay away from.
Starting a company – and growing one to scale – isn’t easy in any market. But in a market like India, all that pain up-front could result in some tremendous gain later on given the huge untapped market opportunity that a youthful population that is steadily increasing its disposal income offers.
Shoba Purushothaman is an entrepreneur who has previously started and grown business in Europe, U.S. and Asia. She is currently focused on her third start-up, this time in India. Training Ventures (India) is building a portfolio of training businesses aimed at narrowing the skills gap in India as it becomes a key part of the global economy.
Click here to read our hugely popular interview with Shoba from earlier this year.
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