Nurturing the Entrepreneurs Breed.

Just as a plant doesn’t grow with water alone, a startup enterprise cannot blossom only with money. It needs an eco-system that promotes entrepreneurship in addition to early-stage funding. India has not been able to spawn as many entrepreneurs as it can, because of the lack of such support systems. In the last few years, however, beginnings have been made by academic and industry bodies to join hands with funding institutions and nurture networks of entrepreneurs, mentors, customers and skilled workers. 

A popular link in this chain is the business plan competition, in which aspiring entrepreneurs pitch their business plans to venture capitalists. The best ones sometimes get funding for their ventures, but everyone gets the lasting benefits of networking, mentoring, and learning from peers. 

These contests can be as challenging as the marketplace itself. An entrepreneur needs to give a clear strategic perspective on the demand for one’s business, chart the cash flow and outline competitive advantages. For start-ups with all the elements drawn up, these contests can open the doors to success. 

While entrepreneurs are unlikely to get VC funding only on the basis of their business plan presentation at such contests, they will be able to take home exposure to a professional audience and feedback from a panel of judges who had nurtured startup businesses either as investors or founders, says Alok Mittal of Canaan Venture Partners. “The entrepreneurs get visibility in the right context. VCs and potential investors know the winners are chosen from a large number of entries.” 

One such event helped Abhishek Sinha finetune his business idea for a mobile phone payment system aimed at bringing daily wage earners under the banking system. He presented his plan at a contest organised by The Indus Entrepreneurs (TiE) in Mumbai last year, which helped him get feedback from industry veterans such as Raman Roy, Pramod Bhasin, Mahesh Murthy and Saurabh Srivastava. “To get a validation of my business plan from them was a tremendous boost,” says Mr Sinha. 

At the time of the event, he was already running a company and was in talks to sell it off. Once the sale was concluded, he used the proceeds to start another company, Eko Financial Services, to give shape to the new plan. He had initially thought of a product model, but the feedback at the contest helped him re-focus his business into a service model. The exposure also helped him to network with other experienced professionals and rope in Sanjay Bhargava, a former employee of Paypal, as co-founder. 

TiE has also teamed up with Wadhwani Centre for Entrepreneurship Development at the Indian School of Business to organise TiE-ISB Connect. In its third year now, the event provides an opportunity for entrepreneurs — both in the early stage as well as the growth phase — to meet venture capitalists, successful entrepreneurs, analysts and academicians in sessions over three days. This year’s event will be held in Hyderabad in the second week of November. About 60 venture capital firms, which have over $5 billion in India-focused investments, will be present. Last year’s event saw the participation of NEA Indo-US Ventures, Canaan Partners, Battery Ventures, Lightspeed and Helion Ventures. The last date for submitting business plans for this event is August 31, 2007. 

Institutes Play A Crucial Role 

It is still early to say if these events hold the answers to solving India’s entrepreneurship problems. But they are a step in the right direction. In the West where such competitions have been around for much longer, they have yielded good results. One example is the MIT Entrepreneurship Center that runs one of the best known entrepreneurship competitions called the MIT $100 K for its students and researchers. MIT $100 K, which has been around for the last 18 years, has created over 60 firms, 1,800 jobs and raised $175 million in venture capital so far. 

Academic institutions are a critical constituency of the entrepreneurial ecosystem and institutes in India are beginning to take a lead at grooming entrepreneurs. For example, IIM  Bangalore in association with the Nadathur S Raghavan Center for Entrepreneurial Learning conducts a management programme for women entrepreneurs at the IIM-B campus. Held every summer since 2004, the programme takes in 60-70 participants for a fee of Rs 15,000. The programme is spread over six weeks and helps the participants get a basic understanding in finance, business strategy, sales and marketing, managing people, negotiation and other basics of management. All participants submit a business plan at the end of the programme and the two best business plans are awarded. This programme is inspired by the Oxford Brookes University, which has a programme to train women entrepreneurs in tourism. 

Over the years there has been an increase in the number of B-School graduates wanting to start their own ventures on graduating. In 2006, nine students of IIM Lucknow, including the batch topper, opted out of final placements in order to start their own company. To meet their needs, IIM Lucknow started an entrepreneurial cell at the school called Abhiyaan. Among its other activities, Abhiyaan organises business plan workshops and an annual national level business plan competition called Nirvaan, which is open to all business and engineering schools across the country. Nirvaan 2006 saw participation from 40 schools and 550 participants who battled it out for prizes worth Rs 7.5 lakhs and a chance to get funding. 

IIM-L students who start their companies while still on campus are provided facilities, mentorship, and networking and business opportunities with the help of faculty, the IIM-L alumni community and Abhiyan partner organisations. Two such firms, including a guitar school chain, are being mentored this year. 

In TiE-ISB business plan contest in 2006, 20 entrepreneurs were chosen from 200 applicants, made presentations to a VC panel. In 2005, 14 entrepreneurs were selected for presentations. The organisers are reluctant to share the amount of money that these companies have raised since those meetings. “This is not a speed dating service, but more of an opportunity for entrepreneurs and investors to meet each other,” says Sateesh Andra, Venture Partner, Draper Fisher Jurvetson. After the event, TiE-ISB continues to mentor the selected startups. 

How Social Networking Sites are Helpful in Business?

How Social Networking Sites Help?

Web offers a platform to engage professionals and tap key talent for new ventures.

ASOUND adage to know is the one that says it’s not what you know but who you know that counts. Skill and grit can get you far, but it is only networking that will take you far enough. For entrepreneurs, it is the lifeline that fuels their startup aspirations. Until recently, social networking meant daylong seminars which meandered aimlessly or evening tuxedo events, where one waited for the first opportunity to leave gracefully. But it has taken on a whole new meaning in the internet age. Executives at companies of all sizes, but especially in startups, are connecting with professionals around the world through social networking (SN) sites to learn strategy, hire the best people and form alliances.

Keeping up with the competition demands cultivating contacts at warp speed, and that means working your shtick online. There are plenty of tools — many of them free — and more are on the way. Social networking sites are all the rage these days. Younger people may use such sites for dating and hobbies, but there are other sites devoted to professional collaboration.

LinkedIn and ZeroDegrees are two of the more popular services that facilitate business-oriented connections, and some argue that these and similar sites are now doing a better job at connecting entrepreneurs than any other medium before. Remember Metcalfe’s Law — coined by the inventor of Ethernet — which states that the power of a network grows in proportion to the square of the number of its nodes? That’s a geeky way of saying that networking technologies nobody uses are of little value. As the popularity of social networking sites grows, so does their value, because a larger number of users means better odds for productive connections. A look at the sheer number of start-ups getting online shows how their popularity is increasing among entrepreneurs. LinkedIn, for instance, had 40,000 users in mid-November 2003, and is now up to over 5,50,000 users, who have uploaded more than 25 million contacts from their address books. Many of those 25 million will soon be getting e-mails asking them to join LinkedIn and participate in the network.

And LinkedIn is not the only social network out there, of course. It is not even the biggest one, although it is the largest business-oriented network. Others, like Friendster, are oriented more toward easing the way for personal relationships and more popular ones like Orkut and Facebook have recently started professionals getting online to connect with peers.

And new ones seem to pop up every day. And then there is Techtribe, which brings together technology entrepreneurs through social networking. “Connections are of prime importance to any entrepreneur. And there can be no means cheaper to get to know people than creating a profile on an Orkut or LinkedIn,” says Rohit Agarwal, who operates TechTribe.

So how does all this affect entrepreneurial firms? Says Avinash Agarwal, founder of RouteGuru, “SN services offer a cheap platform for entrepreneurs to connect with experts who can offer mentorship and help shape business ideas. It can also prove to be a starting point for such connected entrepreneurs to get in touch with a few venture capitalists as well when they raise money.”

Mr Agarwal himself has used SN to great effect for his startup RouteGuru. Before starting his company, he started a discussion group on TechTribe about his business idea. He placed his idea about an India GIS (geographic information system) service on the internet for feedback from industry gurus. He says: “I blogged about my idea for RouteGuru using the website’s platform. This way, I got to connect with experts. And not just getting feedback, I also got to know a few people interested in my domain and eventually ended up hiring them for my company.”

And now that his company is looking to raise venture capital, he says that he would once again turn to many more sites such as Facebook and Ryze to connect with the right people both in India and abroad.

The world of venture capitalists, however, may still be slow to embrace social networking. Many VCs prefer face-to-face interaction with startups. SN sites, at best, can be a secondary means and not the primary means to connect to them, VCs say.

Also, the biggest concern for many is the amount of spam that an account-holder can face. Suvir Sujan, managing partner of Nexus India Capital says he had to close his account with a popular social networking site after getting an enormous amount of unsolicited messages. Such a tactic could undermine the credibility of a startup, he says. “For instance, while using social networking websites for sales pitches, if one sends out countless unsolicited advertisements to unsuspecting users, chances are that his account might get banned for that network. At the least, you will chase off potential customers and earn a negative reputation for your business.”

In fact, spam generated by social networking has come to be known by its own term: snam. Employees within a startup who are often motivated to join these networks for personal or professional reasons often end up exposing themselves, and their Rolodexes, to the outside world. This may lead to them being head-hunted when they are not actively looking for jobs, pitched products or services they might not want, and waste working hours dealing with contact requests from “a friend of a friend of a friend.” According to a research by comScore, employees tend to spend, on an average, 186 minutes on Facebook per session. “This definitely affects productivity,” says Mr Sujan.

So, what should companies do? Probably, the best policy is the one most commonly used for instant messaging and e-mails: allow certain, secure networks for business use and set policies about how contact data can be shared. Says Mr Agarwal, “I do not think that networking in the cyberspace can be stopped; one can waste a lot of money trying to stop and control it; but I think what they have to do is learn how to deal with it and learn how to live with it.”

Find a COO without spending a bomb

WHEN Bikram Dasgupta of Globsyn Technologies bought out the Mumbai-based Synergy Log-in Systems, he learned a few hard lessons. Dasgupta had acquired the promoter’s stake by making an upfront cash payment. But soon after, Dasgupta discovered that relations between the promoter and his management team had been strained and two key executives left taking their business and contacts with them.

Dasgupta was faced with the task of finding a person who could take on their roles and also the revive the loss-making banking products software company. Because of the differences between the promoter and the senior leadership of the firm, business was slipping and many client orders were unserviced. These customers were considering moving to a different software provider. The need of the moment was a chief operating officer who would lift the company from the morass.

“I couldn’t pay too much money, and I wanted someone who was willing to take on the risk and who had experience in working in a leadership role in a technology firm. If we could turn Synergy around, the rewards would be good,” says Dasgupta.

There was no money to hire a professional executive search firm. Thinking about it one night when he was online, Dasgupta decided to advertise on LinkedIn, the professional networking site. “It was only $160. So, I thought I have nothing to lose,” he recollects. The response was tremendous. And Dasgupta struck gold. One of respondents, Prakash Seernani, became his COO. “Prakash had excellent references. He had been an entrepreneur and had worked in several senior positions in IT firms,” says Dasgupta. Dasgupta is based in Calcutta; so although he travels frequently to Mumbai, Seernani has a big hand in running the venture.

For Seernani, LinkedIn was another way of networking. “Most senior-level appointments at this level happens through networking or through a professional executive search firm. So, it is not really unusual from that point of view,” says Seernani. The opportunity offered by Dasgupta was one of the many that came his way on the Internet. “Where I started, in Hinditron, we still have an alumni network on Yahoo Groups. It’s great way to network and the personal benefits are tremendous,” he says.

Article Resource:
Author: Ritwik Donde is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

On Wings of Social Entrepreneurship

On Wings of Social Entrepreneurship

Corporate Professionalism Is Spreading To The Social Sector, As Professionals Give Up Comfortable Corporate Careers To Work With The Masses

WHEN 24-year-old Anand Shah was flying out of India back to America, another Indian sitting next to him on the flight was complaining. “The taxi drivers, they fleece you. The food, the water… oh, I was sick for four days out of ten.” Born in the USA and trained at Harvard as a biologist, Shah thought to himself that criticising came easily to us, but not the initiative to change things.

Mr Shah, on his part, decided to do something for the country of his parents’ origin. He looked around and realised there was a huge need for talent to work at grassroots organisations in India. “What India needs is people time. Very rarely would you see very talented people getting their hands dirty,” he says. Thus was born IndiCorps, which works to bring the brightest and best people, often lost to the management consultancies and investment banks, to work in social development.

Mr Shah is not alone. An increasing crop of professionals are sacrificing lucrative corporate jobs to become social entrepreneurs. They blend the entrepreneurial skills of the business world with the social purpose of non-governmental organisations to create unique solutions to India’s problems. For decades, social work in India meant charity, but the economic changes of recent years have brought hardnosed business sense and professionalism to the social sector.

Like Mr Shah, Mumbai-based Venkat Krishnan quit a nice job to start a company that brings together donors and social organisations that need their money. His company, GiveIndia, works with about 100 organisations that have projects ranging from environmental protection to child welfare.

Social entrepreneurship is no different from starting a profit-motivated company-the challenges are perhaps only tougher. They grapple with problems of retaining people with motivation, scaling up viable business models and of course, raising resources. But the modern day social enterprise has one advantage compared with a conventional NGO-it is run by a professional who understands target setting, performance and accountability.

For instance, Mr Krishnan opted to set up his venture as a company rather than as a charitable trust. The company has on its board, strategy consultant Rama Bijapurkar, ICICI chairman N Vaghul, Tarun Das of CII and Kishore Chaukar of the Tata group-well-known people who brought credibility to a start-up and also a specific set of skills to the table. “To some extent, being from IIM-A helped to establish my seriousness and get them on board,” says Mr Krishnan. Like any corporate, GiveIndia also periodically works out the cost of raising funds and compares with other ways of raising funds. The goal being to raise funds in the most the cost efficient and effective manner.

Employee retention is the next challenge. Vineet Rai, whose organisation Intellecap acts as an advisor to firms with a social-focus feels human resources is the number one challenge most of them face. This is where organisations like Indicorps come in. The Indicorps fellowship programme is an intensive two-year programme that involves a selection process to identify the best talent-those selected work for 1-2 years on the project of their choice with grassroots organisations.

While volunteering for social work is not new, getting the brightest and best minds to do it and tapping their potential at a costs lower than consultant fees is the crucial differentiator for IndiCorps. “This is not volunteering. These are fellows,” says Mr Shah, who calls what his organisation does “service for the soul”. The basic requirement for the Indicorps fellowship, apart from being a person of Indian origin, is a university degree or five years of work experience. Interested candidates need to fill out a 20-page application form, pay their own way to India for the interview. So only serious candidates apply.

Initially, Mr Shah found NGOs were not very excited about the idea. “But once you give them (the NGOs) the basic management skills, you suddenly find they are very hungry for talent,” he says. Unlike traditional businesses, that can use compensation and stock options to employ good talent, social entrepreneurs have to rely on other incentives to retain people. “Usually, we find we lose people to other organisations in similar fields,” says CRY (Child Relief and You) CEO, Ingrid Srinath.

CRY, one of India’s better known organisations working for child welfare, commissioned Ernst & Young to do a study to reduce its employee turnover which had gone up to 25%. In response to the findings, it increased salaries by 40% across the board in 2006. “We were able to bring attrition down to 6%, and compared to before, when we had 46 vacancies, we have under 20 now,” says Ms Srinath.

CRY was a first mover in many ways. It was among the first entrepreneurial efforts in the social sector that was professionally managed and run. It was also among the few organisations that built a strong brand presence that was bigger and better known that its shy and retiring founder Rippan Kapur.

“Most organisations are board driven or CEO-driven. It is rare to find the ideal combination where the board is involved in the governance and the CEO in the management,” says Noshir Dadrawala, who advises charitable organisations, and who has authored a number of books to help them. Even today, CRY is among the most professionally run and managed organisations.

In 2000, it commissioned IMRB to study donor habits and found that the biggest block to making donations was inertia. The intent existed but few people translated it to action. Acting on this, CRY put in place mechanisms to make the payment process more convenient, and also put in place an online payment system. Confesses Ingrid, “When we outsourced our cards business to Archies, we also introduced a voluntary retirement scheme.”

Compared to 1979 when CRY was started, there are now many more resources for social entrepreneurs. There are courses run by management institutes such as NMIMS on social entrepreneurship, as well as hand-holding and consultancy that organisations such as Noshir’s Centre for Advancement of Philanthropy provide for free. Even venture funding is available if it is a for-profit socially focused venture, apart from organisations such as Ashoka that fund deserving individuals in social work. The time for social entrepreneurship has come.

Advice and help on how to go about it
Centre for Advancement of Philanthropy. Cap India
Intellecap. Intellecap
Networking, Funding Ashoka. Ashoka
Funding Accumen Acumen Fund
Aavishkar. Aavishkaar

Article Resource:
Author: N Shivapriya is the cheif editor in the Economic Times, Mumbai and the article appeared in one of their successful columns called "Starship Enterprise.