Current Projects and Studies
Impact and Overview of the Start-up Economy in India, with special reference to the Digital Start-ups
The Startup India initiative is envisioned to catalyse the start-up culture, with start-ups being recognized through the initiative and entrepreneurs availing the benefits of launching and conducting their own business in India with ease. In recent years, India has seen a steady increase in the number of start-ups incorporated, especially in sectors such as IT and ITES. The annual growth rate of start-ups as of early 2022 was around 15.5 percent. The number of registered start-ups grew from 223 in August 2016 to more than 83000 in December 2022. Several policy changes and new schemes have been introduced by 129 different ministries, to encourage and support start-ups. Government’s support is critical in providing the essential funding, mentorship, and market access support required by start-ups. In line with the same, MEITY’s start-up support programs contain various provisions to incentivise key start-up stakeholders such as incubators and institutions of higher education among others so as to promote holistic development for India’s start-up ecosystem. The objective of this study is to analyse the start-up landscape and understand the impact of the Start-up policy introduced by the National Government in 2016, with a specific focus on start-ups in digital technologies.
Research and Documentation Project
Program for Educating, Mentoring and Handholding on Entrepreneurship for the Spouses of GAIL Employees
GAIL (India) Ltd, India's largest Natural Gas Company, has large townships adjacent to its gas fields and manufacturing plants. As a leading and one of the most sought-after PSUs in India, GAIL attracts and employs people of very high calibre. As is most often the case, the spouses of the employees of GAIL are also professionally qualified. Unfortunately, since many of the GAIL townships are in remote locations, there are limited opportunities for the spouses to find suitable employment nearby. To address this concern, a research-based consultancy project is proposed to suggest promoting entrepreneurship and start-up ventures among spouses of GAIL employees. The project will involve conducting research to understand the feasibility and potential success of such ventures, identifying areas where support. The Centre for Research on Start-ups and Risk Financing will partner with GAIL to design and implement a Program for Educating, Mentoring and Handholding on Entrepreneurship for Spouses of GAIL Employees. The activities will be implemented by IIT Madras with the support of YNOS Venture Engine, an IIT Madras incubated startup.
Private Equity Financing in Infrastructure and Real Estate: Impact, Strategies, and Value Addition
Josephine Gemson, Kings’ University College, Canada
This book provides a comprehensive overview of Private Equity (PE) financing in the infrastructure and real estate sectors. In doing so, it analyzes the effects of such investments in the two sectors, evaluates the types of financing strategies, and explores the value created by such investments. Infrastructure and Real Estate have emerged as a significant asset class for PE investors. In the last three decades, PE firms have invested significant amounts of capital in infrastructure and real estate – sectors which did not feature in their radar until recently. Between 2000 and 2009, PE firms invested about USD 203 billion in infrastructure and similarly placed figures in real estate. Fundraising for infrastructure and real estate was about USD 98 billion and USD 151 billion in 2019, setting new records and reaching all-time highs. This book examines such PE investments – both at a global level and at an emerging economy level, to identify how PE firms have created an impact with their investments, to provide both ready capital and value-addition to sectors which seem to urgently need both. The book is being published by Springer.
Patents and Startup Performance: Evidence from the Indian startup ecosystem
Entrepreneurship and startups are considered drivers of technological innovation and economic growth in today's economy. Through these engines of economic growth, cities attract fresh ideas, talent, technology-driven businesses, and venture capital (VC) funding. Several studies have shown that along with business acumen and creativity, intellectual property rights play a role in helping firms survive competition in the market. There is an increasing number of patents filed by start-ups in India; the number of patents filed by Indian start-ups increased by 353% between 2015 and 2019. Startups patent for a variety of reasons: to gain a competitive advantage, prohibit competitors from utilizing their technology, raise capital by indicating to investors the appropriability of their technology and own an asset that adds to the company's value.
Venture Capital Valuation, Structuring and Exits
Three critical aspects of venture capital investments are valuation, security selection, structuring, and exit. Valuing a new venture with limited information is always difficult. The process of valuing a venture and writing contracts between VC and Entrepreneur is an intensive process. Since India receives a significant pile of capital inflows, tax implications in VC investments need be considered. The VC hopes to design a contract that reflects the firm's true value, protect investments on the downside, and reflects all of this in the exit returns. It's fascinating to learn about start-up valuation and the signals that VCs consider before investing. The information asymmetry in venture capital investments has been extensively explored. Securities and the capital structure enable entrepreneurs and investors to optimise their incentives. Contracts, in particular, mitigate downside risk for investors. Given the tax implications, security selection and structuring is a critical component of venture capital investing. These risk mitigation strategies should reflect in the returns when they exit from the venture.
Alternate Approaches for Valuing Start-ups: Investigating the Effectiveness of Risk Neutral And Cascade Neural Network Approach
A typical valuation procedure of a startup involves an analysis of potential future cash flows, an analysis of comparative firms’ stock prices, or an analysis of the price-to-earnings ratio of the venture. The valuation of a new venture with significant growth opportunities, high uncertainty and no real cashflow using foggy discount rate estimations seem to defy all the common wisdom on growth firm valuation. Rather than anchoring the Risk-Return equation of such high-growth, high-uncertainty firms in some impassable plan, the study intends to conduct an empirical analysis of the risk and return profile of start-ups in the Indian scenario using a risk-neutral model and backing it up with the findings of the cascade neural network model. This would provide a systematic reference guide for entrepreneurs as well as risk capital investors in India.
Role of Incubators in Indian Entrepreneurial Ecosystem
Many universities have a technology based incubator (TBI) or its variants such as innovation and technology centres, science and technology parks, and business accelerators. TBIs offer a link between: technology, know-how, entrepreneurial talent, and capital. They help nascent ventures with various support services, such as business services, networking, access to professional services & capital. In short, incubators enable nascent enterprises to overcome their liabilities of newness and smallness. The intent is to help the ventures by providing enabling linkages to help the new business survive, scale up and grow. These university-based incubators have now become a hub for new business ideas and several well-known firms have come out of such incubators. It has also been seen that there is no clear single path for success of a new venture. Every entrepreneur has access or utilizes a different set of resources which can lead to a successful idea. In this backdrop, incubators need to understand and back ideas which have a high chance of success. This should be done while optimization the use of incubator resources.
Motivating factors of sustainable entrepreneurs
The decision to startup into one of the SDG areas can be driven both by external and internal factors. The regulatory environment, societal needs for more sustainable solutions or other drivers constitute the external factors, while the intrinsic motivation could be either idealistic/altruistic orientation or pure economic orientation or a combination of both. There have been studies in the past that examine entrepreneurship in the sustainable development area. These studies are based on western markets and there is a dearth of literature that focuses on the Indian startup ecosystem. This study addresses the gap by examining the drivers of sustainable entrepreneurship (specifically environmental entrepreneurship) in the Indian context and looks at demographic factors including age, gender, education and prior experience, and the behavioural factors like altruism/idealism or economic reward maximisation.
Effect of digital innovation on the recombinant capability of the firm: Smart Manufacturing context
Organizations continuously focus on fostering radical innovation to gain a competitive advantage. Innovation theory shows that recombining the existing components yields most of the invention. The fourth industrial revolution provides numerous opportunities to manufacturing firms by integrating various digital technologies such as additive manufacturing, IoT, machine intelligence, virtual and augmented reality, and blockchain. Most of the studies illustrated the operational benefits of digital technologies. This proposed study focuses on how these technologies affect the firm's innovative capabilities using patent analytics.
Role of Start-Ups and Entrepreneurship in Achieving Health Equity
Health Equity is the absence of unfair, avoidable, or remediable differences among groups of people, whether those groups are defined socially, economically, demographically, or geographically or by other dimensions of inequality (e.g., sex, gender, ethnicity, disability, or sexual orientation). It also requires attention to health inequities, which are differences in population health status and mortality rates that are systemic, patterned, unjust, and actionable, as opposed to random or caused by those who become ill. Health equity is an issue within all our countries and is affected significantly by the global economic and political system. Startups have unique capabilities such as revenue generation, poverty elevation, and strengthening the local economy, etc. that can help them achieve health equity. This proposed research focuses on how these startups and entrepreneurship can contribute to health equity and address inequities in health.
Exploring the nuances of women entrepreneurship in India
Entrepreneurship helps women to realize their potential and fulfill their dreams by providing them earning opportunities, improving the standard of living of their family which ultimately has implications for society. Women entrepreneurs are increasingly contributing to the economic growth of the nation worldwide, still their representation in entrepreneurship is meagre in India. Government of India (GOI) has taken enormous efforts towards women empowerment and entrepreneurial development by introducing several schemes under the Ministry of Micro, Small, and Medium Enterprises (MSMEs). Yet many such sponsored development activities have failed to reach all sections of women. While such schemes and support from institutions have given women much-needed economic empowerment, it is largely observed that women entrepreneurs have to confront several personal, familial, societal, and cultural obstacles. So, there is a constant need to investigate the reasons (drivers) for the under-representation of women in the entrepreneurship domain which is one of the objectives of our research and identify the factors that contribute to their business performance. This study also seeks to explore the work-life balance of women.