It was in 2015, that we came together to try out what we call an “Experiment in Entrepreneurship.” Entrepreneurship was beginning to get significant traction among policy makers and various ministries of the national government as well as different state governments. Policies for start-ups and innovation were shaping up. Entrepreneurship was seen as a cool thing to achieve some of the broader goals such as employment creation, innovation, and economic growth. Our focus was on entrepreneurship at the Bottom of the Pyramid. Income generation and employment from agriculture and allied sectors was increasingly becoming difficult. As a result, women started to engage in non-farming economic activities to supplement family income. The setting up and growth of Self-Help Groups (SHGs) and availability of micro finance spurred the creation of micro enterprises. However, with no prior experience in operating a business, many of the women entrepreneurs had a tough time in operating a business and mortality rates of their businesses were high. This publication captures our experience of providing access to basic knowledge in business and management to increase the success of the micro businesses found by women entrepreneurs.
The report features a series of seven analytical articles. The first article focuses on factors that could help the entrepreneur to raise venture funding in the first six years of incorporation. The focus is on the initial years, because it is then the startups are most vulnerable and need external capital to sustain the operations. The second article focuses on factors that help in raising successive rounds of venture funding. Most ventures need several rounds of funding before they can turn cash positive. With the odds of getting successive rounds continuously decreasing, the trends seen in those companies that have successfully raised multiple rounds can benefit the early stage entrepreneurs. Exit is a very important part of the venture capital life cycle. There are three articles that focus on various aspects of exits (i) timing of exits; (ii) returns realized at the time of exit; and (iii) types of exit. One of the important focus areas of startup policies is generation of employment. The seventh article analyses the impact of start-ups on employment. While there are no many positive aspects, the results in terms of employment creation are unenviable.
This report outlines the vision and assesses the comprehensiveness of public sector initiatives, and contrasts the difference in approaches between public sector and private sector. The first article focus on government policies, the second analyses the start-up programs of Public Sector Undertakings and CSIR Labs, and the third covers the venture funding activities of public sector financial institutions. Interspersed between the articles are conversations and commentaries that provide different perspectives on the role of the government and public sector in supporting start-ups. The case studies delve into detail on specific contexts and attempts to synthesize the key elements of the start-up policies and programs in two Indian states: Telangana and Kerala; and two countries, viz., Israel and China, where the government has played an important role in the growth of the venture industry.
In the six years between 2011 and 2016, PE-VC firms invested over $72 billion in Indian companies, more than 6.5 times what Corporate India raised via Initial Public Offerings (IPOs) during the same period. PE-VC investors have been the primary driving force behind many major new industries for the country including IT Enabled Services, Cloud Computing, FinTech, Microfinance and E-Commerce. Almost all the leading companies in these industries were started with PE-VC capital. The fact that these industries have also turned into very large employers, has been a strong bonus. Salient findings from this study are as follows:
- Private Equity and Venture Capital investment in India is more than six times the capital raised through IPOs.
- PE investment is largely associated with smaller companies. The average size of PE funded firms in terms of revenues and assets are about one-sixth of all listed firms.
- Revenue growth of PE-VC backed companies are more than twice that of other benchmarks.
- PE-VC investment is associated not just with top line growth but also with growth in asset creation.
- PE-VC funded companies exhibit a more efficient working capital management as compared to listed peers.