Last year saw a sharp dip in startup funding in India. According to startup tracker Tracxn, in 2016 investments halved to $3.9 billion from $7.5 billion in 2015. Devaluations, shutdowns and layoffs plagued the sector, and profitability and business model sustainability became the new buzzwords in place of growth and market share. None of this, however, dampened the enthusiasm at the Wharton India Startup Competition (WISC) hosted by the 21st Wharton India Economic Forum (WIEF) in Mumbai earlier this month.
With a goal of celebrating and promoting entrepreneurship in the country, this year’s WISC received more than 500 applications from startups focused on a wide range of areas from sanitation to artificial intelligence. “What’s been most impressive about the applications is that they are not just ideas on pitch decks. Most entrepreneurs have demonstrated traction to validate their hypotheses and have a well thought out execution plan,” said Ayush Tapuriah, a Wharton student and director of WISC. He added that a majority of participants “have already closed in on their pre-seeded and seeded funding arrangements.” Talking about the 10 finalists, Bharati Jacob, jury member and cofounder/managing partner of early stage venture capital fund Seedfund Advisors, said: “I was very impressed with the quality of ideas, quality of pitches and the quality of entrepreneurs. The majority of them were different and not simply copy-paste models.”
The winner of the $12,000 Judges’ Choice award was Chennai-based Detect Technologies. An Internet of Things (IoT) startup incubated by the India Institute of Technology (IIT) Madras, Detect Technologies was formally incorporated in February 2016. Its area of focus is to enhance productivity in industries through artificial intelligence and non-destructive evaluation. The 35-member Detect Technologies team has developed GUMPS — guided ultrasonic monitoring of pipe systems — for industries such as oil and gas, chemicals and fertilizers. This product has been built indigenously at IIT Madras after more than five years of research and development and enables continuous monitoring of pipes at operating temperatures. Daniel Raj David, cofounder and CEO of Detect Technologies, said: “Our solution can detect any corrosion in real time and, in turn, ensure high levels of safety and prevent loss of life and productivity and environmental damage.”
So far, the startup has received around Rs10 lakh ($15,000) from IIT Chennai. It is presently in talks for raising funds of around Rs400 lakh. Detect Technologies is currently piloting its solution with a few large oil and refinery firms in the country and expects to be operational by March. David believes that a high entry barrier product and a large, universal market are two key differentiators for his startup.
The slowdown in startup funding is “a minor course correction and should be welcomed as a period of introspection.” –Sumit Mody
According to Seedfund’s Jacob, Detect Technologies stood out and emerged the winner because “its approach is very innovative and it has strong commercial benefits for users in terms of savings costs, improving productivity and ensuring safety. We have not seen something like this before.”
The $6000 People’s Choice award went to HelpUsGreen, a Kanpur-based social enterprise that recycles waste flowers from temples into patented products like organic fertilizer and incense sticks. Traditionally, these flowers are dumped into the Ganges River. The startup’s aim is to help make the Ganges pollution free and at the same time provide livelihood to rural families. HelpUsGreen and Detect Technologies also won WISC’s award of pro-bono legal advice from Khaitan & Co. All the 10 finalists were chosen for mentoring by Innoven Capital.
“Being a winner [of the WISC] is humbling and inspiring. To see that a group of esteemed judges shares our view [of] the disruptive nature of what we are building is quite rewarding,” said David.
The Power of Disruption
In fact, the ability to disrupt was emphasized in the forum’s opening keynote address by Kunal Shah, founder and chairman of FreeCharge, India’s leading payment app and mobile commerce firm. Entrepreneurs, he said, must work on solutions that make the previous way of working irrelevant. Citing the examples of railway ticketing in India, Uber and Truecaller, Shah said: “Everything is ripe for disruption as long as you have a ‘delta 4’ solution. Once a delta 4 solution is created, customers do not go back to the previous inefficient system.”
During a panel moderated by Kartik Hosanagar, Wharton professor of operations, information and decisions, participants discussed various issues ranging from the investment scenario in India to how Indian companies can stay relevant in the face of global competition.
Pointing to the ratio of GDP versus investments, Hosanagar noted that while the U.S. GDP is around nine times that of India, the capital that went into the venture capital space in the U.S. in 2015 was six times compared to India. Responding to Hosanagar’s question on whether India is overfunded, Rehan Yar Khan, founder of Orios Venture Partners, said he believed that the gap was because of “India’s faster pace of growth as compared to the U.S. and also because of the large number of white spaces here.” Khan added that “fundamentals like the rate of growth of consumers, the growing number of online users and increase in disposal income are all in place in India.”
Talking about profitability among Indian startups, Nipun Mehra, vice president of Sequoia Capital, said: “Competitive dynamics are forcing companies to spend more on customer acquisition. Firms are looking at the end-state versus the current state, and based on certain indicators they are willing to take an educated guess that there is light at the end of the tunnel.” Sumeet Thandani, founder of Presto, added that since India does not have any firewalls unlike China, Indian entrepreneurs have no option but to “up their game, focus more on quality and constantly innovate” in order to compete successfully with global players like Amazon and Uber who are investing heavily in India. Other important steps include developing domestic capital and focusing on localization, panelists added.
The panelists were unanimous that despite the slowdown in funding in 2016, there has been no bubble burst. “It’s a minor course correction and should be welcomed as a period of introspection,” said Sumit Mody, general partner at Health Passion Fund. Added C. Venkat Nageswar, deputy managing director-global markets at the State Bank of India: “2016 was a period of consolidation. We see tremendous opportunity in the coming years.”
The Need to Differentiate
The confidence in India’s growth story was reiterated at the Speaker’s Series on the concluding day of the two-day WIEF.
Delivering the inaugural speech, Adi Godrej, chairman of Godrej Group, noted that for the past two and a half years, India has had a “reforms- oriented and free enterprise-oriented government” and “several steps towards reforms and growth have been initiated.” Speaking strongly in favor of the recent demonetization scheme in which Rs500 ($7.40) and Rs1,000 notes were rendered as invalid currency, Godrej said that “while it may take some time to take effect,” he believes that “in the long term demonetization will have a very strong positive impact on India’s GDP.” The biggest reform, he added, was the goods and services tax (GST) which is slated to be introduced later this year. The objective of GST is to replace all taxes levied by the federal government and the states with one central tax. Godrej expects it to add “tremendous momentum” to India’s economy. “In fact, it is quite possible that India could have some years of double digit GDP growth,” he said.
“In order to realize the true potential of India, we need to do things differently — be it products, processes or business models – in a manner that is suitable to India but can also make a mark globally.” –Saikat Chaudhuri
Adil Zainulbhai, chairman of the Quality Council of India, debunked many myths associated with the public sector and encouraged professionals in the private sector to work in the public sector. Zainulbhai, who is also the chairman of media house Network 18 and was formerly with McKinsey for 34 years, said: “It is a myth that nothing gets done in the government and that bureaucrats don’t work. A lot of bureaucrats are very dedicated to making things happen. Once you get the people aligned, and all parts of the government are aligned, the pace and scale of impact is simply amazing.”
In a panel discussion moderated by Saikat Chaudhuri, Wharton adjunct professor of management and executive director of Mack Institute for Innovation Management, panelists shared their perspectives on the “New India.” Chaudhuri set the ball rolling by saying that “in order to realize the true potential of India, we need to do things differently — be it products, processes or business models – in a manner that is suitable to India but can also make a mark globally.” He also pointed out that India doesn’t need to go through the same cycles as the West but can leapfrog in many areas.
Harsh Agarwal, founder of AGacquisitions, a global hedge fund, added another dimension. It’s not always just about being innovative, he said, but also about doing things “right.” Pointing out that the financial services space in India is still very nascent, he said: “In our company, we gave our customers the ability to access new markets. By itself this is not a ground-breaking change, but given where the Indian market is and our learning curve as a nation, it did give a new perspective.” Commenting on the role of the government in fostering entrepreneurship, Agarwal added: “The most efficient way to deliver change at scale is to bring about changes at the policy level. However, once a new policy is formulated, there should be a 100% commitment to that policy and there should not be too many riders. One should not have to keep looking at the fine print.”
Karan Bhagat, founder, managing director and CEO of IIFL Wealth & Asset Management, discussed two trends that he saw emerging. One, there is a rise of “professional entrepreneurs” who have a large appetite for taking risks. Two, during the past 10 years, most small and medium businesses (SMEs) have seen their return on equity decline from high double digits to high single digits or at best 14% to 15%. This is forcing them to rethink their business models. Bhagat said: “Most of these are family businesses, and with the younger generation getting more involved these businesses are now becoming more service-based and productivity-based as compared to the earlier manufacturing and working-capital based entities.”
Manisha Raisinghani, cofounder and chief technology officer of LogiNext, a logistics and supply chain analytics startup, wants to see more innovation in the enterprise space. She observed that there are very few companies like Freshdesk, Zoho and InMobi which bring innovation to fix business processes and solve actual business problems. “India has seen a lot of consumer tech startups. We now need more action in the enterprise space,” said Raisinghani. She warned, however, that “in this space it is very difficult to get support by way of advice and mentorship, and proving valuations is extremely tough.”
“Once a new policy is formulated, there should not be too many riders. One should not have to keep looking at the fine print.” –Harsh Agarwal
Zorawar Kalra, founder and managing director of Massive Restaurants, stated that his “personal crusade” is to put Indian food on the global plate. “Every major city in the world must have a good Indian restaurant, and Indian cuisine must become a primary dining option.” Kalra pointed out that his firm relies heavily on technology, and every technology that they use is of Indian origin. “We find that the Indian software we use is far better than its global competitors. What’s more, it is also one-fifth the price.” Kalra encouraged Indian businesses to embrace their Indian-ness. “We only have to learn that we are capable of becoming global leaders. Once we realize this, we will learn to innovate and not depend on global solutions.”
Building Sustainable Organizations
In another panel discussion, the focus was on how sustainable organizations could be built in the not-for-profit space. Moderated by Harbir Singh, Wharton’s vice dean of global initiatives, professor of management and co-director of Mack Institute for Innovation Management, the panel comprised Pramath Raj Sinha, founder and managing director of 9.9 media and founding dean of the Indian School of Business (ISB), Wendy Kopp, cofounder and CEO of Teach for All and Shaheen Mistri, CEO of Teach for India.
Sinha listed three factors as critical for building sustainable and world class not-for-profit organizations: Strong emphasis on governance, finding scalable solutions and relentless focus on quality and excellence. Citing an example of strong governance at ISB, he said: “The institution is funded by a large number of philanthropists, but every board member has equal say irrespective of how much they have donated.”
According to Kopp, cultivating leadership capability is critical. “In business one talks of leadership development all the time. We need to do the same in social development, too. We need to aggressively recruit top talent and then invest in their development.” Social organizations, Kopp added, also need to build global networks. For Mistri, the secret sauce is having a strong purpose. “Constantly understanding why I do the work I do helps me to navigate the ups and downs of the journey,” said Mistri. “It is also important to believe that change is possible and that I can make a difference today.”
“Universal digital education and accessibility to digital resources is crucial for a successful digital economy.” — Arundhati Bhattacharya
Going Digital
The event concluded with a keynote address on the digital future of the Indian economy by Arundhati Bhattacharya, chairman of India’s biggest bank, the State Bank of India. Bhattacharya supported the move to digital, be it in banking or in any aspect of the Indian economy, and acknowledged it as an enabler of growth. At the same time however, she stressed that even as India embraces the digital revolution, it is important for it to devise its own models and policies and not simply follow the lead of other countries.
Adoption of digital technologies by mature economies has to be seen in the context of their ageing population, Bhattacharya said. “Their aim is to ensure that productivity gains due to new technologies outweigh the contractions due to decline in population. But is that the direction in which we need to move?” She made an interesting observation: Unlike India, where 75% of the population is below 25 years, the country that works most in robotics has more sales of adult diapers than infant diapers. Pointing out that one million people enter the workforce in India every month, Bhattacharya added: “We need to ask ourselves how much of digital should we adopt given the labor intensive nature of our country.” She also emphasized the need to be aware of the impact of digital on social and individual behavior, especially the youth. “The decisions we take today will bind us to the outcomes in the years to come,” she cautioned.
Bhattacharya pointed out that there is a wide disparity in India when it comes it diffusion of digital technologies among different demographics, especially the elderly, the uneducated and the less affluent populations. “Universal digital education and accessibility to digital resources is crucial for a successful digital economy,” she said.
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2 Comments So Far
Shyamsunder Panchavati
Both Wharton and Harvard schools have been contributing substantially towards the growth and progress in India. In the field of Innovative Business Models, the contribution has extraordinary and has been there for quite a while.
However their contribution in the government, governance and policy formulation for the country though recent, is very encouraging. We had a Wharton alumni and a Harvard alumni as ministers in Dr. Mahmohan Singh ministry. Dr. Singh an Oxford alumni would qualify as the most educated and most academic minded prime minister of the country.
We now have Wharton faculty as a minister in Narendra Modi Government.
My reason for mentioning these people, is to state the fact that, now the people with high academics are also showing an inclination towards governance and policy making. This is a good development that needs to be encouraged.
As Ms. Arundhati Bhattacharya said. We Indians have 75% of our population aged 25yrs. This unique position give us the capacity to contribute hugely towards Human Capital requirements of the world.
The United States, and the Europe have the Technology and Monetary resources for growth and development, but they will have to depend increasingly on the Human Capital Reserves of India for the fructification of their desired objectives.
India still needs to evolve in terms of academic excellence. And somewhere it can be related to lack of evolution in government thinking on academics.
India needs academically empowered politicians, who are in tune with the latest in policy and governance.
Leading Academic institutions like Wharton, and Harvard and other institutions can contribute through collaborations with the government and private institutions.
This will not only result in the evolution and maturity in political thought process, The Manpower Capital, we supply to the world would be of higher quality.
United States has enviable record of almost all its past 10 presidents being alumni of world’s top ten institutions.
I have a similar dream for India.
I hope, it gets fulfilled in not too distant future.
Anumakonda Jagadeesh
There is something amiss in Indian canvas. About 40 per cent of our people still live below the minimum subsistence level. Eighty six per cent of such people live in our villages. Two hundred forty million people in India live in utter destitution. Of them 200 million live in our half a million villages. It only proves that the rural people have not been brought into the mainstream of our national endeavour to contribute to the progress and share the fruits of our economic and industrial growth. It is true that a large number of these rural poor are illiterate, but not ill-informed however. These poor and illiterate people have learnt that a better life is not only possible for them but they have a right to better life. They cannot wait in line indefinitely for the better days to come. We have to plan and work in this direction so that better days for them could come sooner than expected. This is the imperative need of the nation and a challenge before all thinking Indians.
It is well recognised that science and technology are the propellants for progress and prosperity and catalysts for growth and development. The greater the capacity of a nation to generate, transfer and to utilise the technology, the faster is its growth, progress and prosperity. Technology flow should be coupled with financial flow. With the same capital, but with a twist in technology, greater outputs can be obtained. Technology not only brings about change in production system but also influences social relations in this system, changing the lifestyles, values and attitudes which in turn change technology. Technology is thus culture – specific. Therefore, the welding of capital, cultural and technology factors is essential for rapid development.
The major question is how can science and technology help to fulfil the expectations of people. In an attempt to catch up with the west, its modernisation and consumer civilization, we have only landed ourselves in the pockets of affluence, in a sea of distress and destitution. We now realise mere increased production is not enough; it should be coupled with the distributive justice. Economic development must be coupled with social development.
Social development is centered around man. The country is not just soil. The country is people. Development is really the development of the people, development of the capabilities in the people to be self-confident, self-competent, self-dependent and self-reliant: to live in harmony with the environment and to have a sense of values of human dignity.
The task of the leadership should basically be to modernise the traditional and traditionalise the modern. This task becomes more difficult in old countries like India imbued with traditions, taboos, superstitions, rituals, etc.
The need today, therefore, is for an integrated approach to couple natural and human resources with modern tools, techniques and technologies and management methods; to practically demonstrate how the living and working conditions of the people could be improved. To people; seeing is believing. Such an approach should provide gainful employment to the people; help in building self-competence to utilise their own skills and resources; a feeling of adventure and pride in achievement; a faith in science and inculcation of attitudes – rational scientific attitudes, to bring about a cultural change and always looking out for a change for better.
The object is to change the face of under development of the people through application of science and technology at the grass-roots level and bringing science to the doors of the people that need it. The object is to fill the people with faith in science and involve them in creative and productive endeavours.”
In a broader sense, innovation is important to the advancement of society around the world. New and innovative products can increase the standard of living and provide people with opportunities to improve their lives. Breakthroughs in medicine and technology have significantly improved living standards around the world. Innovation has also lead to significant improvements in the way businesses operate and has closed the gaps between different markets.
Innovation in engineering:
Innovation in engineering is much more than research and development. It encompasses an end-to-end process, such that it extracts value through implementation. Innovation involves:
• creating or generating new activities, products, processes and services
• seeing things from a different perspective
• moving outside the existing paradigms
• improving existing processes and functions
• disseminating new activities or ideas
• adopting things that have been successfully tried elsewhere
Innovation covers the area from minor quality improvements to ‘cutting edge’ products and services.
“If we can’t find ways to inspire a generation of engineers with varied skills, this is going to be a principle obstacle for growth in our slowly recovering global economy” said Lidia Brito, Director of the Division of Science Policy and Capacity Building at UNESCO. “A recent UNESCO Engineering Report shows a marked shortage of engineers in many countries. Although the general number of engineering students is increasing worldwide, the proportion who enroll in engineering, as compared to other disciplines, is concernedly dropping. We need hands-on challenges like Fly Your Ideas to motivate young innovators about the potential of engineering in helping to find practical solutions to issues the world may face in the near future.”
Such innovation may be under threat from a skills gap that could be hitting the economy hard. It will see high tech companies face a shortfall of 40 million of the skilled workers needed by 2020 and beyond, with aerospace likely to suffer, along with motor and the medical equipment sectors.
Charles Champion, Executive Vice President Engineering at Airbus and Fly Your Ideas Patron, says: “These future-focused and disruptive concepts prove that engineering isn’t just about technical skills – it’s about having an innovative mindset and a creative approach. But for our industry to succeed in making aviation carbon neutral by 2020, we need a constant source of fresh and inventive ideas from the innovators of today and those of tomorrow. Our future solutions are here right now – and through projects like ‘Fly Your Ideas’, we are helping them to become a reality for the future.”
Innovation is extremely important to a country like India as it is closely related to productivity. Although there are a number of avenues to increased productivity, innovation is the most significant factor.
Creativity is seeing what everyone sees and thinking what no one else has thought before,Invention is transforming those new thoughts into tangible ideas Innovation goes even further, involving preparedness to mix with the commercial world to turn novel ideas into products .
The expertise of the engineering profession is vital to convert innovative ideas into reality for common use. Many of the comforts humankind enjoys today have been the result of innovative engineers. Examples include electrical appliances, transportation, buildings, telecommunications and urban infrastructure. Innovation and technology have become two inseparable words in the annals of human history. Engineers drive technology and are therefore at the forefront of innovation.
In India there were efforts to harness the talent and innovative spirit among people by organisations like National Innovation Foundation(NIF),National Research Development Corporation(NRDC),TePP etc. besides some private initiatives(Spark the Rise) etc.
In a vast country like ours these are piecemeal.
I am glad to read the news item in January this year:
Rs 5000 Crore Innovation Fund in India
“National Innovation Council Chairman Sam Pitroda today said a Rs 5,000 crore fund to support innovations would be launched soon.
“We have an innovation fund that we are launching… a Rs 5,000 crore innovations fund with focus on affordability, scalability and sustainability,” Pitroda said on the sidelines of an event here.
“The real innovation has to come from the bottom of the pyramid,” he added.”
The amount spent for innovation should help to shape the beneficiaries as entrepreneurs. I have a project:
Innovation Centres in Engineering Colleges:
Engineers are best suited to innovate. Unfortunately most of the Engineering Colleges like Infrastructure facilities(like Good Workshop, Electronics Lab etc). A Project,” INNOVATION CENTRES) in Engineering Colleges can be started under the Innovation Fund. Selected Colleges can be provided to start a good workshop and Electronics Lab. This way the Students can undertake innovative projects and come out with good gadgets. Later they can patent them and go for commercialization. This is the best way to spend Innovation Fund so that there will be productivity and promotion of Entrepreneurship.
Creativity, Innovation and Invention are the Pillars of Progress.
Today in Industry, INNOVATE OR PERISH is the MANTRA.
Dr.A.Jagadeesh Nellore(AP),India