Transcript Concept for simulation games used as an adjunct to training programs

Startup Ecosystem and Enablers:
The Journey Ahead
at crossroads
Dr. Vikas Singh
Crux Management Services Pvt. Ltd
at crossroads
Two Issues
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The challenges & opportunities for the start ups
and entrepreneurs
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Why we need to focus on job creators rather than
job seekers
Entrepreneurship: Life line
Economy is defining politics. Have we got it right ?
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India is an old country with a young population and it is
undergoing unprecedented changes.
Not only is the Indian market getting younger and more aligned
with global trends, India's business leadership is also shifting to
young disruptors who are redefining the business using new
technologies and innovative models.
The young India is fearless, ambitious and impatient and it is not
satisfied with the country's perpetual potential. It wants
opportunities, prosperity and influence here and now and the
country has to accommodate this steep rise in expectations.
Entrepreneurship: Opportunities
India is at crossroads where it now has to cater
to the aspirations of a billion people.
 Existing frameworks can prove to be
inadequate and there is a great need to
leverage a billion minds and become a global
power.
 Startups and entrepreneurship is the best way
forward in becoming a knowledge
superpower.
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Entrepreneurship: Opportunities
Demography, Governance, Jan dhan, internet access,
low cost smart phones …… etc.
It has meant faster decision making, supporting ecosystem
 better logistics
 access to bank accounts
 higher mobile penetration
has also led to increased financial inclusion and flow of credit
to the unbanked. Growth in mobile penetration is
transforming the way businesses and consumers
communicate and work. With data enabled mobile phones,
the very nature of startups and businesses have changed.
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Background
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The story of Indian start-ups is not just limited to the current century; in fact
it began over four decades ago. Through the 1980s, a handful of
pioneering IT services companies, including Tata Consultancy Services,
Infosys and Wipro, put India firmly on the global economic map.
These companies invested in technology and leveraged the country’s young,
English-speaking workforce to provide cost-effective technology services to
clients across the globe.
The result is an industry that currently employs nearly four million people,
generating $150 billion in revenues for India today.
The 1990s witnessed the launch of Bharti Airtel, $15 billion in revenues and
more than 350 million consumers worldwide. Similarly the 1990s also
witnessed the launch of ICICI, HDFC and Axis banks, which are among the
top 10 banks
The Story
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The Story
Over 75% less than 36 years old
 Over 50 % have worked in an MNC
 About a third with an Engineering
‘only’ background
 Only 6 % are women
 45% are focusing on global market
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The Story
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The Story
Top 6 cities account for 90% of the
startup activity, with Delhi/NCR and
Bangalore alone
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accounting for more than 50 %
 Kolkata, Ahmadabad, Cochin and
Jaipur are the next emerging
locations
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Entrepreneurship: Issues and challenges
Employees
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While its a cliché, startups require the right kind of employees with a
great balance of ability and attitude. India is still nascent in terms of
the startup culture
There aren't enough high-quality employees that all the growing
startups need.
It takes an enormous amount of time to hire is very expensive (irrational
expectations)
The pool is not very big. Quality of the candidates is poor .The good
ones don’t want to work for you. This results in a very small talent pool.
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30 % selected turn up. Over 80% leave within one year.
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Cost of hiring and training is about 15 months wages.
Entrepreneurship: Issues and Challenges
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Government regulations : Everyday
government regulations are changing,
especially when it comes to state-level rules.
Each state has a different tax form that needs
to be filled if you want to ship products to
customers in that state.
There is no central tax or governing body that
regulates the e-commerce space.
Entrepreneurship: Issues and Challenges
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More VCs and hedge funds, less investors
Over the last few years there has been several startup
funding.
Some spectacular blowups too (e.g.. : Housing)
The funds are in such a hurry to capture market segments
and be part of the next, big unicorn story that they are
taking a betting view of the market.
Because of ridiculous expectations of accelerated
success, startups are being pushed toward short-term
solutions and unreasonable scale very early.
As a result, short time solutions and “jugaad” are
implemented which hurt the overall ecosystem in general
and the entity in particular.
Entrepreneurship: Issues and Challenges
Patent pains
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Globally, patents are seen as the bedrock for creating truly
differentiated companies.
In India it is difficult, time-consuming and opaque process.
And a very small percentage of Indian startups go this route.
For one, there are very few, truly innovative technology based
startups and two, the process is so bureaucratic and inefficient that it
does not encourage entrepreneurs to think about patenting and
patent-able innovations at early stages.
Change may be across the corner
The government has taken the right step in addressing this under the
'Startup India' plan and we need to wait and watch how things
evolve.
Entrepreneurship: Issues and Challenges
Early stage capital
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Access to early stage capital (and very late stage capital) are issues.
Apart from the unorganized route of angel funding or some seed
funding, not enough channels which open up capital to startups.
Banks, for instance, have not participated in this market at all.
There aren't enough incubation cells and funding from different
organizations directed towards improvement in certain areas.
Startup ecosystem is a pyramid that should be very wide at the
bottom and narrow at the top. However the pyramid is not wide
enough (not enough early stage startups that has access to capital)
to create a powerful ecosystem yet.
Entrepreneurship: Issues and Challenges
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Clearly, the 20 startups with the least VC funding have done the
best. In contrast, the 20 with the most VC money backing them,
have lagged far behind.
What do we learn from this? It's simple. If a startup has a lot of VCs
backing it, then it likely commands a big valuation even before the IPO.
Thus retail investors looking to make a fortune would probably be
disappointed.
Entrepreneurship: Issues and Challenges
Cultural views and lack of infrastructure support
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There is little tolerance for failure in our country.
Our focus is still on getting reputable jobs in a reputable
company. In complement to that, infrastructural support
such as incubation and funding are not easy to find in
India.
Irregular power supply can be a hindrance
Silver lining: the Govt sees this as a priority
Corruption free environment, friendly regulations, good
connectivity, healthy environment, efficient logistic support
is now the focus
Entrepreneurship: Issues and Challenges
Absence of mentors
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Young entrepreneurs usually have unique ideas however
they lack experience.
A brilliant idea works only if executed promptly.
Industry insights, market knowledge, business experience
is important to materialize the idea.
Mere ideas cannot propel startups.
Entrepreneurship: Opportunities
Demographic dividend
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According to the latest UN report India with 356 million 10-24 yearolds India has the largest concentration of youth population despite
having a smaller population than China.
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This is great.
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right education and healthcare can see the economy soar.
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Youth is the driving force behind innovation, creation, and the future
leaders of a country.
Youth also drives demand and consumption pattern in a country. For
startups youth make up the workforce that it so desperately needs
and going forward youth can be a huge talent base for startups.
And
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Entrepreneurship: Life Line
Demographic dividend and why we may not be
able to capitalise
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In the lifespan of every country comes a period of two to three
decades where the working population grows at a rate which is
faster than the overall population growth rate.
It can happen because of the fact that health facilities improved, so
infant mortality rates fall and because infant mortality rates fall
people have fewer kids and when people have fewer kids, the
population growth rate is slower than the workforce growth rate
These people entering the job market, earning and spending
money, leading to grow at a much faster rate
China is a very good example of the demographic dividend coming
good.
Entrepreneurship: Life Line
Demographic dividend and why we may not be
able to capitalise
The key assumption to the demographic dividend is
that people entering the workforce will actually find
jobs
 The scary thing in the Indian case is the number of
people entering the workforce is simply too big.
 There are multiple estimates and most of these
estimates essentially suggest that there are around 1
million individuals entering the workforce every
month and about 1.2 crores annually.
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Entrepreneurship: Life Line
Demographic dividend and why we may not be able to capitalise
Only around one third of the women entering the
workforce will actually go out and work
 Other assumption: every year around 5 million people
will retire
 As more women get educated, as the health systems
improves; more women are likely to enter the workforce
 So if we take these factors into account, the number can
go up to as high as 2.4 crore individuals a year
 Jobs are being created, but are enough jobs being
created?
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The answer is no
Entrepreneurship: Life Line
Demographic dividend and why we may not be able to capitalise
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The other interesting thing which most people don't realize is
that since the process of economic reforms was initiated, the
rate of growth in jobs has actually fallen.
Economic growth since 1991 has been less labor intensive.
It means that it is now possible to create growth without
creating jobs.
Take a sector like IT or take a sector like BFSI, both sectors
add a lot of value to the economy without recruiting a lot of
people
Entrepreneurship: Life Line
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Indian manufacturing has become more and more
machine oriented.
Beyond a point nobody wants to recruit people and hence
factories have gotten more and more mechanized.
So we are not creating enough jobs.
Our great beliefs towards the turn of the century was that
the information technology sector would come to India's
rescue, and we would go from being a developing to
being a developed country.
It hasn't turned out that way
Entrepreneurship: Life Line
Agriculture has many more people than it needs.
 Everybody gets a job, However job does not add any value.
 Let's take agriculture, now 50% of India's population is
dependent on agriculture, but 50% of India's population
produces around 16% to 18% of India's GDP
 So we have what the economist call huge disguised
unemployment...that's one point.
 The second very, very interesting point is that India has
millions of enterprises which employ very few people.
 An average Indian firm employs around 2.2 individuals.
Entrepreneurship: Life Line
National Skill Development Corporation is doing some
amount of good work.
 There is a change in thinking that has happened on
this front, because there is no way.
 There is 1.2 crore individuals entering the work force
every year. How can the government train even 10%
of them?
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Entrepreneurship: Life Line
 Economy
IS going up, the GDP IS going
up, but that is not creating jobs.
 The other important thing is, because the
government tries to do too many things,
it ends up not doing things that it should
be doing well.
Entrepreneurship: Opportunities
Best suited to address challenges
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India has a unique set of problems that need innovations to
originate out of the country.
Problems around its health, education, infrastructure, sanitation are
unique to the country and solutions from western world cannot solve
it.
Each problem provides a unique opportunity for startups to solve
some pressing issue and at the same time create a business around it.
What helps is that most problems around emerging economies are
similar in nature and solutions applicable here can also work in many
countries in Africa and elsewhere.
This will enable Indian startups to acquire an even bigger scale and
at the same time make a meaningful impact around the world.
Entrepreneurship: Opportunities
Huge Market
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For startups in the country, it is not essential to go overseas.
India, with over a billion people, present a very large home market
for any goods or services.
A rising disposable income and growing aspirations of a
mushrooming middle class have meant there is a large appetite for
brands.
The large population has also led to a consumer expenditure growth,
which has in turn has propped up supply and production.
Startups that look to service and cater to the large population in
solving a pain point or providing a utility in one of the world's most
important consumer markets, stand to do well.
Entrepreneurship: Opportunities
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The economy is at the inflection point.
Every economy goes through phases.
We are in a sweet spot. Research indicates that an
economy tends to ‘consuming’ once the per capita
reaches certain threshold.
We are there. This is demonstrated by moving from
necessities to aspiration consumption at least for the
50% of the economy is huge (in numeral terms over half
a billion).
The next 5 years will see this trend covering the next
half.
Entrepreneurship: Opportunities
High Mobile penetration
 According to latest TRAI figures India's tele-density
reached 76.55 percent with a subscriber base of
95.76 crore.
 Significantly wireless subscriber base touched 95.76
crore, just shy of 100 crore mark.
 High mobile penetration in urban and rural India has
reshaped the economy of the country and how goods
and services are offered.
 It has lead to greater efficiencies and increased
productivity.
Entrepreneurship: Life Line
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So thinking at our political level has been extremely muddled.
We need to create jobs at the lower end of the spectrum.
We've tried to project high skill intensive sectors, without
trying to project the low skill intensive sectors, where a lot of
jobs could actually be created.
Things like textiles, toys, food processing, construction, real
estate.
Information technology could never had had that multiplier
effect.
Let's not forget, we have huge, huge disguised unemployment in
agriculture...
Entrepreneurship: Life Line
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The best example I can give you is whenever I
write/speak about skill development, or about
demography (how it may fail us) I get a few stinkers
trying to tell me that I don't understand
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So there are a few good things which are happening,
but it's just that the problem is so deep that we need
some deep fundamental action
Entrepreneurship: Life Line
What's going to happen? We're talking of a social crisis.
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30 - 50,000 people joining the workforce everyday, and no
one's is really even thinking on how to get them jobs
sustainably over a period of time.
These are very big long term macro trends, so if you were to
ask me, would things start unraveling in 2020 or 2025.
Think of that guy who is making one fifth of the income,
which in comparison to other Indians,
Entrepreneurship: Life Line
It is NOT an economic issue. It is a social issue
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Look at different parts of the country, a lot of “upper castes”...
land owning upper castes..are essentially opposing the
government of the day.
What happened in Haryana with the Jatts, Jatts are land owning
upper caste.
Look at what is happening with the Patels in Gujarat or even the
Marathas in Maharashtra or the Kapus in Andra Pradesh
I really don't know
And I think that sort of sums it up, in some sense, because the
problems are real and the efforts are sort of just half steps.
at crossroads
Thank you!
What questions do you have