ENTREPRENEURSHIP - A Study By National Commission of India by gauravjindal

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									ENTREPRENEURSHIP-
 A Study By National Commission of India



          Presented By: Group 7
            Megha Chaturvedi
              Nalini Sharma
               Sonal Gupta
              Sushma Gowda
              Shyna Singhla
             Tanvi Upadhyay
Methodology
 Formal one-on-one interviews with
 entrepreneurs.
 Other stakeholders-
   Financial community-Bankers, Angel, Investors,
   venture capitalists, state finance corporations.
   Educational Institutions- Incubation centres,
   Industry associations and associations of
   entrepreneurs.
 The interviews were conducted across six cities
 of India – Pune, Kolkata, Chennai, Ahmedabad,
 Hyderabad and Bangalore,NCR
Cont.
 Entrepreneurs to rate their perceptions along numerical
 scales. Based on both quantitative:
     gender,
    age of entrepreneur,
    sector,
    year of starting,
    educational qualifications,
     turnover of enterprise,
     number of employees, etc and
 Qualitative Parameters:
     family support,
    importance of education,
     financial assistance,
     taxation policies,
    corruption,
    Regulatory issues, etc
ENTREPRENEURSHIP

•Professional application of knowledge, skills and competencies
and/or of monetizing a new idea by an individual or set of people by
launching a new enterprise or diversifying an existing one , thus to
pursue growth while generating wealth, employment and social good.

•Crucial characteristics of entrepreneurial activity are: risk taking,
innovation and venturing into new business activities for profit.
Role of Entrepreneurship in the
economy.


  Increasing opportunities for employment.

  Wealth creation.

  Introduction and dissemination of new methods and technology.

   overall economic growth.
  Entrepreneurship in India
    India has been an entrepreneurial society…we had the entrepreneurial
skill but suppressed it for too long a time… and now it is thriving.‟
    The entrepreneurial spirit is an ongoing characteristic of India‟s history,
particularly visible in a number of communities engaged primarily in
trading.
    Deloitte group, India ranks 2nd globally as home to the fastest growing
    technology .rms. 82 Indian companies entered the Deloitte Technology
    500 list of Asia- Pacific Companies in 2007 and the companies that
    have made it to the Technology Fast 50 of India have an average three-
    year revenue growth of 489%.
    According to Goldman Sachs and Pricewaterhouse Coopers, have
    estimated that India has the potential to be among the world‟s leading
    economies by 2050.
The Entrepreneurship „Pyramid‟ in India

                                      Level 1: Agriculture and other activities:
                                      Crop production, Plantation,
                                      Forestry, Livestock, Fishing, Mining and
                                      Quarrying.

                                      Level 2: Trading services: Wholesale
                                      and retail trade; Hotels and
                                      Restaurants

                                       Level 3: Old economy or traditional
                                      sectors: Manufacturing, Electricity, Gas
                                      and Water supply

                                      Level 4: Emerging sectors (including
                                      knowledge intensive sectors):
                                      IT, Finance, Insurance and Business
                                      services, Construction, Community,
                                      Social & Personal Services, Supply
                                      Chain, Transport- Storage-
                                      Communications etc.
Cont.
 Levels 2 and 3 (Trading and Manufacturing)
 of the above pyramid comprise the
 traditional areas of Entrepreneurship. Level
 4, on the other hand, is an emerging/modern
 sector of Entrepreneurship with high growth
 rates.

 Most entrepreneurial ventures in Levels 1
 and 2 do not register themselves as
 companies and instead function largely as
 self-employed entity
This study concludes that a successful
Entrepreneurship ecosystem is the function
of a number of factors working in tandem.
These are classified as „Entrepreneurial
Triggers‟ These are as follows:
  Individual Motivations for Entrepreneurship
  Socio-cultural Factors
  Access to Early Stage Finance
  Education and Incubation
  Business Environment for Entrepreneurship
What Motivates
Entrepreneurship?
MOTIVATION TRIGGERS
 Motivation- Variation according to
region
Motivation- Variations according to
gender
Motivation- Variations according to age
Motivation- Variations according to
family background
Motivation- Variations according to time
periods
Motivation- Variations according to level
of work experience
Quotes from Entrepreneurs

 „Entrepreneurship offers the opportunity to create something of
 one‟s own‟
 „Entrepreneurs get the opportunity to make the road as well as
 walk on it‟
 „Entrepreneurship allows people to think outside the box and make
 thoughts work‟
 „Entrepreneurs are not confined to a particular area of   business;
 they need to know everything about how business runs‟
 „Entrepreneurship     allows      possibilities    for    constant
 selfactualization‟
Contd…
 „Entrepreneurship is about the sheer joy of taking an
 idea and making it work‟

 „Entrepreneurs like to do it their way – they are
 virtually unemployable‟

 „Entrepreneurship brings pride, passion and self-
 respect, from doing things on one‟s own‟

 „Entrepreneurship gives the freedom to try something
 new and break stereotypes‟
Positive Factors-Motivate
Entrepreneurs During Their Journey
“An overwhelming 99.4% of the
entrepreneurs said they do not want to
be in a routine job, signifying that they
are satisfied with their vocation and do
not regret their initial decision to
become entrepreneurs”
An Entrepreneurial Journey
 Jignesh Shah

 Chairman and CEO of Financial Technologies
 Group
 Founded in 1995
 Leader in providing technology and domain IP
 (intellectual property) to trade on next-
 generation financial markets
 8th most valued Software Company-
 NASSCOM‟s
 2nd fastest growing company in India-Deloitte
SOCIO CULTURAL FACTORS
Socio Cultural Factors
Constellation of socio cultural forces that has been
responsible for the development of business enterprise in
certain communities:

  Credit facilities
  Infrastructural Support
  Socialization
  Market Development
  Role of intra caste networks
Degree of Family Support as a factor:
  The NKC study explores the degree of family support
  (a socio cultural factor, particularly in India) that the
  entrepreneurs received at the time of starting their
  venture.
Variations in Family Support
1. Variation according to region
2. Variation according to family background
3. Variation according to work experience
Gender as a factor in Entrepreneurship
 Of the 24 female entrepreneurs interviewed, two-thirds of
   the female entrepreneurs said that their gender did not
   make any difference to their ventures.
Gender as a factor in Entrepreneurship:
some illustrations
 A female entrepreneur from Kolkata said its all because of
 preconceived notions.
 Another female entrepreneur said that women are able to deal
 with all the details of the business, they face problems because
 of family life suffers
 Another female entrepreneur from Hyderabad said that the
 running her own business gave her flexibility
 An entrepreneur from Bangalore said that, women make better
 entrepreneurs than men because of their inherent ability to
 multitask, a crucial skill for any entrepreneur
Key Challenges faced by Women
Entrepreneurs
 Financial assistance
 Marketing support
 Counseling
 Other support like:
  Day care centers
  Crèches
 Examples of Institutions like:
 FIWE
 AWAKE etc focuses on development of
 entrepreneurship among women
 Contd…
ALEAP – Association of Lady Entrepreneurs
of Andhra Pradesh
This institution assists women in identifying
projects, in marketing their products as well as
in conducting training programmes
It also assists in providing finance to its
members through an innovative Mutual Credit
Guarantee Scheme (MCGS)
It currently has two industrial estates exclusively
for women
Encouraging and Celebrating
Entrepreneurship



                   Some of the major
                   institutions in India include:
                   •CII
                   •FICCI
                   •ASSOCHAM
                   •MCCIA in Pune
                   •BCCI in Kolkata
                   •GCCI in Ahmadabad
                   •FAPCCI in Hyderabad
                   •FKCCI in Bangalore
Contd…
 An initiative taken up by Bharatiya Yuva
 Shakti Trust
 Also known as Business and Youth Starting
 Together
 Key support in Finance and Training
 Primarily caters to underprivileged groups
 between 18-35 years
 Credit Guarantee Scheme of Govt of India
 Also provides active Mentoring
 Contd…
  National Entrepreneurship Network (NEN)
 “Entrepreneur cell” workshops in educational
  institutions
 Organizes national “Entrepreneurship Week”
  every year

• The Indus Entrepreneurs (TiE)
 Networking events among entrepreneurs and
  investors
 Recent initiative “Pan- IIT Entrepreneurship
  Movement”
Summary

          In this respect it is imperative to
          launch Entrepreneurship
          outreach events Not just in
          school and colleges, but also
          through Media. Where
          entrepreneurial experiences,
          including Unsuccessful
          experiences can be shared
          widely.
Access to Early Stage Finance
Access to Early Stage Finance

1. Seed capital - a critical factor
• Decision to undertake entrepreneurship
• Decides the nature of the enterprise.
  2. Types of early stage finance
• Debt
• Equity
SOURCES OF START-UP PHASE
FUNDING
SOURCES OF SELF-
FINANCING
ACCESS TO FINANCE FROM
BANKS AT DIFFERENT STAGES
ACCESS TO FINANCE FROM
BANKS- Variations according to family
background
ACCESS TO FINANCE FROM
BANKS- Variations according to
time-periods
PE/VC INVESTMENT BY SECTOR
IN 2007
GROWTH OF VENTURE
CAPITALISTS AND PRIVATE
EQUITY IN INDIA
TOP CITIES ATTRACTING PE
INVESTMENTS 2007
CRITICAL ISSUES IN FINANCING

Ensuring Ready Availability of Seed
Capital
Lack of Relevant Secondary Markets
Relative Lack of Market Understanding
among Start-ups
SUGGESTIONS TO INCENTIVIZE
EARLY STAGE FUNDING IN INDIA
   Explore innovative models
1. Venture debt
2. Blend of traditional debt and equity
   Set up a public fund for start-up
   entrepreneurs using innovative PPP
   mechanisms
   Create a secondary market for smaller
   companies
   Encourage enabling business environment
EDUCATION,INNOVATION
 & ENTREPRENUERSHIP
Interlinking Education, Innovation and
Entrepreneurship

   Generating a critical mass of entrepreneurs oriented to high
  levels of growth depends on:
      the quality of education provided,
      an environment that encourages innovation and,
      An entrepreneurial culture.
Significance of Education
   Social progress and Economic development.

   Encouraging entrepreneurship, in highly skilled and
   knowledge-driven sectors.

   Skilled- Human Resource.

    Multi-dimensional nature of the required
   entrepreneurial skills.
KEY ISSUES
Higher and Professional Education
  Expansion, excellence and inclusiveness in
  higher education
  Increased industry interaction
  Interconnecting the knowledge institutions in
  the country
  Finding sustainable and workable models for
  continuous innovation driven Entrepreneurship.
KEY ISSUES
 Vocational Education & Training - Skill Development

    Only 5% of India‟s existing workforce has received skill training as
    against 96% in Korea, 75% in Germany, 80% in Japan and 68% in
    United Kingdom.

    Returns from VET are low and the quality of training does not meet the
    needs of industry

    There is little incentive to pursue VET courses since most of these do
    not lead to a job.

     Facilities in most VET institutes are old and outdated.

    Current certification systems are inadequate.

    There is need to provide incentives for training in spoken and written
    English

     Performance outcomes in VET institutions are not measured with
    industry participation and there is no incentive for better performance
KEY ISSUES
 Innovation
   Certain key actions such as reforms in
     higher education,
     investment in research and
     building formal and informal academia-
     industry linkages.
IMPORTANCE OF EDUCATION
Qualification of Entrepreneurs
Qualification of entrepreneurs –
Variations according to time period
MBA and entrepreneurship – Variations
according to time period
Profile of MBA graduates in
different time periods
Availability of skills
Issues of skills
Issues with skills – Variations
according to type of skills
Issues of skills – Variations
according to age of enterprise
Eleventh Five Year Plan Initiatives in School
Education, Higher Education and Development of VET
Increase in the resource allocation for education from 7.68% to 19.29%

Reduce drop out rates in elementary schools

Attaining minimum Standards of Education

Increased literacy rate

Reduce gender gap in literacy

Setting up of new universities and institutions.

Upgrading science education and research infrastructure in the
universities
launch a National Skill Development Mission

Setting up 600 RUDISETIs(Rural Development and Self Employment
Training Institutes) would be set up
OTHER SUGGESTIONS
 Content and Learning Methods
 Teaching and Entrepreneurship
 Encourage Student-led Entrepreneurial
 Activities on Campus
 Performance-oriented VET Skill
 Development
 Enterprise Centres in Major Educational
 and Research Institutions
Business Incubation for
Entrepreneurship (BIE)
 Critical organizational support mechanism for
 fledgling entrepreneurs at the initial stage

 Provides services like:
   physical infrastructure,
   administrative support,
   management guidance/mentoring,
   help in formulation of a business plan,
   technical support,
    Intellectual Property (IP) advice where applicable,
   facilitating access to finance and
   encouraging networking with the greater and
   relevant business community
Business Incubation for
Entrepreneurship (BIE)
 The „first generation‟ incubators - infrastructural needs
 such as affordable space and shared facilities.

 The „second generation‟ incubators - respond to needs
 of counseling, networking, skill enhancement,
 professional support and seed capital.

 Future Growth
Business Incubation for
Entrepreneurship (BIE) – in India
To develop techno-preneurship, the Ministry of Science and
Technology (MoST) initiated the Science and Technology
Entrepreneurship Park (STEP) programme
    foster linkages between academia, industry and R&D institutions
    to inculcate a culture of Entrepreneurship.

Incubator support in India is largely in the form of physical
infrastructure, technical support (access to libraries, labs and academic
resources), management advice and helping in access to finance

Quantity: There is a need to massively increase the number of
incubators in the country

Quality: There is a need to develop greater marketability of ideas to
industry.

Finance: Access to finance and its timely disbursal is one of the
biggest barriers to Entrepreneurship.
Incubation Policy

 Crucial incentive structures such as
 Special Enterprise Zones

 Practical business models for incubators

 The structure of delivery mechanisms
Business Environment and
Entrepreneurship
A prerequisite for nurturing Entrepreneurship is the
creation of a favorable business environment. This
goal is at the heart of India‟s economic
liberalization initiatives.
India ranks 120th out of 178 countries – even behind countries such as
The Maldives (60th), Pakistan (76th), Sri Lanka (101st), Bangladesh
(107th), and Nepal (111th). The OECD draft report on regulatory
framework in market for goods and services places India behind
various countries, including Chile and Brazil.

 The Global Competitiveness Report 2007-08 of the World Economic
Forum places India in the 48th position among 131 countries. Clearly,
there appears to be need for qualitative improvement in the business
facilitation environment.
The lack of readily available information compels new
  entrepreneurs to employ intermediaries to advise them
  on essential aspects of starting a business, thereby
  incurring additional costs.
Suggestions to Ease Information Access: Develop
   comprehensive sources of information through the following:
a. Entrepreneur information handbooks
b. One Stop Shops
c. Web Sources in India:
Hurdles   •Difficulty and delays in
          meeting various government
          requirements
          •Corruption:




                   •Initiatives Already Underway-MCA-21
                   •Single Unique Company Number:
                   •Single Window System
Initiatives        •Single Composite Application Form
                   •Illustrative International Best Practices
                   •Illustrative National Best Practices
Suggested Improvements: Some of the legal reforms that would
facilitate a better environment for Entrepreneurship are as follows:
a.Specialized Commercial Courts
b.Undertake Reforms in Bankruptcy Laws
c. One Person Company/LLPs
Package for Promotion of Small and Medium Entrepreneurs, 2007

1.   Legislation
2.   Credit Support
3.   Fiscal Support
4.   Support for Cluster Based Development
5.   Technologies and Quality Up gradation Support
6.   Support for Entrepreneurial and Managerial Development
Encouraging Entrepreneurship
Advice to Entrepreneurs:
 Increase networks

 Document failures and learn from them

  Invest in people and build teams that follow inclusive approaches
develop incentives and bolster human resources – „translate business
strategy into talent strategy‟.

  Understand the product and markets well.

   Conduct extensive background research, especially on marketing and
financial aspects.

  Focus on quality – „Cost is forgotten, quality never‟.

  Match the skills, mindsets and beliefs with the business venture – focus
on core strength and excel.
Be open to ideas. Take informed risks.
Hard work, persistence, perseverance,
confidence – these are the „must qualities‟ for
every entrepreneur.
 Be honest – never compromise on ethics or
offer bribes.
 Build strong foundations and then grow; take
incremental steps.
What the Government Can Do
 Create up-to-date information source for start-up entrepreneurs
 Create specialized commercial courts for speedy enforcement of
 contracts.
 Reform bankruptcy laws to ease the process of closing down
 businesses.
 Speed up development of world-class infrastructure.
 Ensure proper publicity and implementation of various
 promotional schemes and policies.
 Set up a Public Fund for new entrepreneurs using innovative PPP
 mechanisms.
 Explore venture debt instruments with the help of innovative PPP
 mechanisms, through SIDBI and similar institutions.
 Establish a secondary market for trade in stocks of smaller
 companies.
Frame appropriate polices to encourage innovation
among smaller institutions and companies and
encourage transition among R&D/ educational
institutions.
Develop recognition and reward systems for
Entrepreneurship, at the local, state as well as
national levels
Implement far reaching changes in higher education
policy to enhance quality, quantity and inclusiveness.
Explore the possibility of innovative social security
for entrepreneurs to encourage ability to take risks.
At the National Level

 Encourage and celebrate Entrepreneurship – Reward
 and acknowledge its role in wealth creation and
 employment generation.
 Widen the social base of capital, including access to
 new entrepreneurs from communities not
 traditionally associated with business, especially
 from marginalized groups.
 Launch Entrepreneurship Outreach events (not just in
 schools and colleges, but also through the media).
 Improve general perceptions regarding
 Entrepreneurship to influence family and community
 support for first generation entrepreneurs
Key Findings
 Key „Entrepreneurial Triggers‟ are: Individual
 Motivations, Socio-cultural Factors, Access to
 Early-Stage Finance Education and Business
 Environment.

 Prominent „Motivation Triggers‟ are
 „Independence‟, „Market Opportunity‟, „Family
 Background‟, „New Idea‟, „Challenge‟, and
 „Dream Desire‟.

 „Challenge‟ is the principal „Motivation
 Driver‟. 99.4% of the entrepreneurs interviewed
 did not want to be in a routine job.
63% of the entrepreneurs interviewed were
self-financed, while other sources included
banks, venture capital (VC), angel investors
and state finance corporations.

95% of entrepreneurs believe education is a
critical success factor.

50% of the entrepreneurs experienced
difficulties while seeking statutory
clearances and licences.
Key Recommendations
 Recognition and rewards right from the local up
 to the national level will energize and
 encourage new entrepreneurs.

 Financiers need to be more proactive in
 assessing the business opportunities generated
 by Indian entrepreneurs.

 To create incentives for seed capital funding,
 some steps include the following: establishing a
 secondary market for smaller companies,
 creating new instruments for start-up funding
 and providing financial literacy to start-ups.
Synergies between Education ,Innovation and
Entrepreneurship should be encouraged.

Growing the pool of skilled people is a key priority.

In Vocational Education and Training (VET) there is
need to completely overhaul and modernize current
institutions and practices. Reforms in VET require
innovative delivery models, providing incentives for
states, ensuring performance-based training and
assessment, re-branding, certification ,encouraging
learning-by-doing, incentivizing English speaking
skills, ensuring flexibility of VET alongside the
higher education stream, for easier crossover and
choice, as critical success factors.
THANKYOU

								
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