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Case Study: The Power of Ideas Introduction Today, Indian society can best be classified into three categories. The first category of people is that of well-established business families, such as the Mittals, Tatas, Ambanis, Birlas and the like. These families have a very strong base, with most individuals following the family business tradition passed on from generation to generation. Most of these companies have a strong management team, and are now going global. World trust in the Indian corporate sector is increasing like never before. The second category is dominated by young graduates who are an integral part of Indian business growth. In fact, India has graduated a huge number of individuals with management degrees over the past decade. With information technology and multinational corporations on the rise in India, young entrepreneurs serve as the backbone of many flourishing enterprises. The third category of society would be product-based
Submitted to: Dr. Kishan Rao
business entrepreneurs. You every India. big
Submitted By: Group 7
will find them in Aditi Narayan (08PG074) city, Albert Rohan Silas (08PG079) town, or village in Bhargav B D (08PG086) Educational Garima Chopra (08PG087)
qualifications do not mean much to them; Priyanshu Mishra (08PG335) rather, they rely on sheer entrepreneurship Raksha Neogi (08PG104) ability that include training, experience, Ranjini Ballal (08PG339) customer service skills, networking, hard work, and innovation.
Sulabh Sharma (08PG347)
There is an overall shortage of start-up entrepreneurs in India compared to the rest of the world. One of the most significant deficiencies an Indian entrepreneur may face revolves around capital. Although there is ample willingness to invest capital in a well-established enterprise, there is little willingness to fund start-ups. The quality and quantity of venture capital or angel investors in India is low. The Power of Ideas: ‘The Power of Ideas’ is an initiative started by The Economic Times which provides a platform for talented entrepreneurs to explore their ideas. Here the entrepreneurs and the investors gather in order to discuss the different innovative business plans and fundings are provided to the deserving ones. This platform bridges the gap between emerging MSME’s and willing investors. The interaction involves the short listed candidates, the investors of IAN, VCs and incubators. The short listed candidates are nothing but the budding entrepreneurs like George Koshi, Sumesh Mishra & Punit, KS Chhabra and Akshat Mullick who wanted to start their own ventures and needed financing. George Koshi needed capital to launch and scale up his business of cooling motorcycle helmets. Sumesh Mishra & Punit wanted to boost their health food brand business across Mumbai. KS Chhabra, the founder of HindBio says that the portal has helped him to think beyond boundaries in terms of financing. Akshat Mullick, the MD of Jeevarth clinic needed an investor to fund his new project on home healthcare services. All these entrepreneurs are looking for investors who help them grow ventures. While some investors preferred existing businesses looking for growth, fresh start-up ideas are also considered and carefully inspected to see if they had potential. Initiatives such as ‘The Power of Ideas’ have emerged as an innovative way to convert the dreams of MSM entrepreneurs into reality. Scope:
Such platforms have widened the scope of MSME’s by opening them up to the available investment avenues. The MSME segment basically gets financed from bank loans, private equity funds, angel investors and venture capitalists. Several platforms are emerging these days which encourage the entrepreneurs to put forth their ideas. Some of them are: IAN (Indian Angel Network) it is a large business angel group with
successful entrepreneurs and dynamic CEO’s who are interested in investing in start-ups and early stages of ventures which have the potential of creating disproportionate value. Indian Investment Network – it is an online platform connecting local entrepreneurs with angel investors in the Indian and internationally. Angel Group Network – this network helps entrepreneurs to post their business proposal and get help regarding business start up, a business expansion or an invention they are trying to introduce from an angel investor or a venture capitalist. The Angel investors bring with them experience, hardened knowledge and contacts (including experts and potential customers)—all of which are extremely essential for the success of a start-up. They invest their money in a business even before it has taken shape. If they trust the ability of a start-up team, they give all the guidance required to realise this entrepreneurial dream. Angel investors invest in businesses looking for a higher return than they would see from more traditional investments. Working of Angel Networks:
The prospective entrepreneur submits the investment proposal either free of cost or by paying some minimal Referral fee. The details of the proposal are sent out to the database of investors. The angel investor interested in the project, would then contact the angel network firm acting as the intermediary between the entrepreneur and the angel investor. The proposal remains active for a pre-defined number of interested in the proposal for this entire period. The most effective Angels help entrepreneurs shape business models, create business plans and connect to resources - but without stepping into a controlling or operating role. Often Angels are entrepreneurs who have successfully built companies, or have spent a part of their career coaching young companies. days and the Referral Fee gives access to the contact details of all the investors
The VC’s (Venture Capitalists) are higher risk investors and desire is a higher return on their investment. The venture capitalist manages the risk/reward ratio by only investing in businesses that fit their investment criteria. For example, Chintan Soni from GVFL says that scalability, sustainability, a good business model and a great team are the ingredients required to invest. IAN – an innovative concept The gist of the case was to highlight the requirement for financing MSME’s. As mentioned earlier, we have identified few platforms that have been helping the MSME’s in financing their projects. Taking IAN (Indian Angel Network), we have discussed its functions, criteria for lending assistance and its role in promoting MSME’s. In addition to money, IAN provides constant access to high quality mentoring, vast networks and inputs on strategy as well as execution. The
network members, powered by their experience and background, assess the potential and risks at the early stage. The Network looks at investing up to USD 1 mn and exiting over a 3 to 5 year period through an IPO, M&A or strategic sale. The Network may consider investments over a million dollars but is likely to do so through syndication. Investment criteria IAN invests in start-ups that meet the following criteria :
High barriers to entry: The Network looks for businesses that have high barriers to entry and can grow to be large. A complementary management team: The quality of the management team is important. A complementary management team that comprises multiple skills such as technology, sales, finance, HR etc. is considered a major asset.
Entrepreneurs who can provide evidence of the validation of their concept and particularly those who have begun to engage with the market have a stronger proposition.
Differentiated value proposition: Propositions that have sharp differentiators providing something different of proposing to do something differently.
Role of IAN in promoting SME’s: Investors with strong and operational backgrounds who are willing to invest not just money but also time adding value to the investee companies and also providing them access to their vast networks. The Network seeks to add value by providing advice/mentoring an access to its network in addition to money so its members are likely to invest in businesses where they have the ability to add such value.
It looks at a broad spectrum of investments agriculture, food processing, biotech, pharma, life sciences etc. and other area that excites Network members.
Companies funded by IAN: Hungryzone, is a premium online food ordering website. Currently having operations in Bangalore, Hungryzone allows one to place orders online and make reservation online at participating restaurants for free. Ordering from Hungryzone can help the customer discover new cuisines for a family dinner or simplify the task of ordering lunch for an office of 20. Benefits include no telephone miscommunication, easy specification of special requests and paperless menus for local restaurants right at customers’ fingertips. Hungryzone aims at providing a convenient platform for foodies to access restaurants and for restaurants to service their clients.
Kwench, is a library solutions provider, bringing a paradigm shift to the concept of corporate libraries. Founded by four alumni from IIMAhmedabad, it enables companies to provide its employees access to thousands of titles - with no capital expenditure, no administrative effort and no physical space. Going much beyond providing books, 'kwench' works with their clients in a consultative mode - facilitating learning and development. Karmic Lifesciences, is an ISO 9001:2000 certified, Oncology focused Contract Research Organization (CRO) based out of Mumbai with end-toend clinical expertise and full service CRO capabilities. Karmic provides concept to clinic services for new drugs as well as generics development and its services include Regulatory Strategy/Submissions, Pre-Clinical
Support, Clinical Trial Management, Clinical Data Management, BioStatistics and Pharmacovigilance services. Karmic works for several global and domestic pharma/domestic clients and has experience of handling 30+ clinical studies. It has further pioneered the codevelopment program wherein it is partnering with early stage R&D innovators to co-develop and create joint IP on promising new molecules in various stages of development and take them to market. MobileNXT Teleservices P Ltd is a Bangalore headquartered company with 22 stores running across India. MobileNXT stores are in 3 formats – standalone stores, store in stores and virtual stores. MobileNXT also has a tie-up with Shoppers Stop and Star India Bazaar (Trent) for setting up store in stores in their outlets across the country. With Indian Angel Network's support MobileNXT aims to have 500 stores all over India over the next three years, creating an unparalleled buying experience for the consumer.
Robhatah, Creators of a wide array of “intelligent” machines - Robhatah is a robotics R&D and technology licensing company that offers robotics technologies, concept & product development and consultancy services. .
Initiatives taken in India to promote entrepreneurship: 1. Techno-entrepreneurship: The STEP programme initiated by the National Science and Technology Entrepreneurship Development Board NSTEDB in 1984 in collaboration with the all India financial institutions (IDBI, IFCI and ICICI). STEP enables S&T person to cultivate entrepreneurship culture and fosters close linkages between universities, academic and R&D institutions on the one hand and industry on the other.
S&T Application for Rural Development (STARD): STARD aims at facilitating development of promising S&T based field groups and innovative technologies related to rural development. It also has a unique programme to support selected voluntary agencies with a proven track record of innovative work in development and application of technologies for rural areas. S&T Application for Weaker Sections (STAWS): This scheme is aimed at the development of economically weaker sections of the society in rural and urban areas. It focuses attention on specific S&T inputs for improvement of rural artisans, landless labourers, etc. Women Component Plan (WCP): This programme is focused on women to increase their contribution to S&T and development. It also aims at promoting research, development and adaptation of technology; improve the life, working conditions and opportunities for gainful employment of women especially in rural areas. Special Component Plan (SCP): SCP aims at promoting research and development under adaptation of technology to the needs of economically weaker scheduled caste/scheduled tribe communities in urban/rural areas. Tribal Sub Plan (TSP): TSP aims at improving living conditions of tribal population with science and technological activities. Young Scientist Programme (YS):The scheme is focused on young scientists who have adequate background of and training in fields of science and technology and show inclination to undertake action research projects, which are socially relevant and have application for rural development. 1. Entrepreneurship in Agriculture and Allied sectors: The launching of the 'National Horticulture Mission (NHM)' as a Centrally Sponsored Scheme with a view to promote holistic growth of the horticulture sector through an area based regionally differentiated
strategies, which include research, technology promotion, extension, post harvest management, processing and marketing, in consonance with comparative advantage of each State/region and its diverse agroclimatic feature. Realizing the potential of horticulture in the North-Eastern region and other special category States, a centrally sponsored scheme called 'Technology Mission for Integrated Development of horticulture in North Eastern States, Sikkim, Jammu and Kashmir, Himachal Pradesh and Uttarakhand' was launched. This Mission/ scheme is based on the 'end to end approach' taking into account the entire gamut of horticulture development in a holistic manner, with all the backward and forward linkages. It aims at establishing convergence and synergy among numerous ongoing governmental programmes through horizontal and vertical integration of these programmes, in order to ensure adequate, appropriate, timely and concurrent attention to all links in the production, post harvest and consumption chain. 1. MSME Expo 2009: The MSME Expo-2009 organized by the Development Commissioner (MSME) at the 29th India International Trade Fair, was inaugurated by Shri Dinsha Patel, Minister of State (Independent Charge) for MSME at Pragati Maidan.. Shri Dinesh Rai, Secretary, Ministry of Micro, Small and Medium Enterprises was also present on the occasion. Going around the Pavillion the Minister praised the exhibits and the work done by the clusters. The MSME Expo-2009 will help the SMEs to showcase their achievements in the global market. This Expo will also provide opportunities and foray for those SMEs who want to build up business linkages. The SME exhibitors gathered in New Delhi from different parts of the country have built up more than 85 stalls. The products range includes consumer electrical & electronic goods, engineering products, readymade & embroidery items, soft toys, health care, cosmetic and
health products, food and allied products, carpets, shawls, home furnishings and made ups, handicrafts and decorative items, gems and jewellery, cotton and silk sarees, plastic household items, handbook printing, jute products, pressure cooker and aluminium utensils, leather bag, fancy bag, Jaipuri rajai, Kashmiri craft. Around 100 MSME entrepreneurs displayed their products in the areas of innovation, quality and R & D. At the Expo Stalls are earmarked for women, SC/ST and entrepreneurs from North Eastern Region. The entrepreneurs are provided stall space and other facilities at subsidized rates. Participation was invited from across the country. This year, the representation is largely from Andhra Pradesh, Uttar Pradesh, Delhi, Bihar, Rajasthan, Gujarat, West Bengal, Jammu & Kashmir, Haryana and Punjab. The objective of the exhibition is the recognition of micro and small-scale units by showcasing the technology adopted by them in manufacturing items and also MSME EXPO is to provide a suitable platform/place entrepreneurs at reasonable cost to micro and small scale and to showcase their products and technology
according generate business including export orders. They get every year million of rupees business from local as well as from overseas business houses/units. Conclusion: In spite of all the measures taken and the facilities available to the MSME’s, they still encounter the following challenges. 1. Production problems: Include raw material availability, capacity utilization, and storage problems, high cost of raw materials and other inputs 2. Marketing problems: Arises because of dealing in only one product, cut throat competition, adopting cost oriented method of pricing, lack of advertisement, not branding their products, unfavourable market fluctuations etc.
3. Financial problems: Include investment risks, procurement of loan from banks and their repayment, meeting day to day expenses and the like. 4. Labour problems: Include highly and demanding until you employees, have the absenteeism lack of skilled workers and transportation of workers. 5. Infrastructure problems: Unless infrastructure in its place the rest of the efforts are futile. 6. Legal aspects: Complex rules, regulations and procedures framed by the Government. According to a study, majority of small businesses consider finding and retaining qualified workers as the most significant challenge to the growth and survival of their business. State and federal regulations, economic uncertainty, keeping up with the technology and access to adequate capital are other major concerns of small businesses However there is a huge scope for entrepreneurs in India and initiatives such as ‘The Power of Ideas’ have paved a new way to explore such potentials.
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