Entrepreneurial Ecosystem

Dr. Deepali
 Entrepreneurial Ecosystem

▪ ‘

K J Somaiya Institute of Management, India

 Entrepreneurial Ecosystem

▪ Indian Army signs $20 mn contract with ideaForge to procure SWITCH

drones
▪ The Indian Army has signed a contract with ideaForge to procure
'undisclosed quantities' of high-altitude variant of SWITCH unmanned
aerial vehicles (UAVs)

K J Somaiya Institute of Management, India

Definition of an Entrepreneurial Ecosystem

▪ ‘A set of interconnected entrepreneurial actors

(both potential and existing), entrepreneurial
organisations (e.g. firms, venture capitalists,
business angels, banks), institutions (universities,
public sector agencies, financial bodies) and
entrepreneurial processes (e.g. the business birth
rate, numbers of high growth firms, levels of
‘blockbuster entrepreneurship’, number of serial
entrepreneurs, degree of sellout mentality within
firms and levels of entrepreneurial ambition) which
formally and informally coalesce to connect,
mediate and govern the performance within the
local entrepreneurial environment’.
K J Somaiya Institute of Management, India
 Features of Entrepreneurial Ecosystems
▪ Place-specific assets, eg Oxford’s emergence as an entrepreneurial
ecosystem is undoubtedly linked to its strategic location with regard to
London and Heathrow airport, its attractiveness as a place in which to
live, its university and associated global brand and its unique cluster of
UK government laboratories (Lawton Smith, 2013)

▪ at least one, and usually several, ‘large established businesses’, with

significant management functions (e.g. head office or divisional/
subsidiary office) as well as undertaking R&D and production activities

▪ Firms locally headquartered

▪ Entrepreneurial recycling, eg serial entrepreneurs, advisers and mentors,
board members and teaching entrepreneurship, y lobbying government,
mentoring

▪ Culture: ‘give-before-you-get’

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 Features of Entrepreneurial Ecosystems
▪ Availability of finance: Seed capital funds and business accelerators
▪ Israeli government in 1992 explicitly to bring the investment expertise
and contacts to Israel from foreign (mainly US) venture capitalists
(Lerner, 2009). This is a rare example of policy success in boosting the
local entrepreneurial ecosystem through an interaction between the
policy and the ecosystem.

▪ Global pipelines are seen as being particularly important in the early

stages of ecosystem formation, providing access to markets, resources
and knowledge before a critical mass is available locally.
▪ Universities: numbers of university spin-out companies are typically
small and high growth spin-outs are rare (Harrison and Leitch, 2010).
Åsterbro and Bazzazian (2011) note that “the median university among
the top US research-based institutions creates less than two academic
spin-offs per year, local and regional economic conditions are marginal.
IPR issues

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 Features of Entrepreneurial Ecosystems
▪ Service providers – lawyers, accountants, recruitment agencies and
business consultants – who understand the needs of entrepreneurial
businesses and can assist young firms in avoiding stumbling blocks and
perform non-core activities that are outsourced

▪ Entrepreneurial ecosystems have typically emerged in places that

already have an established and highly regarded knowledge base which
employs significant numbers of scientists and engineers. These
organisations are the source of the skilled personnel who start
businesses. These knowledge institutions – research universities, public
research laboratories and corporate R&D labs – perform several roles in
seeding the cluster

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Ent Eco

▪ Seven categories: market access, capital, talent, business assistance, infrastructure,

culture, and regulatory support

▪ Firms that are located in ‘clusters’ exhibit higher growth than those in other locations
(Gilbert et al, 2008).

K J Somaiya Institute of Management, India

 Types

▪ Startup ecosystems in the USA - Silicon Valley and Boston, New York City, and Israel,
▪ a group of companies, including start-ups, and one or more coordination entities, which
share similar goals and decide to form a network or organization
▪ individuals, organizations or institutions
▪ Startup Ecosystem

▪ University-based Entrepreneurship Ecosystem

▪ Business cluster

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Examples : links

▪ Babson Entrepreneurship Ecosystem Program

▪ Babson Global

▪ The Dutch Entrepreneurial Ecosystem

▪ MIT Entrepreneurship Center

▪ The Development of University-Based Entrepreneurship Ecosystems: Global Practices

▪ New Orleans start-ups and all that jazz
▪ Where Israeli Entrepreneurship Really Came From
▪ President Obama Can Make Start-Up America Succeed
▪ Dear President Medvedev: Stop Emulating Silicon Valley

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K J Somaiya Institute of Management, India
6 domains of Enrt Eco

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K J Somaiya Institute of Management, India
 National
Entrepreneurial
Context Index
(NECI)

▪ Global Ent
Index 2021, pg
92.pdf

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 Ent. Ecosystem in the UK

▪ An influential UK study covering the period 2002-2008 found that HGFs (less than 50
employees, but well established in over five years old), represented about 6% of the total
number of businesses (termed ‘the vital six percent’) but created 54% of all net new jobs
in the UK (Anyadike-Danes et al, 2009). these firms invest heavily in human capital (Mason
et al, 2012)

▪ Ultimately, the ability of a country to nurture the growth of such businesses is probably
the most important element in enterprise development.”

K J Somaiya Institute of Management, India

 Ent. Ecosystem in OECD countries

▪ Policies in many OECD countries continue to emphasize on start-ups

▪ Specific policy support instruments to nurture high growth start-ups are primarily
‘transactional’ in nature, notably R&D grants and tax incentives, business accelerators
and incubators, proof-of-concept funds and access to funding (OECD, 2010)

K J Somaiya Institute of Management, India

 THE DUTCH ENTREPRENEURIAL ECOSYSTEM by Prof dr Erik Stam (2014)

▪ The Netherlands has seen a remarkable rise of independent

entrepreneurship
▪ A rise in solo self-employment

▪ Not an increase in growth oriented and innovative entrepreneurship.

▪ Lowered unemployment rates,
▪ Stagnation of innovation
▪ Favorable fiscal treatment of self-employed, and an increasing demand
for flexible labor, stimulated the growth in the number of solo self-
employed since the early 2000s

▪ Suggestions: changing formal institutions to enable labor mobility

(development and circulation of talent); opening up public demand for
entrepreneurs, to provide finance for new knowledge creation and
application; stimulating a culture of entrepreneurship and
entrepreneurial leadership; adapting or creating physical infrastructure
to enhance knowledge circulation and networks

K J Somaiya Institute of Management, India

WEF – 2013, Entrepreneurial Ecosystems Heat Map by
Country: Pillars Readily Available in Region

K J Somaiya Institute of Management, India

 Doing Business - 2020
▪ Starting a business – Procedures, time, cost, and minimum capital to open a new business

▪ Dealing with construction permits – Procedures, time, and cost to build a warehouse

▪ Getting electricity – procedures, time, and cost required for a business to obtain a permanent
electricity connection for a newly constructed warehouse

▪ Registering property – Procedures, time, and cost to register commercial real estate

▪ Getting credit – Strength of legal rights index, depth of credit information index

▪ Protecting investors – Indices on the extent of disclosure, extent of director liability, and ease
of shareholder suits

▪ Paying taxes – Number of taxes paid, hours per year spent preparing tax returns, and total tax
payable as share of gross profit

▪ Trading across borders – Number of documents, cost, and time necessary to export and
import

▪ Enforcing contracts – Procedures, time, and cost to enforce a debt contract

▪ Resolving insolvency – The time, cost, and recovery rate (%) under bankruptcy proceeding

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 Doing Business - 2020
Data in Doing Business 2020 are current as of May 1, 2019.
▪ Main findings:
• Doing Business captures 294 regulatory reforms implemented between May 2018 and
May 2019. Worldwide, 115 economies made it easier to do business.
• The economies with the most notable improvement in Doing Business 2020 are Saudi
Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India and Nigeria. In
2018/19, these countries implemented one-fifth of all the reforms recorded
worldwide.
• Economies in Sub-Saharan Africa and Latin America and the Caribbean continue to lag
in terms of reforms. Only two Sub-Saharan African economies rank in the top 50 on
the ease of doing business; no Latin American economies rank in this group.
• Doing Business 2020 continues to show a steady convergence between developing and
developed economies, especially in the area of business incorporation. Since 2003/04,
178 economies have implemented 722 reforms captured by the starting a
business indicator set, either reducing or eliminating barriers to entry.
• Those economies that score well on Doing Business tend to benefit from higher levels
of entrepreneurial activity and lower levels of corruption.
• While economic reasons are the main drivers of reform, the advancement of
neighboring economies provides an additional impetus for regulatory change.
• Twenty-six economies became less business-friendly, introducing 31 regulatory
changes that stifle efficiency and quality of regulation.

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 Doing Business - 2020
▪ DB2020 – 63rd - India
▪ Starting a Business: India made starting a business easier by abolishing filing
fees for the SPICe company incorporation form, electronic memorandum of
association and articles of association. This reform applies to both Delhi and
Mumbai.
▪ Dealing with Construction Permits: India (Delhi) streamlined the process,
reduced the time and cost of obtaining construction permits and improved
building quality control by strengthening professional certification requirements.
India (Mumbai) streamlined the process of obtaining a building permit and made
it faster and less expensive to get a construction permit.
▪ Trading across Borders: India made trading across borders easier by enabling
post-clearance audits, integrating trade stakeholders in a single electronic
platform, upgrading port infrastructures and enhancing the electronic
submission of documents. This reform applies to both Mumbai and New Delhi.
▪ Resolving Insolvency: India made resolving insolvency easier by promoting
reorganization proceedings in practice. India also made resolving insolvency
more difficult by not allowing dissenting creditors to receive as much under
reorganization as they would receive in liquidation. This reform applies to both
Delhi and Mumbai.

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 Case Study & Country Ranking

case study_ Employing workers.pdf

Doing-Business-2020_ rankings.pdf

Capillary Technologies” Executive Case India & Singapore.docx

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.

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Distinction between small business policies and entrepreneurship policies.

▪ Small business policy is a rather scattergun approach which focuses on

increasing the number of business start-ups. Shane (2009) has
described this approach as ‘bad public policy’ on account of their
limited growth, short survival and high failure rates and high
displacement of the vast majority of start-ups. Nevertheless, this
approach is deeply embedded in public policy (Nightingale and Coad,
2014).
▪ Entrepreneurship policy, in contrast, is concerned with supporting
businesses with high growth potential. Such firms are more likely to
require relational rather than transactional assistance. Moreover, they
are likely to benefit most from peer-based support (Fischer and Reuber,
2003; Mason and Brown, 2013) on account of the greater opportunities
for experiential learning and tacit knowledge sharing. Moreover, in view
of the “idiosyncratic and unstable” nature of firm growth (Vinell and
Hamilton, 1999) such support needs to be time-sensitive, aimed at
supporting firms that have experienced ‘growth triggers’ and therefore
experiencing systemic changes to their structure and workings (Brown
and Mawson, 2012).

K J Somaiya Institute of Management, India

 India Problems
▪ The core issues of the country are sanitation, health care, power,
education, rural enablement, Anganwadi children and grass root level
problems of agriculture,

▪ NSRCEL - IIM Bangalore

K J Somaiya Institute of Management, India

 India
▪ The entrepreneurial ecosystem in India is the third largest and the
fastest growing ecosystem in the world (World Economic Forum, 2014)

▪ Technology-driven startups, uncertain and fast-moving business

environment
▪ Companies in India are increasingly reaching out to startups to Increase
their own innovativeness
▪ The best part of markets like India, China, Africa, South East Asia, and
ASEAN is scale; you are probably covering a problem which has the
validation of 40 million people and that value can be immense
▪ Accelerator with Reliance called GenNext hub.

▪ LogiNext, which helps to address big data analytics to solve logistic

challenges in India

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 NASSCOM – India 2019 Report

▪ 8900-9300 # of Start-ups incepted during 2014-19, overall base growing at 12-15% y-

o-y
▪ total unicorns active in India https://www.ventureintelligence.com/Indian-Unicorn-
Tracker.php
▪ 335+ Active incubators and accelerators; up from 320+ in 2018
▪ 60,000 New Direct Jobs6 created; 1.3-1.8 Lakh New Indirect Jobs created
Sector-wise split of start-ups
▪ Enterprise – 19%
▪ Healthtech– 14%
▪ FinTech – 10%
▪ HRTech – 6%
▪ Edtech
▪ Retail & Retail Tech Travel and Hospitality SCM & Logistics Real Estate and
Construction Automotive Industrial & Manufacturing Food & Foodtech Mobility
AgriTech Others
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 Enabling the Indian start-up ecosystem’s growth
▪ Growth of new start-up hubs
▪ Increasing depth and breadth of sectors

▪ Diffusion of deep-tech

▪ Building on India’s unique digital infrastructure

▪ Serving the underserved
▪ Built in India. Branded Global: Paytm, Practo

▪ Strengthening pipeline of potential unicorns

▪ 2nd Innings: Amit Ranjan,Slideshare, Angle investor in 11 startups
▪ Evolving investor landscape
▪ Intensifying corporate participation

▪ Bangalore, Delhi-NCR, and Mumbai are home to 55-58% start-ups

K J Somaiya Institute of Management, India

 Enabling the Indian start-up ecosystem’s growth
▪ Evolving investor landscape
Traditional Approach: Direct investment into a start-up either via debt,
equity or convertible debt. This not only resulted in immense paperwork
and increased the time-to-closure for a round – it also led to the “Angel
Tax” challenge which was resolved only after mid-2019.
New Approach: Angel Funds, sub category of CAT 1 Venture Funds registered
with SEBI. These allow, up to 200 investors to leverage single investment
vehicle with - Min Investment amount of INR 25L and Max of INR 10 Cr per
investor. With only 1 year Lock-in period it allows investments in companies
within 5 years of incorporation

K J Somaiya Institute of Management, India

 Exit for startups
▪ POs are for well established companies with proven track records,
strong balance sheet, etc. For startups, this could be a challenge.
However, recently, SEBI has come up norms for an IPO like process for
smaller companies as well. This is still in nascent stage

▪ M&A.

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 policies
▪ National:
▪ Fund of Funds for Start-ups (Small Industries Development Bank of
India): Rs. 10,000 Cr fund to support innovation driven Start-ups

▪ Atal Innovation Mission (AIM) Atal Tinkering Labs (ATL) Atal Incubation
Centers (AIC) (NITI Aayog) : • For AIC: Rs. 10 Cr. grant to be provided • For
ATL: Establishment fund of Rs. 10 lakh; Operational expenses of INR 10
lakh
▪ Tax Exemption Schemes (Ministry of Finance) : • Income tax exemption
for 3 years • Exemption on capital gain up to Rs. 50 lakhs
▪ TBI Research Parks Promoting BioTech Incubators (Govt. Of India): Rs. 1
Cr. each to be given to Bioincubators • Funding support to be provided
for Incubators & Research Centers

K J Somaiya Institute of Management, India

 policies
▪ State:
▪ Karnataka: Incentives to start-ups in association with Corporates like
Amazon, IBM, Microsoft etc.

▪ • Chhattisgarh: Partnerships with Wadhwani Foundation’s NEN for

conducting workshops, mentoring sessions and college outreach
▪ • Telangana: Partnered with corporates that support start-ups under T-
Hub initiative
▪ Haryana: Collaboration with United Nations to promote Women
Entrepreneurship
▪ Uttar Pradesh and Kerala: Established a common mentor pool to offer
start-ups Business and Technical Guidance

K J Somaiya Institute of Management, India

 Indian – Associations & media

National VC Circle INC42

entrepreneurship
network TechCircle VC intelligence

The Indus IVCA entrackr

entrepreneurs
DealStreet Asia Tracxn
Head start
Team Founding Dare
Start up Saturday Fuel
Entrepreneur
Your story
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 Terminology
▪ A gazelle company or simply gazelle is a young, very fast-growing
company. This type of company maintains consistent and rapid
expansion of both employment and turnover (sales). Additionally, the
company maintains a high rate of expansion for at least four
consecutive years.
▪ Incubator: This is where the entrepreneur acquires technical skills and
product and market knowledge and develops understanding about
appropriate organisational structures, strategies and systems

▪ (i) technology incubation mechanisms, such as incubators, innovation

centres and science parks, to provide physical space and intangible
support to new technology based firms; these can be public or private
sector and often designated as not-for-profit; and
▪ (ii) partnership organisations, usually comprising government,
universities and the private sector, to promote networking and
collaboration between members and which can ‘champion’ the region
both internally and externally.

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 Terminology
unicorn is a privately held startup company with a
current valuation of US$1 billion or more.
▪ Unicorns in India

▪ Flipkart, Makemytrip, Renew Power, Delhivery, Billdesk

▪ Snapdeal, Policy Bazaar, Paytm, Phonepe, Mu Sigma, Quikr

▪ Ola Cabs, Paytm, InMobi, Shopclues.com, Byjus, Dream11, OYO

Accelerator
▪ A fixed term, 3-6 month long, cohort-based program for pre-growth and
growth stage start-ups. During program, the emphasis is on building
proof-ofconcepts and/or on integrations to determine on long term
engagement.

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 Terminology
▪ Partner Program: A requirement-based program, where corporate
business units define problem statements that they are looking to
solve, and partner with growing, mid, or late stage start-ups to build
complimentary solutions in exchange for a financial commitment.

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Thank You
simsr.somaiya.edu

K J Somaiya Institute of Management, India 37