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’
 K J Somaiya Institute of Management, India

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
 K J Somaiya Institute of Management, India

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
 K J Somaiya Institute of Management, India

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
 K J Somaiya Institute of Management, India

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

K J Somaiya Institute of Management, India

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

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

▪ Global Ent
Index 2021, pg
92.pdf
 K J Somaiya Institute of Management, India

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-conceptfunds 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
 K J Somaiya Institute of Management, India

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.

K J Somaiya Institute of Management, India

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.

K J Somaiya Institute of Management, India

 Case Study & Country Ranking case
study_ Employing workers.pdf

Doing-Business-2020_ rankings.pdf

Capillary Technologies” Executive Case India & Singapore.docx

K J Somaiya Institute of Management, India

.
 K J Somaiya Institute of Management, India
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
 K J Somaiya Institute of Management, India

▪
NASSCOM – India 2019 Report
8900-9300 # of Start-ups incepted during 2014-19, overall base growing at 12-15% y ▪ total unicorns
o-y
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
K J Somaiya Institute of Management, India
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.
 K J Somaiya Institute of Management, India

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 TechCircle VC intelligence

entrepreneurship
network IVCA entrackr

The Indus DealStreet Asia Tracxn

entrepreneurs Head
Team Founding Fuel Dare
start
Your story Entrepreneur
Start up Saturday INC42
VC Circle
 K J Somaiya Institute of Management, India

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.
 K J Somaiya Institute of Management, India

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.
 K J Somaiya Institute of Management, India

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.
 K J Somaiya Institute of Management, India

Thank You

simsr.somaiya.edu

K J Somaiya Institute of Management, India 37