Its TiECON Pune time and its time for me put ideas and things that bother me in the blog. I am not at a regular blogger though I enjoy writing. As part of TiE Pune entrepreneurs and Pune startup eco system, I have been involved in mentoring and supporting startups for almost a decade now. My own experience as entrepreneur has been with Mojo Networks, the company of which I am a co-founder was created way back in 2003.
As a mentor, it is all about preparing a young company to get to the next stage from wherever you begin. It can be a ideation, funding, go to market preparation, pivoting, scale up etc etc. For student entrepreneurs its about transforming startup from the college set up to an out of college set up. I have been mentor to a BITS Pilani startup, amazing entrepreneurs. For 2nd / 3rd year Computer Science students, they are not only very smart but are very mature. And, thanks to digital infrastructure, distance has not been a show stopper.
India has emerged as a major destination for startups. I was in Japan around mid March 2019 where one of our TiE Pune startup won global championship competing with finalists from twenty other cities that included San Francisco, New York, London, Tokyo, Tel Aviv and others. Many Japanese executives I met almost assume Indian startup eco system matches the best in the world. And we all know who is the leader.
My favourite analogy for a startup entrepreneur – (s)he is a like a pregnant mother. Very focused on the well being and the growth of the child. Ideas, financial capital, team, access to potential market and most important moisture of mentoring are much needed nutrition. However, there are serious challenges to our pregnant mother. I am going to pick Government.
Governments are a big influencer on all startups. Governments can bring in regulations or pass laws to fuel or kill growth. Governments can be a big market and can single handedly build not one but an entire industry.
Governments in India (Central, State and even local) have been putting prime focus on Startups providing incentives, programs etc to promote startups. However, its like a elder in the family, well meaning but not helping where it matters most and at times being a stumbling block.
Let me take a seemingly innocent action like changing the name of a company. Imagine that our student entrepreneurs are audacious enough to try a futuristic idea and even get couple of customers in India. Encouraged, these entrepreneurs set up an entity in the United States to tap world’s most lucrative market. Students then get funding from Silicon Valley VCs as investors in India are largely reluctant to fund a disrupting idea. VCs will ask the entrepreneurs to create US Headquarter and may even suggest a name change as a rebranding exercise. Now starts the bumpy ride in India.
In US it is an very simple process. However in India, it's like climbing an 8000 meter peak. What hits you are myriad of steps with high probability of errors. Then comes filing applications for bunch of approvals from local, State and central Government entities. In this day and age of simplifying things like Step 1 à Step 2 à Step 3, Government processes are not easy to understand and prone to errors by entrepreneurs.
While policy makers are trying their best to be business and startup friendly, they cant imagine the complex maze that exists at the bottom of the Governmental hierarchy with plethora of steps, processes and interpretations that will ensure that entrepreneurs spend totally unproductive time in managing a simple name change at the expense of building the business they set out to do. And, it catches everyone unaware.
Next, Governments present a huge market and hence significant opportunity to all. However, as we all know, Government tendering is a complex set of web that a startup has to navigate. It starts with tender specifications. Established players crowd out smaller but at times more competent companies by influencing the tender team. The issue is not influencing which all bidders do but often inability or reluctance of the tender team to ensure that proper requirements find their way into tender specifications.
Minimum business volume, three years profit and loss, EMD are part of many tenders and no one is spared. Worst are payment terms where 10% is held till the end of the contract which may be five years away. Lastly, lowest price seems to be dominant criteria introducing big risk not only to good product companies but to the tenderer as the lowest bidder often does not have the right quality and the ability to execute.
If a startup has disruptive idea or a futuristic idea and has built a product that's unique and underlying technology patented, process of minimum three bidders can not be applied as there is only one owner of the technology. Governments does have a solution for this. There is a provision for proprietary technologies. However, the mindset of people who manage tender is an issue. First, they don't expect totally new technologies to come out of India and hence first push back is disbelief. Second issue, specially with technology products is requirements that are dominated by large vendors with Tenderer literally accepting RFP from powerful vendors whose priority is primarily to win business and not to represent customer requirement. There are real life examples from India entrepreneurs that have faced this issue.
I am not saying every Government entity is like this. And senior functionaries of the Government, political and bureaucratic are mostly supportive. However, they are caught in the web that has evolved over time and cant get out of that. Leaf nodes of the Government have no incentive to change as they can’t be punished for inaction. There are notable exception but far and few.
If India is serious about becoming a world leader, we need to take a cue from US and make it simple and trust people. Let it be “Make It Simple” for Make in India to be successful.
Or “Swatchh Bharat Saral Bharat”.