Hemant Gupta is the Managing Director at BRTSIF (BIL Ryerson Technology Startup Incubator Foundation) and the MD & CEO of BSE Sammaan CSR Ltd. a fully owned subsidiary of BSE Ltd. After 26 years at Citi, one of the largest Global Financial Powerhouses, where he worked in a wide variety of functions including Product Management, Technology, Operations, and Internal Audit, in India and New York, Hemant decided to swap a large Corporate role for a more socially impactful role with BSE Sammaan, which helps Companies do more effective CSR. Hemant holds a Management degree from IIM Kolkata and an Engineering degree from IIT Chennai. In an exclusive interaction with the CXO Outlook, Hemant talks about the Indian startup ecosystem, advantages of global incubators and accelerators, the impacts of COVID 19, and many more.
Nasscom says that India’s start-up ecosystem has the potential to create up to 12.5 lakh direct jobs by 2025, from 3.9-4.3 lakh direct jobs in 2019. What is your take on the Indian startup ecosystem and its potential?
The start-up ecosystem in India, which is already the 3rd largest in the world, has been growing at a healthy clip of 12-15% per annum for the last few years. This growth rate has been a result of a very healthy support system in India both at the public and private levels.
Did you know that apart from the fillip being provided by the Central Government through various schemes through Startup India, DST and NITI Aayog, over 26 states also have Startup policies in place and have allocated funds for the same? Incubators and Accelerators have also been growing at a healthy clip of 11-12%.
However, a growth rate of 12-15% will result in doubling of the ecosystem, not the 4X growth that is presumed in going to 12.5 lakh direct jobs by 2025. For that level of growth, some of the following will need to be implemented –
- Expand the size of the market with support for access to global markets. We at ZSI have been doing this through our Next Big Idea program for the last 7 years, by providing access to the North American markets for Indian Startups.
- Increase collaboration amongst Incubators and Accelerators to enhance their capabilities. We should not be viewing each other as competitors, but as catalysts for scaling up the size and enhancing the quality of the startup ecosystem. This needs to be institutionalized rather than being left to individuals.
- Increase the incentives for setting up of Innovation labs to drive the creation of disruptive startups. This will need to happen both in the academic system and the corporate system.
These are only some of the ideas we have there are many more relating to funding support and other areas that can also be worked upon.
Apparently, the Indian start-up ecosystem has the potential to grow about four times by 2025. However, what work needs to be done to turn India into an internationally recognized startup nation?
Our experience at Zone Startups India has been that there is a tremendous amount of interest being shown by countries in North America, Europe, and Australia in the Indian Startup ecosystem. A lot of times this interest is focused on specific sectors that are of interest to the country. We’ve had delegations from several countries who have evinced great interest in our startups and the programs we run.
Additionally, historically, almost all of the global investors have Indian investments as a significant part of their portfolio, including, Sequoia Capital, Accel Partners, Tiger Global Management, and SoftBank Capital.
However, to become “an internationally recognized startup nation”, we not only need great quality startups, but equally importantly, a world-class ecosystem to nurture them. We must partner with global startup eco-system players, adopt best practices from around the world, create a strong community of mentors/coaches and experts. This along with favorable policy initiatives, funding support and a supportive ecosystem we should become internationally recognized very soon.
In your opinion, what are the major challenges young entrepreneurs in India face? How Zone Startups helps them in overcoming those challenges?
The four key pillars of support any startup needs are infrastructure, mentoring, market connect and investors, in that order mostly. We support our incubatees in all the four pillars to help them scale and become sustainable.
Our experience has been that in the Indian context, the biggest challenges entrepreneurs face relate to the right mentoring and market connect.
So, for example, mentoring essentially exists at a tactical level and at a strategic level. Most mentors I have come across tend to be in the former category and most startups also are looking for problem-solvers rather than coaches. We are actively working on building a pool of strategic mentors in addition to the tactical ones we have and educating our incubatees on the value a strategic mentor can bring.
The second is giving startups the ability to truly market test their product or service. In most cases what is crucial here is to have a network of Corporates who can not only offer their services for carrying out a proof of concept but are also willing to invest resources in conducting the same. Being a part of the Stock Exchange with the largest number of companies listed and a brand name Corporates can trust, it helps us in building such a network.
Global incubators and accelerators in India are seeing frenzied growth. How will it help the Indian startup ecosystem?
Their high level of activity and business growth shows that they see great opportunity in the Indian startup segment which is fast-growing and one that has started creating a global impact. We at Zone Startups have also been witnessing this trend and keep receiving proposals for collaboration. This is a good development for India.
This would help the Indian startup eco-system to inculcate best practices from program structure, curriculum design and content point of view. This will also help in providing channels of international mentors, market connects and investors much more easily than for a pure domestic incubator or accelerator.
At present, what are the sectors in which you see an increase in activity by startups? How will it evolve in the future?
Agriculture, Healthcare and Education seem to be sectors where we have seen the largest uptick in activity. It will evolve with the plug-in of technology-based solutions which increases operational efficiencies along with enhancing reach and enabling faster-decisioning. The old favorite, FinTech is also seeing some activity, but nowhere near the levels that were there even 2 years ago.
There are a lot of ventures which are working on IOT / AI / ML / Blockchain / Data & Cyber Security / Robotics serving multiple sectors.
These are likely to remain attractive sectors for startups in India although operational efficiency and profitability will be a lot in focus leading to some churn within the sectors and the stronger ones will grow to corner market share.
Government has been focusing on supporting startups that are providing solutions for the masses, those that are helping create a sustainable lifestyle and help in the delivery of citizen services – which will help grow these sectors too.
What will be the impact of this ongoing coronavirus lockdown? How will it affect Indian economy in the coming months?
From the first world to the third world countries, globally we are grappling with an unprecedented economic slowdown due to the Covid-19 pandemic. I strongly believe that that it will have far-reaching consequences in the way we live, work and interact going forward. Startups will also not remain untouched and will get severely impacted.
The Indian economy was already suffering over the past few quarters due to a variety of reasons, including a liquidity crunch and a demand slowdown. The Covid-19 pandemic has brought both social and economic activities to a complete halt. We in India and the whole world is rightfully focused on the health of its citizens and in saving lives. I don’t know as to when the situation will normalize, it is unwise to make any predictions.
Having said that, there is a lot of action already happening in the HealthTech and in the online and digital technology space. HealthTech sector is starting to contribute significantly in the Testing, Preventing and Treating regimes for dealing with the pandemic, while gaming, online education and entertainment have seen an ever-increasing consumer demand. There is a surge in the usage of audio-video conferencing platforms like Zoom, Teams and Skype as well and Food delivery platforms where they are allowed to operate.
What advice would you give to entrepreneurs who are starting out?
There are so many moving parts at present, hence my advice to them will be to hold-on, watch the social and business trends and wait for the pandemic to come under control first. This is also a good time to introspect on your business model and network with peers and seek validation.
The changes that have taken place on the social and economic fronts may not be permanent but will definitely alter the current fabric. And hence, business models, target segments and go to market strategies may have to be altered thereby necessitating a business pivot.
In case a startup is working on raising external funding, then a lot more work has to be done to remain in touch with their prospective and current investors, keep them informed on your business plans and changes that you foresee and seek their guidance. Most importantly since overall economic activity will be down, it’s of extreme importance that the operations are run very frugally and only critical expenses are undertaken at least in the near future.
Many great businesses have been built in such disruptive times and we need to be positive and continue to work hard to survive and succeed in these tough times. As the situation improves, we need to be ready to grasp the opportunities with both hands.