Doing business in start-up India

entrepreneurial activity can really sustain the image of India being a boom country for start-ups.

The best part of the book is, of course, the many unknown nuggets of information about some of the start-up heroes. For example, Vijay Shekhar Sharma of Paytm was rejected by his prospective father-in-law as a suitable boy after he did an informal audit of One97’s financial position in 2004. The marriage did take place but only a year later, though the reason for his father-in-law’s change of heart is not known.

Or read this one about Sunil Mittal, who recounts how he faced acute cash flow challenges in his earlier days, having to secure cleared payments from customers before he was able to place his next supply order. Once when he had completely run out of funds, he approached Brijmohan Lall Munjal for money. The Hero Group founder cleared a couple of bills but told him not to make this a habit. That is a lesson, Mr Mittal says, he hasn’t forgotten.

Mr Rosling has gone beyond the well-known poster boys as well. There is a fascinating account of how Srikumar Misra chased his dream, not from the e-commerce hubs of Bengaluru or Mumbai but from Odisha. Mr Misra’s Milk Mantra, based in Bhubaneswar, has built a consumer brand (Milky Boo) in a perishable product that relies on rapid distribution and thin margins. His business is based on a complex supply chain across rural Odisha, collecting a few litres of milk every day from 40,000 farmers. The story is inspiring — Milk Mantra was one of the first agro-food start-ups to be funded by venture capital funds. Many entrepreneurs struggling for a foothold in the start-up space can draw quite a few important lessons here.

Although many books have been written about Indian start-ups and their success stories, Mr Rosling has extended the analysis by examining the complicated relationship — love and hate, respect and conflict — between investors and entrepreneurs. It is true that the Indian venture capital scene is still dominated by generalist funds for whom technology risk is hard to understand and, hence, indigestible. As the book says, the market is yet to develop any significant number of specialist funds with differentiated approaches and the deep sectoral insight required to make technical judgements. Given that founders tend to feel emotional and protective about their businesses and, by their very nature, are often prickly, obsessive characters wanting to be left alone and avoid even well-intentioned interventions, the potential for corrosion of mutual respect and even deepening mistrust is apparent.

A repeated but encouraging theme in the book is the changing attitude of Indian entrepreneurs towards failure and the fear of failure. Globally, the majority of entrepreneurial ventures fail, and many successful entrepreneurs fail initially, sometimes repeatedly, before breaking through. The trend, Mr Rosling says, is catching up in India.

But there is a downside, too, and Mr Rosling has done remarkably well in capturing the essence. India’s fastdeveloping but immature entrepreneurial ecosystem is currently skewed towards sectors such as information technology and financial services and only 20 per cent in industrial and manufacturing businesses. That is a cause for worry.

The writer has also identified a spectrum of weaknesses in the ecosystem, including the reality that India remains a challenging operating environment for business, the need for further evolution in government policies and practices, lacunae in the VC-funding system, and shortcomings among the entrepreneurs themselves. The most alarming failing of too many of India’s entrepreneurs is the endemic neglect of the criticality of innovation.

One only wishes Mr Rosling had delved deeper into the Indian start-ups’ demand for protectionism. He touches upon it but exits the subject quickly, giving the impression that he wants to steer clear of controversial issues. That is an opportunity lost as he has given a considerable amount of space in the book to the protagonists of this demand – the Bansals of Flipkart and Bhavish Aggarwal of Ola.

Also, the book devotes a lot of space to the Tata group, with which the author has been closely associated. Included, for instance, are little anecdotes about Ratan Tata. In one, he tells us how Mr Tata personally organised a birthday celebration for him, along with some senior group honchos, when he learnt that he would be spending the evening away from his family. Touching as this story may be, readers might wonder about its relevance in a book about Indian start-ups. The New Wave of Indian Enterprise Alan Rosling Hachette India 312 pages; ~599