Session Report

Plenary II: Start-ups and innovations which had social impact in India

Session Chair:

  • Mr Amitabh Kant, CEO, Niti Aayog

Session Coordinator:

  • Mr Nagaraj Naidu, Joint Secretary (Economic Diplomacy), Ministry of External Affairs, Government of India

Panelists:

  • Prof Anil Kumar Gupta, Founder, National Innovation Foundation
  • Dr Venketesh Shukla, President, TiE Silicon Valley
  • Mr Naveen Jha, CEO, Deshpande Foundation
  • Dr Prasad Kaipa, CEO, Kaipa Group, California
  • Mr Jagadeesh Moodera, Adjunct Professor at Suffolk University, USA
  • Mr Arsh Shah Dilbagi, Entrepreneur & Student

The Context

Start-ups are one of the most powerful growth engines in an economy, creating value for customers, generating innovations and disruptive technologies, creating jobs, both directly and indirectly. A central feature in this ‘start-up movement’ is the greater involvement of our youth. There is a need for a strategy to unleash the potential of the youth to provide meaningful opportunities for their participation in the start-up system. This will help the nation reap the benefits of a favourable demographic transition that is currently underway. It will also help provide direct and effective intervention to uplift the quality of life among millions of marginalised citizens.

The session aimed at involving the Diaspora with the impact invest movement in India. Social impact investing drives entrepreneurs to build self-sustaining systems to serve a wide array of the population and provide returns (both social and capital) on such investments. Today, India is considered a breeding ground for (social) impact investing due to the enormous size of its demography and the unfulfilled demands for social and economic services. The reduced public investment in priority sectors like primary education, health, housing, water and sanitation, etc., has allowed the growth of the private entrepreneurial space. The large development gaps in various sectors call for innovative and unorthodox solutions which can be addressed by startups.

Recommendations & Action Taken

Under the PBD 2016 Conference titled “Role of Diaspora in Transferring Knowledge and Encouraging Innovation (Science and Technology, Education, Start-up India)” organised on July 30, 2016 in New Delhi, 25 domain experts from the Diaspora, stakeholders and policy makers discussed the strategy for developing India’s technological prowess, harness the Diaspora’s collective energy and knowledge-base for India’s development.

At the conference, Ms Sushma Swaraj, Minister for External Affairs, Government of India, re- emphasised India’s aim to become one of the top 5 scientific powers globally and called for a roadmap to forge public private partnerships, strengthen and expand the existing institutions of excellence and incentivise research in India, as well as place India at the forefront of the knowledge and technology revolution. 

Plenary Session & Q&A

In this plenary session, the speakers deliberated upon the key issues and came up with the following recommendations:

  • Build a talent pool in the country and create the right ecosystem for nurturing the talent and transforming creativity into marketable innovations.
  • Innovation does not happen in silos. It is created at the boundaries where disciplines interact; there is a need for interdisciplinary interaction.
  • Innovation is the only road to greatness; India has to learn from the experiences of countries like Japan, Korea, and Taiwan that are pioneers in innovation and imbibe their best practices.
  • India needs to focus on its intrinsic strengths and develop its own model of education. Initiatives like observing the International Yoga Day have contributed to the collective heritage of mankind.
  • Attitude to innovation must undergo a drastic change; risk-taking and possibility of failure must be accepted.
  • Adopting a different mindset to innovation, i.e, focus on the outcome and then work backwards; need to adopt a design thinking approach.
  • Need for a change in the education methodology: Enhance quality of education; promote interactive education; upgrade teacher skills; make vocational education more relevant, attractive and respectable.
  • Need to address the issue of high drop-out rates by introducing innovative methods of teaching and learning.
  • Develop meta-skills for innovation and support the innovators to transform their ideas into commercial propositions.

The panel also referred to the following developments:

  • The Startup Hub India: This platform helps entrepreneurs to connect with other entrepreneurs, advisers, consultants, mentors, guides, angel investors, incubators, accelerators and venture capital firms.
  • Legal support and fast-tracking patent examination at lower cost: A fast-track system for patent examination at lower costs is being conceptualised by the Government. The system will promote awareness and adoption of Intellectual Property Rights (IPRs) by the startup foundations.
  • Relaxed norms of public procurement for startups: Government shall exempt startups (in the manufacturing sector) from the criteria of “prior experience/ turnover” without any relaxation in quality standards or technical parameters.
  • Funding support to startups being provided through a ‘Fund of Funds’ with a corpus of Rs 10,000 crore.
  • Tax exemption to startups for 3 years: This fiscal exemption shall facilitate the growth of business and meet their working capital requirements during the initial years of operation.
  • Harnessing private sector expertise for incubator setup: To ensure professional management of Government sponsored / funded incubators, the Government shall create a policy framework for setting up incubators across the country in public private partnership.
  • Encouragement for women entrepreneurs through the Mahila Vikas Nidhi, Trade Related Entrepreneurship Assistance and Development (TREAD) scheme for women, co-operative schemes, Swarna Jayanti Gram Swarozgar Yojana and Swaran Jayanti Sekhari Rozgar Yojana.

Stating that India has a vast youth population and huge challenges to solve, and this gives the country immense opportunity to come up with innovative start-ups, Mr Amitabh Kant, CEO, Niti Aayog, mentioned that in the last two years, the Government has dismantled lot of rules and regulations and further opened up India’s investment regime. There is huge energy and potential in India’s startup industry that needs to be captured. India’s startup policies are designed not only to encourage the younger generation to start new businesses but also help them create job opportunities. The Government’s objective of ushering in startup policies is to reduce the regulatory burden on start-ups thereby allowing them to focus on their core business while keeping their compliance costs low.

Focusing on the Government of India’s ‘Start-up India’ programme, Mr Kant encouraged the delegates to learn about the new schemes, the Start-up India Action plan, etc. Several measures have been initiated by the Government to boost startups in India. A pan-India hub as a single contact point for start-up foundations in India, allowing entrepreneurs to exchange knowledge and access financial aid and focus on incubators for startups, legal support and fast-tracking of patent examination at lower costs, and tax exemption to startups for three years are all going to provide the much required launch pad for new businesses in India.

Comparing the start-up scenario of the western world with India, Mr Kant stated that India’s challenges are quite different from those of advanced countries. While the western world is focusing on making drones and driverless cars, India should look at solving socio-economic issues like making India sewage free, providing clean drinking water to citizens and solving issues of farmers. There are vast opportunities for developing start-ups in the social sector.

Citing examples of successful social start-ups like Agrostar, an m-commerce platform which is a one stop solution for all agro-needs, smart scooters developed by students of IIT Madras, and Social Cops, a mobile app that helped the Government and citizens during the Chennai flood, Mr Kant urged investors to look at businesses that can bring about a positive change in society.

Mr Kant further stated that India is also undergoing huge disruption in its financial sector which provides immense opportunities for startups to focus on socio-financial businesses and thereby further the ‘Digital India’ goals. The purpose of demonetisation was to promote digital payments and BHIM (Bharat Interface for Money), a mobile app developed by the National Payments Corporation of India (NPCI), was launched by Prime Minister Narendra Modi in this direction. Young Indian entrepreneurs should have the ambition and passion to create something new and innovative that would help the Government and citizens to move towards making India a startup hub.

Coordinating the session, Mr Nagaraj Naidu, Joint Secretary (Economic Diplomacy), Ministry of External Affairs, Government of India mentioned that with over 50 active impact investors and a cumulative investment of $4.1 billion since 2010 in more than 350 enterprises, India has emerged as one of the largest social impact investment destinations in the world. A McKinsey Research report revealed that social impact investing in India has the potential to grow from $1 billion in 2015 to $ 6-8 billion by 2025.

Mr Naidu emphasised that it is important to identify and address the various challenges faced by startups, especially in the social impact sector, such as:

  • Mentorship/guidance: A key factor responsible for the failure or slow growth of many organisations is the lack of quality mentorship, especially in terms of industry knowledge/support.
  • Funding/capital deficiencies: The Government and private sector investors have set aside funds through investment channels but they are not available for all forms of business. The biggest problem for such organisations has been their inability to attract investors and gain their trust with regard to their mode of operations.
  • Lack of understanding on risk-return tradeoffs, fund performance, social impact measurement, etc. 

Appreciating the Youth Pravasi Bharatiya Divas as a strong platform for young minds to come together, Mr Anil Gupta, Founder, National Innovation Foundation, focused upon how startups in India should also look at addressing social issues. It is essential to match the aspirations of resident young social entrepreneurs and non-resident shareholders who would like to participate in developing the startup ecosystem in India. The current government has taken commendable steps in this direction. “Encouraging the youth to come up with innovative solutions would bring out the best potential of our youth even in far-flung areas,” he said.

A company, big or small, working for a social cause should be encouraged and funded, said Mr Gupta. Investing in startups should be like a sport where venture capitalists should be enthusiastic to put their money in. They should also scout for young talents and nurture them. It is only then that startups in India will gain momentum.

Mr Venketesh Shukla, President of TiE Silicon Valley stated that India is a country with a lot of problems but not many problem solvers, and this is not because of lack of talent but due to a general disinclination among people to take risks. To address this, both the Government and private sector should extend awards and scholarships to support the development of entrepreneurial talent.

One step that the Diaspora of Silicon Valley has taken is to engage in specific social causes like encouraging and promoting young talents who are poor. The Government’s focus on startups and innovation is evident from its pro-startups policies like initiating the Rs 10,000-crore ‘Fund of Funds for Startups’ to support them with an aim to generate employment for 18 lakh persons. He said that it is time to focus on addressing the challenges of social enterprises by providing them with access to technology, investors, mentorship, and business development support.

Mr Naveen Jha, CEO, Deshpande Foundation, spoke about the need to focus attention on small ideas that could bring about a societal change. Citing the example of his social venture Akshayapatra started in Hubli, Karnataka, he stated that small ideas can create impactful social change. A lot of new wealth being generated in the country and by Indian Diaspora is increasingly being contributed for social causes.

Dr Prasad Kaipa, CEO, Kaipa Group, California, clarified the various gaps that India needs to bridge in order to become the startup capital of the world. The strength of an idea lies in it becoming productive and profitable to society. An idea needs to be backed by good design, prototype, manufacturing and marketing strategies. It is only then that funding the idea becomes feasible. It is important to identify these gaps and start resolving them, whether it is to mentor an idea, support its manufacturing or promote its marketing and sales. Mr Kaipa urged the investors and entrepreneurs to create a hybrid model in social enterprising that would generate revenue rather than a model of NGO where revenue generation is a challenge.

Mr Jagadeesh Moodera, Adjunct Professor at Suffolk University, USA stated that encouragement of startups should happen at the grass root level. Regional innovation centres should be encouraged to support youth in their ventures.

Further, children at the middle school level should be encouraged to lead, innovate and express their talents.

Mr Arsh Shah Dilbagi, a young entrepreneur and student, mentioned that out of the 20,000 startups in India today, only 2% are social enterprises and the majority of them are concentrated in relatively affluent metropolitan cities. There is a need to tap the potential at the margins, i.e, in far flung regions of the country where there is a multitude of social problems. Talking about the cultural shift happening in Indian society, he mentioned that the youth today is getting the support and encouragement of their family for innovative ideas and startup ventures. It is important to encourage the youth to come up with innovative ideas, like setting up innovative centres in schools. Mr Dilbagi also focused upon how crowd funding has helped many businesses reach new heights worldwide and the need to leverage the same in India.

In the Q&A session, Mr Kant highlighted the need to encourage women entrepreneurs in the country. He also stated that the Government is taking conscious steps to address any bureaucratic bottlenecks that exist in regard to support for startups. He also underlined the importance of a mentoring system and a strong startup ecosystem in the country.

Participants

  1. Mr Amitabh Kant, CEO, Niti Aayog (Session Chair)
  2. Mr Nagaraj Naidu, Joint Secretary (Economic Diplomacy), Ministry of External Affairs, Government of India (Session Coordinator)
  3. Prof Anil Kumar Gupta, Founder, National Innovation Foundation
  4. Dr Venketesh Shukla, President, TiE Silicon Valley
  5. Mr Naveen Jha, CEO, Deshpande Foundation
  6. Dr Prasad Kaipa, CEO, Kaipa Group, California
  7. Mr Jagadeesh Moodera, Adjunct Professor at Suffolk University, USA
  8. Mr Arsh Shah Dilbagi, Entrepreneur & Student

Key Recommendations

Following were the key recommendations made during the course of Youth PBD 2017 & PBD 2017 deliberations which have been organised under different sectors and areas:

Social Entrepreneurship

  • Encourage the Diaspora to invest in social projects in India. Young Indians overseas in particular could take up causes like the conservation and preservation of Indian heritage and monuments that would lend spurs to the Indian tourism industry.
  • Encourage in-situ incubation model for distributed growth to enable all regions to participate and benefit from social impact investments.
  • Creation of a smaller ‘Fund of Funds’ which would only comprise social impact oriented funds.

Startup Ecosystem

  • To encourage startups it is important to usher in more ease of doing business policies.
  • While the western world is focusing on making drones and driverless cars, India should look at solving socio-economic issues like making India sewage free, providing clean drinking water to citizens and solving issues of farmers. There are vast opportunities for developing startups in the social sector.
  • Extend technology, investment, mentorship, and business development support to social entrepreneurial ventures.
  • Extend funding and mentoring support at the early stages of the venture; facilitate transition in the financing model.
  • Announce small challenge grants for innovative solutions to address specific problems.
  • Create a hybrid model in social enterprising that would become sustainable in the long run.
  • Promote regional innovation centres to support youth in their ventures.
  • Innovative ideas generated at school-level science fairs and competitions like INSPIRE must be publicly listed and leveraged.

Design Ecosystem

  • An idea needs to be backed by a good design, prototyping, manufacturing and marketing strategies. It is only then that funding the idea becomes feasible.
  • Imperative to create an ecosystem for design. It is the quality of design that delivers superior product experiences.
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