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How India can become a startup nation

A more conducive environment for risk-taking will encourage entrepreneurship

A more conducive environment for risk-taking will encourage entrepreneurship

Why is India not the startup nation that Israel so successfully is? India has three times more product startups annually than Israel,there is twice the amount of M&A activity in Indian companies and Indians make up 52 per cent of Silicon Valley startup founders,while Israelis make up less than 8 per cent. After my third visit to Israel in less than two months,I am hopeful that India too will one day mix the magic sauce of innovation,and not just create companies in bulk.

Israel’s success in the technology innovation space today lies,in large part,in the spirit of its young people. Tech entrepreneurship is part of the lifestyle of the country’s youth. The society has accommodated the culture of fail fast and fail cheap,and that allows its entrepreneurs to be fearless. Families now want their sons and daughters to create a startup instead of settling for a stable job.

However,about one-third of our creative capacity is the individual,while the other two-thirds is the environment one grows up in. In which case,if failing fast decreases the costs of innovation,then India indeed allows for frugal innovation such that failure can be cheaper. Yet,the large number of startups India produces are often mere clones of Silicon Valley companies.

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Innovation is a process result where imagination is the fuel. Imagination is important because it anticipates problems that do not yet exist and foresees the needs of customers. Instilling the culture of fearlessness of failure leads to innovation. For instance,the healthcare sector has resisted imagination precisely because the stakes of failure are so high. So,innovation is slow.

Imagination needs to be nurtured at several institutional levels. This cannot be done on fast-forward mode,because it would lead to simply cloning ideas. At the institutional level,there are many changes that can be brought about. We could think of tweaking the primary educational curriculum such that it stimulates creativity and risk-taking from a young age. In higher education,universities are temples of research but are still conservative. We need to better connect higher education to industry such that universities can keep pace with changes in industry and society.

The greatest challenge lies in creating the appropriate regulatory environment. Public officials and the private sector need to send out the message that innovation is vital. The market positioning of Indian services companies have branded India to be low value,low margin,consulting providers,and that branding is slow to change. Israel,on the other hand,showcases its startups well.


A more conducive societal attitude to risk-taking and concrete steps by the government and private sector to create an environment for overcoming the fear of failure will encourage not only more individuals to be entrepreneurial,but will also embolden more Indians to be seed and angel investors. This will then allow at least a few to take the leap forward in entering into the even riskier terrain of providing solutions for the socially and economically backward. There are currently already some small startups in this field. For example,in healthcare,there are a few pharmaceutical companies and technology-driven initiatives that are creating affordable drugs and new distribution methods.

Poverty imposes an oppressive weight on India,especially in the rural areas. Innovative technology-driven solutions typically create scale. With the appropriate institutional support for creating innovative solutions using technology,India’s contribution to ending global poverty could be massive. The World Bank estimates that in this way,300 million people in the next generation could escape extreme poverty. The scale of innovation possible is tremendous if creativity is unleashed in the environment that our youth grow up and work in.

Startup nation India is the best-placed to ask,“What kind of world will we leave to our children?” But its people need to be given the right environment to find creative solutions and deploy them.


The writer is senior manager and global leadership fellow at the World Economic Forum and founder of The Stargazers Foundation. Views are personal

First published on: 09-04-2013 at 12:25:47 am
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