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Young entrepreneurs are showing scant regard for the floundering economy as they ditch cushy corporate jobs to start their own ventures in the services sector, reports Sumana Ramanan.india Updated: Oct 15, 2012 00:55 IST
India’s economic growth rate is slowing, inflation remains stubbornly high and, until earlier this month, the government seemed paralysed.
Despite this gloomy environment, many youngsters are giving up stable jobs and striking out on their own in a variety of sectors: services, music, food and social enterprises, amongst others.
“More and more people, from business students to entrepreneurs, are beginning to realise that if you can make a go of things when times are bad, then things can only better when the climate improves,” says Nikhil Khattau, 49, a managing partner at MF Advisors, which advises the Mayfield India Fund, a venture fund.
Moreover, most ventures that succeed tend to solve other organisations’ “pain points”, and for such ventures, the global climate is almost irrelevant, says Khattau.
Two years ago, for instance, the fund invested in a Mumbai-based start-up that, for the first time in India, used liquid containers to transport liquids from one place to another. Its revenue has grown fourfold.
Entrepreneurs in the city also have greater institutional support, says Ravi Kiran, 46, who in March co-founded VentureNursery, India’s first angel-backed start-up accelerator, which mentors those looking to start enterprises and then puts them in touch with investors.
“Youngsters in this city are still full of optimism,” he adds. “They’ve seen success stories. They know that it takes time to build a business and they should start early. Moreover, I don’t think there is pessimism about the economy’s mid- to long-term prospects.”
On the investing side, the number of people willing to bet on new ventures is only increasing, he says.
Finally, young entrepreneurs now have much more social support than they did even five years ago, says Mumbai-based Azeem Zainulbhai, 30, an entrepreneur with a focus on building businesses in India and Africa and a co-founder of Restaurant Week. “In 2006, start-ups were still looked down upon.
The typical Indian kid wanted to be a professional. The initial trickle of successes has helped changed things.”
‘The Indian market has always been unpredictable and volatile’
What: Progressive stores and retrieves documents and other physical records, such as tax papers, for companies and other organisations. It also of offers a service to digitise and organise paper records as well. It has a 10,000-square-foot warehouse in Bhiwandi in which it stores the documents.
Who: Raj Barai, 32, who got a Bachelor’s degree in computer technology from an institution in the US, founded the company and is the chief executive. He also freelances as a disc jockey.
When: He founded the company last month.
Why: After finishing his studies in the US, Barai worked with Reuters for about six years there. He was impressed by the way companies there innovated relentlessly, coming up with products and services that made life easier for individuals and organisations. He knew that he also eventually wanted to become an entrepreneur.
He returned to India in 2009 to take care of his ailing father, and continued to work in the Indian arm of the company, before finally quitting last year in order to start his business.
How: To start his venture, Barai used his savings and took a bank loan, most of which went towards buying the warehouse in Bhiwandi.
He got the idea for starting the business in April, when he was chatting with his family doctor, who found it hard to store and manage his patients’ records. He felt it would save him a lot of effort and time if someone did it for him, and would make them available whenever he needed them.
“I then thought of offering such services to not just doctors but other professionals and organisations,” says Barai, who works out of his father’s 300-sq-ft office in Dadar.
‘I now earn ten times more than what I used to in my job’
What: Swaaha, an event management company specialising in weddings and corporate events
Who: Hemant Kale, 29, who worked with the events management department of Aamby Valley for five years, founded the company
When: Kale founded the company in October 2011.
How: Kale tapped into his savings to start the venture. He first rented a 200-sq-ft room in Chembur and hired four people. He got projects from the network of contacts he had established while working.
He hoped to break even within a year, but he began making a profit just six months after starting up. “I earn ten times more than what I used to earn in my job,” says Kale, smiling. “Most importantly, I am the master of my time.”
Why: After gaining experience working for a company, Kale felt confident that he could earn much more by running his own business.
He felt that the demand for managing weddings would be recession-proof. “People somehow find the money for weddings,” he says. “I believe this market is going to grow bigger because weddings are becoming grander.”
As for corporate events, from his experience he believes that companies would not cut down the number of events in a slowdown, merely scale them down. As a small company with relatively low overheads, he felt he could offer a cheaper service.
Also, as companies cut their budgets, they are open to giving work to small players in the event-management business, he says.
“Our profit margins are lesser than that of the bigger companies,” says Kale. “Therefore, it makes sense for clients to approach us because they end up saving money,” he adds.
‘Recession, inflation and political instability will come and go’
What: Tripcrafters.com is a virtual marketplace for travellers on the one side and travel agents and tour operators on the other. Travellers post information about where they want to go and the portal will pick the first three service providers offering to pitch for organising the trip.
Travellers do not pay for posting information but tour operators pay a fee to the company.
Who: After studying and working in the US for ten years, three friends — Umang Dhanuka, 31, who studied computer science, and Vivek Kundnani, 30, and Rajiv Kalra, 30, both MBAs — returned to India in 2010, hoping to start a venture together.
When: They founded the company in October last year.
Why: All of them returned to India to become entrepreneurs. Kalra first came up with the idea and his two friends joined in enthusiastically. None of them had complaints about their lives in the US, but wanted to start their own venture, which was difficult to do for non-citizens.
“India, on the other hand, was booming with opportunities,” says Kalra. “Many foreigners have come here to exploit the market. We felt that we understand the mentality of Indian consumers and we should take advantage of that.”
Adds Kundnani: “It is easier to set up a business in a familiar atmosphere.”
How: The trio used their savings to set up an office in a 300-sq-ft garage in Khar and to hire six people. They also use the service of freelance marketers. The website has registered 25,000 views so far. They say they are not yet making a profit because they are putting all their extra money into expanding, primarily by trying to convince entities in the travel business to pitch for demands posted on the website.
(Reported by Riddhi Doshi)