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'We have a long way to go in making growth inclusive'
Shobha Warrier | November 04, 2008
TiE-ISB Connect 2008 will kick start on November 5 at ISB in Hyderabad.
Sateesh Andra, co-convenor, Tie-ISB, and venture partner with Draper Fisher Jurvetson, India, answers Shobha Warrier's questions about the event.
TiE-ISB Connect 2008 has come up with an interesting theme -- The Next 800 Million opportunity. What is the reason behind the theme?
Entrepreneurs so far have been focusing on the top of the pyramid that comprises 200 million people. However, with economic growth, the middle and the bottom of the pyramid also present huge opportunities today. There is a lot of untapped potential in terms of creating and selling products and services to these 800 million people.
TiE-ISB Connect 2008 intends to focus on these opportunities. Besides, not many conferences have focused on this theme in a structured fashion. Our objective is to do so by bringing today's macro economists and practitioners on one common platform.
Is entrepreneurship only about wealth creation or is it something more? If so, what is it?
Entrepreneurship is more about value creation. It's about the passion and conviction to create value and bring in efficiency even if it means adoption of unconventional means to do so. Wealth follows when value gets created.
One of the sessions is about wealth creation and inclusive growth. Do you feel that growth in India has not been inclusive, and a large segment of India has been left behind?
Yes, there has been spectacular growth in the Tier 1 and Tier 2 cities in India. On a parallel front, the growth in smaller towns and villages has not been phenomenal. We still have a long way to go in making this growth inclusive.
Do you feel the gap between the urban and rural India, the haves and have-nots have widened?
The gap has definitely widened. We have a couple of hundred million people raring to go and compete with the rest of the world. And then there are the remaining 800 million who do not have access to basic education, healthcare and affordable housing. We need to bridge this divide.
The TiE-ISB Connect 2008 website says this year's theme is to encourage the entrepreneurs to take the 'road not taken' and to explore 'unchartered territory.' Why do you think the road was not taken so far?
There are multiple reasons. Customers earlier did not have the purchasing power they have today. Entrepreneurs did not have a clear understanding on how to tap the market potential. Investors faced the dilemma of not knowing the gestation period for their returns.
Things have changed with more money coming in the hands of customers. Entrepreneurs are also more aware of their market environment and investors are more willing to invest.
Which are the areas that can describe as 'unchartered' territory?
There are several -- like rural banking in financial sector, vocational training in education, power generation/ distribution without grid dependency or alternate sources of energy, affordable healthcare through the hub and spoke model and clean water.
Do you want the entrepreneurs to look at 'the road not taken so far' as just a large untapped market segment or something more than that?
Entrepreneurs need to have conviction about the value they are creating, whether it is through social enterprises or profit-oriented businesses. They need to be excited about the problem that their products or services will solve. The large untapped market potential is something they need to be aware of. However, what's of primary importance is their conviction in value creation.
What is 'building social enterprises?'
I am not really an expert to comment on this but I believe social enterprises are about tackling a social problem even while you do not overlook the aspect of expecting returns. So, it involves running a social organisation the sustainable way.
As a VC, what do you look for in an idea? Is your focus any different from what it was last year or year before last?
Well, broadly, the Indian market offers a few buckets of opportunities. First, the better-faster-cheaper model. You take a global process, put up operations here and deliver the service offshore.
Second, businesses that are betting on domestic growth. This would include infrastructure, hospitality, healthcare and other ancillaries. These business models don't offer huge leverage from a venture investing point of view.
Third, localisation of some globally successful business model. Take for instance, online travel.
The fourth bucket is game changing innovation, disruptive business models. These are the businesses that will create maximum value and therefore promise unusual returns. I would like to find businesses in that space.
Are you satisfied with the kind of ideas that were mooted from 2005-07?
The quality of entrepreneurship and the commitment of entrepreneurs have definitely seen an improvement. Earlier, entrepreneurs faced financial, social and career-related risk in entrepreneurship. That's no longer the case today. Besides, entrepreneurs have successful case studies to learn from and follow.
How successful are the entrepreneurs who got funding at the earlier TiE-ISB Connect?
TiE-ISB Connect should be looked at as a networking event where you can connect with investors, potential partners and other entrepreneurs; an event where you can get a crash course in entrepreneurship in terms of the themes that get discussed and the people you meet.
Funding happens, but it is not necessarily a decision that gets taken immediately at the event. It's a long process that probably starts at the event. So it should be looked at as a match making event.
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