Rural Areas – Technology Transfer and Scaling up entrepreneurship and Start
Ups.
(Some Thoughts)
Dinesh K Kapila
I have been
taking an interest in the issue related to Start Ups since some time. The main
concern is the stress on setting up incubation
centres with a focus on facilitating and encouraging start ups in rural and
semi urban India. The first concern is the inability to distinguish start ups
from normal entrepreneurial ventures. I have met at a seminar a person selling
vegetable produce, with grading, as a start up, or an innovator with a better
milk quality tester. The technological edge is missing. This clarity must
evolve.
Then the Eco
System has to be vibrant and feeding off each other in terms of technology and
then its refinement, generating a business idea linked to the technology,
networking and referrals to a group of investors, a commercial orientation and
a comfort level with financial terms and their implications. Frankly speaking,
just how many Plus Two Level Schools and Colleges located in rural and semi
urban India offer Commerce as an option to study. That in itself impacts
awareness levels. The faculty too at the Agricultural Universities and even
Engineering Institutes undertaking a rural out reach if often without a
commercial orientation. Or interest. The
product developed at a Engineering College has to be tested and then acceptance
built with the intended beneficiaries of the product, all along it has to be
commercially sustainable. The Local Chambers of Commerce are seldom inter
linked with the Incubation Centres or their parent institutes and often lack
the awareness themselves.
The Investors are mostly located in the
metros with a sprinkling in the smaller cities. In any case it’s centred at
Bangalore, Chennai, Delhi etc. The incubation centres located away from the
metros and main business centres are often not networked or even able to
establish credible relations with the investors. Mentors can only go so far. The
highly urban centric focus leads to a neglect of rural or semi urban based
start ups generally and funding assistance has normally flown to those who are
already networked. A
response I received from a major investor was this, “Hi Sir ! Nice to be in
touch again. Mostly seed funds like Blume or India Quotient may look at some of
these if the tech is compelling”. Another response was “Sir, I
think go to market especially in Agriculture is very tough, maybe in Supply chains we can
consider. However cash burn in a few ventures has been very high and the
revenue stream was not credible”. Another said he was unaware about the real
commercial benefits and in any case rural markets were scattered, costs were
higher and the very market was too unstructured and opaque.
The alternative
and answer is for an atmosphere of entrepreneurship and mentoring to be
encouraged in the smaller cities by way of a fora to exchange views and seek
guidance and insights. The Universities also have to have a commercial
orientation for such initiatives alongside technology. All in all it takes time
but its my conviction we are now settling in. Entrepreneurs must also know
about the difference of a start up from a normal entrepreneurship. This could
create a vibrant culture of a commercial orientation. The Tier Two and Tier
Three cities have attracted funding even if its limited to even a single start
up in a city at times. Local Start ups would b more focused on the issues closer to the ground and would
understand the local markets better as also customer orientation. This could be
the starting point to drive it up.
I have delivered
talks and interacted with incubatees and basic start ups at a couple of
institutes. I realized that the start ups at this stage at such institutes need
limited funds to get going, mentoring and an opportunity to market their ideas.
An essence (mainly chamomile) oil cultivator and processor looking for a tie
up, a manufacturer of crockery which is edible (use and eat) but needing the
initial orders to build credibility with investors abroad, an app developer who
has the technology to switch off irrigation motors at the farms remotely -
(5000 customers but how to scale up) and a veterinarian who has the products
but not the means etc. There are many more. Including a small manufacturer of
organic granules which can replace DAP. The step forward is the challenge while
the consult various mentors and investors. For example, the start up with the
remote switch for motors has done everything right, boot strapped, organized a
website, met local investors but cannot expand exponentially until fresh
investments are arranged. For those who don’t know, it’s a major convenience in
rural areas. The edible crockery manufacturer has interested investors but is
being asked if he has credible local orders fulfilled, customer feedback and
also any investments by India based houses. A Start up in Poultry – inputs and
outputs – with a sufficiently large base is also looking for an investor who
would understand their business model.
These are preliminary observations, based on an interaction. But
point to the concerns as stated earlier. If any investor or contact has the
intent or the ideas, he can be guided to the institute concerned. Maybe some start ups or rather intending
start ups would need to explore a process of seeking the traditional route
initially before fine tuning their product for a start up mode. It’s a vast area
and the start ups must be aware about the facilitation by the Government and
it’s Agencies too such as the Seed Fund by Start up India. Start with basic
bank finance and then try to build the business idea for a major investor, this
could be a realistic option. Plus try the
maybe not so prominent or glamorous but VCs and Angel Investors focused
on Agriculture and Rural Areas. Alternatively, I feel one option could be that they can be
linked up with NGOs / Government programs in the district/region for PoC (Proof
of Concept) etc. That is a route the incubator usually has to facilitate.
An investor cum
mentor has advised that the social alpha, unit India, acumen etc may be written
to but the technology and financials have to be absolutely attractive and the
data base diligently prepared. The start up / basic venture must have a founder
who closely understands finance and technology personally and specially his
product with transparent research and market experience. He conceded that though there were exciting
success stories in the Agriculture Food Space and Supply chains, but inherently
it remained a non glamourous area too. The scale was small and opportunities
limited. I believe that there
could be a bunch of ex-investment bankers and business leaders, social minded,
looking for an opportunity to give back, who need to be identified for
encouraging such a sector.
As regards technology transfer as
raised by someone I know, the Institute has to tap the existing players in the
ecosystem / sector, even if they are unaware bout this technology. Talk to
players in major nodes (small towns in rural areas) and obtain their feedback.
Reach out to them at their comfort level and accord them respect. Alongside try
the Industries Department, District Industries Centre, Active CSR Funds too. The
technology transfer cannot happen from the institute, it has to go the field
and get tested and recalibrated.
These were just thoughts I thought I would share on this issue. It has
to move forward but currently faces barriers intrinsic to the sector. I do
concede this is from a North West India perspective.
DKK
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