WEBINAR FINDINGS -

ENHANCING THE BUSINESS ECOSYSTEM FOR START-UPS IN

ATAL BIHARI VAJPAYEE INSTITUTE OF GOOD GOVERNANCE & POLICY ANALYSIS, (AIGGPA), BHOPAL

INDEX

1 Background...... 01

2 Panelists...... 02

3 Minute to Minute Schedule...... 03

4 Key Take Aways...... 04

4.1 Promotion of technology & innovation induced entrepreneurship culture in MP.. 04

4.2. Support in grounding of the concepts and incubation handholding...... 07

4.3. Aligning the financing setup that matches the start-up requirements...... 10

4.4 Shaping the demand environment for innovative startups...... 13

5. Q & A...... 16 01

BACKGROUND Start-ups play an essential role in the growth and development of the economy. Start-ups create employment and contribute to economic dynamism by spurring innovation and injecting compe- tition. In order to promote and support start-ups in , the central government had started Startup India Program (SIP) in 2016. It is noteworthy that since its launch, various programs have been rolled out to support budding entrepreneurs and transform India from a country of job seekers to one of job creators. To make SIP, more participative and competitive, central government rolled out States Startup Ranking program in 2019. This ranking program was envisaged to energize the participating States towards achieving the right goals for supporting their start-up ecosystem holistically. It was established with seven broad dimensions: Institutional Support, Simplifying Regulations, Easing Public Procurement, Incubation Support, Seed Funding Support, Venture Funding Sup- port and Awareness and Outreach. Based on the past year's rankings, emerged to be the best performing state, and Andaman Nicobar was best amongst the union territories. Karna- taka and were to top performers, and , , were the leaders in the ranking system. Madhya Pradesh (MP) was in the category of the emerging startup eco- system. Further, in consonance with government initiatives, MP has launched Incubation and Start-up Policy, 2016, and with some update in 2019. The specific focus areas as per the policy are textile manufacturing, automobiles, food processing, soya processing, engineering and agriculture equipment manufacturing. Despite these efforts, the number of start-ups in MP is low, (1200 start-ups till 2018, as per DataLabs) and the success ratio is also not inspiring. As per the analy- sis of State’s Start-up ranking 2019, the performance of MP has significant scope of improve- ment across the above mentioned seven pillars. Therefore, rejuvenated efforts are the need of the hour for noticeable outcomes. To this end, the department of MSME (MP) has expressed a keen desire to understand the current challenges and learn from the better industry practices. Centre for Economic Sector (CES) at Atal Bihari Vajypee Institute of Good Governance & Policy Analysis (AIGGPA), Bhopal is the associate partner to the department of MSME, Govt. of MP for start-up initiatives and actions. AIGGPA would work alongside the department and the stake- holders to suggest actions to boost the startup ecosystem in MP. In the current cycle, a webinar series is planned with an objective to get inputs on the ongoing challenges and more importantly the suggestive path that help in altering the startup landscape in MP. Specifically, the first webinar will focus on the following core areas with the views from the industry experts: 1. Promotion of technology & innovation induced entrepreneurship culture in MP 2. Support in grounding of the concepts and incubation handholding. 3. Aligning the financing setup that matches the start-up requirements 4. Shaping the demand environment for innovative startups 02

EXPERT-PANELISTS

Founder and General Partner of Monta Vista Capital, Silicon Valley, Venktesh Shukla has been involved with numerous start ups as an executive, investor, board member, or adviser. As President of TiE Silicon Valley and Chair of TiE Global, he has had transformational impact on the organization in Silicon Venktesh Valley as well as at TiE Global. Shukla An academician in the areas of Entrepreneurship Education, Dr. Acharya holds expertise in training budding entrepreneurs as well as grooming developed entrepreneurs. He is an Associate Senior Faculty at EDII. He is engaged with Startup focused initiatives of Government of Gujarat, MHRD Dr Satya R Innovation cell at All India Council of Technical Education and various Acharya universities/Institutions.

Siddharth Chaturvedi is the Director of AISECT Group of Universities, Bhopal, an organization working across areas such as Education, Training, e-Governance and other services, predominantly in rural and semi-urban India. Siddharth Chaturvedi Pradeep is the founder, key promoter and Managing Director of Vision Advi- sory Services (P) Ltd. He continues to lead a lot of initiatives and ventures. He is also an expert in human resources and excels in shaping business strategies, identifying human capital implications and designing.

Pradeep Karambelkar Umang Shridhar is the founder of KhaDigi, a business-to-business fabric supplier platform which aims to empower women/artisans in rural India. For her efforts towards reviving along with making sure that the artisans and weavers benefit from the work, Forbes has included Umang Shridhar in its 30 under 30 list of young achievers. Umang Shridhar

To make agri-business a respectable, profitable and preferred choice of profession for the next generation, Salman Haider designs and Implements new and Innovative Financial Products for Farm Sector. He is Vice President Operations at farMart AgriFinTech. Salman Haider Karan handles the corporate engagement and business development at SAB. Karan has done his MBA from Indian Institute of Forest Management, Bhopal. Previously, Karan has been associated with Skill Development Mission of Andhra Government and various skilling organizations like Skills Karan Academy, AISECT etc Girdhar 03

Atal Bihari Vajpayee Institute of Good Governance & Policy Analysis (AIGGPA), Bhopal Webinar on Enhancing the Business Ecosystem for Start-Ups in Madhya Pradesh Minute to Minute Schedule

Date: 30th January 2021 Time: 10:30 A.M. to 1:30 P.M. Session Type Session Name Timings Description Speaker Inaugural Plenary 10:30-10:35 Welcome Remark Mr. Manoj Kumar Jain, Session 10:30-10:50 Sr. Advisor, CES, AIGGPA 10:35-10:40 Introductory Shri Rahul Chaudhari, Remark by Principal Advisor, CES, Moderator AIGGPA 10:40-10:50 Setting the tone Shri Vivek Porwal, Secretary, MSME, GoMP Promotion of Presentation 10:50 – 11:05 Presentation by Shri Karan Girdhar, CEO technology & 10:50 -11:25 SAB (Skill arts and beyond) innovation 11:05-11:20 Presentation by Shri Satya Acharya, faculty induced & Director, Incubation entrepreneurship Centre" Cradle" culture in MP EDII, Ahmadabad Discussion Q&A 11:20 – 11:25 By Participants Support in Presentation 11:25 -11:40 Presentation by Shri Vibhanshu Kumar, grounding of the 11:25 -12:00 Government Business concepts and Advisory, PwC incubation 11:40 -11:55 Presentation by Shri Pradeep Karambelkar handholding Vision Advisory Services Pvt. Ltd. and Chairman, PHD Chamber of Commerce, MP Chapter, Bhopal Discussion Q&A 11:55– 12:00 By Participants Aligning the Presentation 12:00-12:15 Presentation by Shri Vanktesh Shukla financing setup 12:00 -12:35 General Partner. Monta that matches the Vista Capital, Silicon Valley, start-up Ex-President, Tie global requirements 12:15-12:30 Presentation by Ms.Umang Shridhar Founder, Khadi Gi (Start-up Forbs 30 under 30) Discussion Q&A 12:30 –12:35 By Participants Shaping the Presentation 12:35-12:50 Presentation by Shri Salman Haider ‘demand’ 12:35- 01:10 Vice President, Operations environment for Agri-tech FarMart, Lucknow innovative 12:50 - 01:05 Presentation by Shri Siddarth Chaturvedi startups Director, AISECT Group & President, CII, MP Chapter. Discussion Q&A 01:05 – 01:10 By Participants Open Discussion 01:10-01:20 01:10 – 01:20 By All Valedictory 01:20-01:30 01.20 - 01:25 Concluding Dr. Swati Singh Chauhan, Session Remark Advisor, CES, AIGGPA 01.25– 01:30 Vote of Thanks Shri Girish Sharma, Director, AIGGPA

Promotion of Technology & Innovation 05

Promotion of Technology & Innovation Induced Entrepreneurship Culture in MP

The experts proposed the following points to promote technology and innovation induced entre- preneurship culture in MP. 1. The expert suggested that the state government should collaborate with grassroot organ- isations that work on ground level with the communities. In many cases, global organisa- tions do not understand working with indigenous and tribal people. 2. The state government can play a significant role in creating the culture of risk-taking, problem solving through inclusive academic set up. In such a setup, the average students can also perform and take initiatives to solve the problems. 3. The entrepreneurial culture should be created to understand the differentiation between start-ups, innovation, micro and small enterprises. It will help to understand the lifecycle model of start-ups can be highlighted, which includes: emergence, activation, integration, maturity. 4. The state government should invest more in the pre-incubation system, creating an entrepreneurial culture at school and college level. Students can start and run their busi- ness or prototypes in such setup, and local people and invited industries can be their cus- tomers. Further, the pre-incubation system focuses on solving the local problems, and academic institutions need to teach to the students for solving the problem is also a career like others. 5. In the same line, there should be a provision of entrepreneurial education: providing rele- vant knowledge, skills and shaping attitudes of students. The focus of entrepreneurial education should not be on the theoretical aspects rather concentrate on the practical implementation of ideas and solving the problems of society. Further, the scaling up of such things will sensitise more people to take up entrepreneurship. 6. The discussion further highlighted the need to have a flexible curriculum system where students are encouraged to take up the start-up ideas in place of their traditional courses in the program. 7. There is a need for cohesiveness amongst academic/research institutions, government and industry. Because what is being researched or invented by the research institutions goes in vain due to less utility for the industry as well as the government. Therefore, the government and industry can come out with specific research ideas which academic or research institutions can work upon. Further, the state government can fund such kind of projects to boost scenario of innovation in the state. 06

8. Based on the above discussion, there is a need for expenditure on human capital, research and development instead of land and capital. 9. Through above, the supply-side problem of the incubator system will resolve where the incubates are coming up with a similar set of ideas. It will create a supply pipeline for incu- bators, and sector-specific ideas can be harnessed.

Strategic inputs:

Investment in pre-incubation system to create entrepreneurial culture.

Provision for entrepreneurial education and flexible curriculum in colleges/school

Collaboration amongst state government, research institutions and industries

Sector specific focus on start-ups ideas through incubation centers. Incubation handholding 08

Support Structure and Incubation Handholding

The experts have discussed the issues related to support structure and incubation handhold- ing and have proposed the following points: 1. The state government need to put guidelines for building mentor-mentee relations, and incubation centres in small towns. 2. The state government can play a vital role in creating local investor network in every major city of MP for start-ups and incubation centres. These investors can be seed inves- tors and angel investors to local start-ups. Local people/investors understand the local businesses better than the big cities investors. In addition, the start-up ideas in MP are related to Bharat (more of local problems) and less technology-driven compared to the ideas of start-ups. 3. The state government need to monitor and evaluate the incubation centres to find out which ones are doing well. The monitoring and evaluation can be bi-annually, to figure out the issues and problems of incubation centres and associated start-ups. 4. The state government can also bring the policy to create co-incubation centres. It will increase the number of incubators, and the expertise of existing incubation centres can be utilised efficiently. In this league, existing private incubators can be selected to collabo- rate with small town partners. The co-incubation centre can work as the extended arm of the existing incubators. Following this, local investors and local start-ups (people) can be clubbed together for better utilisation of resources. The local investors can also become co-founders and provide handholding support to the start-ups. 5. Through above, there is a need to have a state-level investors board so that start-ups in the state can get the benefits. In this regard, the state government can tie-up with nation- al-level funds such as VCAT, IAN and TIE. On similar lines, the state-level angel investors network can also be created. 6. The above process would solve the problem of the state government of identifying the right start-up for providing finance. The investors' board will identify the start-ups, and then state government can also provide the financial support to such start-ups. 7. There is a need to demarcate between co-working space and incubation centre which is becoming one of the reasons for dying up of the start-ups. The start-ups presume the co-working space as incubation centre which leads to diversion in the path. 09

8. The experts highlighted that the start-ups which innovate new products face the problem of production and marketing. Therefore, the state government can support such start-ups in collaboration with the industries for production and marketing to make the start-ups self-sufficient.

Strategic inputs:

Formation of local investors network and state-level investors board.

Monitoring and evaluation of the incubation centers by the state government.

Guidelines for creating mentor and mentee network with incubation centers.

Policy for establishing co-incubation centers in the smaller towns.

Support in collaborating start-ups with industries for production and marketing related issues. FINANCING 11

Financing Setup Matching Requirements of Start-ups

Panelist highlighted the following points for aligning the financing setup to match the require- ments of start-ups. 1. Experts suggested to focus on small businesses to promote employment in the state. As small sector contributes 70% of the jobs. There is a need of strategic focus from the gov- ernment side to promote the same. 2. There is a need to create a culture of entrepreneurship in the state for creating the jobs and to improve the position of MP as a startup friendly state. 3. The state government need to celebrate the entrepreneurship in the state and initiate the entrepreneur of the year award. It will encourage the youth. Further, the support is required form big industry associates like Tie, CII, FICCI, and Nasscom to organize programs in major cities to listen the stories of entrepreneurs. 4. There is a need of at least one incubation center in each divisional headquarter equipped with coworking space, business advice, financing, counselling, regulatory guidelines, network of mentors to support the budding start-ups. 5. Encourage college students to join incubation centers for their summer internship program, which will inculcate the culture of entrepreneurship among college students in their early days. 6. The state government can create a fund that provides matching funding to qualified VCs investing in start-ups that have more than 50% of employees in the state. 7. The state government in association with academic institutions should organize the com- petitions to mitigate the social issues like clean water, waste collection, water wastage monitoring, parking etc. Winners of the competition awarded by seed funding. 8. Government should assign or fix the share (2% of government purchase) of public procurement from the start-ups. This will make the budding enterprise more sustainable. 12

9. The state government can organize annually a Demo day to showcase the local entrepre- neurs, where big industries will join and promote the entrepreneur by procuring their prod- ucts and sponsoring one start-up in each division. 10. For creating enabling environment of the start-ups in the state, there is a need to make the court processions more efficient and accessible and focus on fast conflict resolutions process. 11. Strengthening of incubation centers is important where pool of qualified mentors will train the entrepreneur and make them understand the importance of sale over funding. It is also important for the start-ups to understand, what type of fund is needed for their start-ups. 12. The experts highlighted the importance of important forums where the Start-up can go and join them, participate in their events, create network and associate with them.

Strategic inputs:

Celebrating entrepreneurship by organizing “Entrepreneur of the year” award.

Organise the annual Demo Day

Strengthening of incubation centers along with multi-stakeholder collaboration

Dedicate share for start-ups in qualified public procurements

Creation of funds by the state government to fund the start-ups along with venture capi talist

Work to ease the legal process to help budding organizations DEMAND ENVIRONMENT 14

Shaping the Demand Environment for Innovative Startups

The experts pointed out the following points relevant for Shaping the ‘Demand’ Environment for Innovative Startups

1. Building a Start-up Cell for holistic support and assistance to the budding start-ups. In order to have an advantage via knowledge of subsidies and incentives provided by the government (state and central level) this cell would play a pivotal role. 2. The state government should make the state-specific important data resources available to the public and update it regularly to suit the needs of the start-up ecosystem. 3. The state government need to formulate a separate legal cell for providing support to start-ups. 4. Provisioning for backing up of the start-ups by the Government functionaries/ Bureaucra- cy by building trust about entrepreneurs in the system. Further, the bureaucratic process should be accessible and inclusive for small businesses. 5. The experts highlighted the need for multi-stakeholder collaboration for fostering innova- tion in the state. 6. The state government need to encourage micro-entrepreneurship at micro and rural level instead of having a common start-up policy for all. Further, different state government departments can organize boot camps, fests, hackathon etc., to drive entrepreneurship out of big cities. 7. There should be a provision in the state budget for creating a risk capital fund to support based start-ups. 8. The start-up policy should be sector-specific and other allied activities in a similar direc- tion. 9. Agriculture, IT, pharma are emerging industries. Having an expert panel and mentors would help to facilitate inter-dept collaboration and inter-state assurance of govt. backup 15

Strategic Inputs :

Building a start-up cell for holistic support

Make provision to open the government data in a user friendly manner

Provision for micro-entrepreneurship

Provision for risk capital in the state budget

Start-up policy needs sector specific focus provisions QUESTIONS & ANSWERS 17

RESPONSE TO AUDIENCE QUERIES

Q&A Session Session-1 Promotion of Technology & Innovation induced entrepreneurship culture in MP

Q) What gives energy to the start-up community? Is it money first or is it ideas first? My feeling is that the money follows the ideas - not the other way around. Your thoughts? Should the gov- ernment and industry create a community of ideas, creativity and people energy.

A) Funding is the next issue. Funding is a big challenge, obviously. Government is giving free grants. I’m not in favour of providing anyone with anything free. It’s the taxpayer’s money and you’re just using that money to experiment with an idea, and 10 months down the lane, and the idea could not be picked up by the market. So, every start-up needs to have commitment from their side in terms of passion and also some amount of investment from their pocket. Yes, we need to have a combination between research institutions/academics and the industry and the government. Chunk of the research taking place in the research institutions is not being accept- ed by the industry. The industry’s requirements are not specifically provided by the research institutions. In the global scenario we can see the interchange between professors who become the CEO of companies and come back to universities. This is something which is not happening in India, as these professors are not being accepted by the industries. But at some point, of time, we need to combine them together- the research institution is creating products for the industry, and the student can understand that this is the requirement of the industry, and can take that idea and do something, and find consumers for it. This will lead to the start of consumer funded business. A dependence on the government needs to stop regarding funds and grants. If you have a bright idea, you’ll have 10 investors lined up to you.

Q) What are the areas for intervention by the state government for strengthening the innovation ecosystem?

A) Intervention should start at the pre-incubation system. Pre-incubation system says that all possible academic setup at school or college level, everywhere we talk to them regarding how to solve local level problems. We can talk about successful stories; we can invite alumni to talk about their start-ups. We need to create entrepreneurial culture in the academic setup. Similar things can be done by the industries also, where they can motivate their own employees. Incu- bation support should be provided by companies. Government can invest heavily in the pre-in- cubation system, and needs to motivate people that solving problems in society is also a career the way engineering is. Setups and Institutions need to nurture the people and create a pipeline to the incubation system, we can get success. Having sector specific incubators, and creating a supply line in terms of idea or incubating are the two essential hinges that need to be done to create a culture of ecosystem. 18

Session-2 Support in grounding of the concepts and incubation handholding

Q) Why can't the government create a platform for mentors and investors?

A) Government shouldn’t fall into execution plans. Incubation centres can create mentor schools and investor schools. Government can only put the guidelines, how these can be formed and how things can be done. But I don’t think the government should create a platform because then again it will be a problem in whom to select and who will select, and to select. Mentors and inves- tors can be done by incubation centres, which will also lead to competition leading to better results. National level organisations and chambers (like TiE..) should be associated with men- tors and investors platforms, so we can reach more industries, more MSMEs, more platforms.

Session-3 Aligning the financial set-up that matches the start-up requirements

Q. How to Attract venture capitals investors for funding startups in Madhya Pradesh? What are the ways in which this process can be made smooth? Why are so many venture capitals present in places like Bengaluru and not MP despite having good ideas? A. “There is a natural clustering phenomenon that occurs among industries and since Bengaluru had a head-start in terms of technology therefore we see so a head-start in venture capital also. That does help. But I think having a very active angel investor ecosystem in MP because if they fund good ideas, VCs will follow since they are driven by success and spotting good ideas. You don’t have to get professional VC money from day 1. A healthy, vibrant angel investor ecosys- tem- that would be the first place to start.” “Govt could facilitate that by saying if you are funding a startup with over 50% of employees in MP, we could match the investment you are making, and all the up-side is yours. We just want our invested money back. If the start-up shuts down, you lose money- we lose money. That could motivate a lot of VCs to get their base set in MP. These creative ideas should be pursued by the govt. “

Q. Which country/state has the best startup policy? Why? Most of them have not done a good job. Most of the money spent by the govts all over the world has gone down the drain. There are a few that stand out. The successful ones are – Israel and Singapore (most lately). Israel followed the same model of investing the same amount as the investors which meant sharing the loss and not taking profits. This served as a massive incen- tive for investors. They had an incredibly high unemployment but now they are a powerhouse. 250 companies from Israel have gone public in US markets and 1000s have been acquired by global companies. You see the total population if Israel is less than the city of , and they have been remarkably successful. Singapore lately has taken up a similar system. Attracting entrepreneurs to Singapore, they give you money and facilities. It is very targeted, the beneficia- ry either has to be the entrepreneur or the venture capitalist- anything else is money wasted. “ 19

Q. There seems to be a huge challenge in deciding how to balance investments and where should the govt focus. Can you suggest something to guide that? A. I think the govt should focus on doing on what it does best. Which is to provide rules and regu- lations. They are the only ones to set up regulations and laws. Doing that well goes a long way. If they can create an enabling environment for the startups to flourish and succeed, people will come to them. Like court systems. All states spend about 2-3% on that. If someone takes the initiative of spending more and resolving its issues such as guaranteeing time-bound settlement of court/ contractual disputes- the VCs and entrepreneurs will fly to you. What do you do when an employee walks away with your intellectual property? If quick redressal is assured, success is guaranteed. No state so far has done it, or done it well. Thus, if govts focus on doing what they do, there can be an opportunity there.

Session 4 Shaping the ‘demand’ environment for innovative startups

Q. How can the government think about creating the database A. he govt has been doing so much heavy lifting for everyone without realizing. They can just talk to departments and collect it on the websites after indexing them. If you have a young start-up cell who don’t have much money, give them access to these sites for accessing data such as India Stat. This can guide people that they can use the available resources. If you can give someone a head start over there or else at least compile the data.

Q. Entrepreneurship at school level. How can the govt think of rolling it out at school level con- sidering the size and level f inst. Involved, no. of students and the complexities involved? A. it is a challenge and the foremost is to introduce it as a subject otherwise it will lose its rele- vance as a theory -based examination and people will start writing answers to it. So, the whole point is to make it livelier and more real-time so some things could be the concept of the Atal Thinking Lab which are there in schools but again they are only limited t a few. What we want to say when talking about entrepreneurship is, we want to inculcate the mindset that students should think about a particular challenge and have resources to try out any ideas they are talking about and then are connected with some subject matter expert either though the nearest incubation center or any such mechanism which can give them feedback. We want to run the process of: open thinking, working on a product/idea and bouncing it off with the experts, getting feedback and finalizing the work. This exercise is important for encouraging the creative mindset which is a 21st century skill which can’t be taught as a subject. My recommendation is to have priority sectors based out of MP and getting them translated into a language that can be under- stood by schoolers and from there-on have a mechanism of reviewing and iterating them. A pilot can also be done in any one district and see the results, thus taking it further based on its usage.

Atal Bihari Vajpaee Institute of Good Governance and Policy Analysis (AIGGPA)

(A Regd. Body Under Public Service Management Department, Government of Madhya Pradesh) Sushasan Bhavan, Bhadbhada Square, Bhopal Madhya Pradesh, India, 462003. Tel: +91-07442777316,2777308, 2770765; Fax +0755-2777316 Web: www.aiggpa.mp.gov.in., Email:[email protected] follow us: @AIGGPA / AIGGPA