Case Study: The Power of

Ideas
 Case Study: The Power of Ideas

Introduction

Today, Indian society can best be classified into three categories. The first
category of people is that of well-established business families, such as
the Mittals, Tatas, Ambanis, Birlas and the like. These families have a very
strong base, with most individuals following the family business tradition
passed on from generation to generation. Most of these companies have a
strong management team, and are now going global. World trust in the
Indian corporate sector is increasing like never before. The second
category is dominated by young graduates who are an integral part of
Indian business growth. In fact, India has graduated a huge number of
individuals with management degrees over the past decade. With
information technology and multinational corporations on the rise in India,
young entrepreneurs serve as the backbone of many flourishing
enterprises. The third category of society would be product-based

Submitted to: business

Submitted By: Group 7
entrepreneurs. You
Dr. Kishan Rao
will find them in Aditi Narayan (08PG074)
every big city, Albert Rohan Silas (08PG079)
town, or village in Bhargav B D (08PG086)
India. Educational Garima Chopra (08PG087)
qualifications do not mean much to them; Priyanshu Mishra (08PG335)
rather, they rely on sheer entrepreneurship Raksha Neogi (08PG104)
ability that include training, experience, Ranjini Ballal (08PG339)
customer service skills, networking, hard work,
Sulabh Sharma (08PG347)
and innovation.
There is an overall shortage of start-up entrepreneurs in India compared
to the rest of the world. One of the most significant deficiencies an Indian
entrepreneur may face revolves around capital. Although there is ample
willingness to invest capital in a well-established enterprise, there is little
willingness to fund start-ups. The quality and quantity of venture capital
or angel investors in India is low.

The Power of Ideas:

‘The Power of Ideas’ is an initiative started by The Economic Times which

provides a platform for talented entrepreneurs to explore their ideas. Here
the entrepreneurs and the investors gather in order to discuss the
different innovative business plans and fundings are provided to the
deserving ones. This platform bridges the gap between emerging MSME’s
and willing investors. The interaction involves the short listed candidates,
the investors of IAN, VCs and incubators.

The short listed candidates are nothing but the budding entrepreneurs
like George Koshi, Sumesh Mishra & Punit, KS Chhabra and Akshat Mullick
who wanted to start their own ventures and needed financing.

George Koshi needed capital to launch and scale up his business of

cooling motorcycle helmets. Sumesh Mishra & Punit wanted to boost their
health food brand business across Mumbai. KS Chhabra, the founder of
HindBio says that the portal has helped him to think beyond boundaries in
terms of financing. Akshat Mullick, the MD of Jeevarth clinic needed an
investor to fund his new project on home healthcare services.

All these entrepreneurs are looking for investors who help them grow
ventures. While some investors preferred existing businesses looking for
growth, fresh start-up ideas are also considered and carefully inspected to
see if they had potential. Initiatives such as ‘The Power of Ideas’ have
emerged as an innovative way to convert the dreams of MSM
entrepreneurs into reality.

Scope:
Such platforms have widened the scope of MSME’s by opening them up to
the available investment avenues. The MSME segment basically gets
financed from bank loans, private equity funds, angel investors and
venture capitalists. Several platforms are emerging these days which
encourage the entrepreneurs to put forth their ideas. Some of them are:

 IAN (Indian Angel Network) - it is a large business angel group with

successful entrepreneurs and dynamic CEO’s who are interested in
investing in start-ups and early stages of ventures which have the
potential of creating disproportionate value.
 Indian Investment Network – it is an online platform connecting local
entrepreneurs with angel investors in the Indian and internationally.
 Angel Group Network – this network helps entrepreneurs to post their
business proposal and get help regarding business start up, a business
expansion or an invention they are trying to introduce from an angel
investor or a venture capitalist.

The Angel investors bring with them experience, hardened knowledge

and contacts (including experts and potential customers)—all of which are
extremely essential for the success of a start-up. They invest their money
in a business even before it has taken shape. If they trust the ability of a
start-up team, they give all the guidance required to realise this
entrepreneurial dream. Angel investors invest in businesses looking for a
higher return than they would see from more traditional investments.

Working of Angel Networks:

 The prospective entrepreneur submits the investment proposal either
free of cost or by paying some minimal Referral fee. The details of the
proposal are sent out to the database of investors. The angel investor
interested in the project, would then contact the angel network firm acting
as the intermediary between the entrepreneur and the angel investor. The
proposal remains active for a pre-defined number of days and the
Referral Fee gives access to the contact details of all the investors
interested in the proposal for this entire period.

The most effective Angels help entrepreneurs shape business models,

create business plans and connect to resources - but without stepping into
a controlling or operating role. Often Angels are entrepreneurs who have
successfully built companies, or have spent a part of their career coaching
young companies.

The VC’s (Venture Capitalists) are higher risk investors and desire is a
higher return on their investment. The venture capitalist manages the
risk/reward ratio by only investing in businesses that fit their investment
criteria. For example, Chintan Soni from GVFL says that scalability,
sustainability, a good business model and a great team are the
ingredients required to invest.

IAN – an innovative concept

The gist of the case was to highlight the requirement for financing
MSME’s. As mentioned earlier, we have identified few platforms that have
been helping the MSME’s in financing their projects. Taking IAN (Indian
Angel Network), we have discussed its functions, criteria for lending
assistance and its role in promoting MSME’s.

In addition to money, IAN provides constant access to high quality

mentoring, vast networks and inputs on strategy as well as execution. The
network members, powered by their experience and background, assess
the potential and risks at the early stage.

The Network looks at investing up to USD 1 mn and exiting over a 3 to 5

year period through an IPO, M&A or strategic sale. The Network may
consider investments over a million dollars but is likely to do so through
syndication.

Investment criteria

IAN invests in start-ups that meet the following criteria :

• High barriers to entry: The Network looks for businesses that have
high barriers to entry and can grow to be large.
• A complementary management team: The quality of the
management team is important. A complementary management
team that comprises multiple skills such as technology, sales,
finance, HR etc. is considered a major asset.
• Entrepreneurs who can provide evidence of the validation of their
concept and particularly those who have begun to engage with the
market have a stronger proposition.
• Differentiated value proposition: Propositions that have sharp
differentiators providing something different of proposing to do
something differently.

Role of IAN in promoting SME’s:

 Investors with strong and operational backgrounds who are willing

to invest not just money but also time adding value to the investee
companies and also providing them access to their vast networks.

 The Network seeks to add value by providing advice/mentoring an

access to its network in addition to money so its members are likely
to invest in businesses where they have the ability to add such
value.
  It looks at a broad spectrum of investments agriculture, food
processing, biotech, pharma, life sciences etc. and other area that
excites Network members.

Companies funded by IAN:

Hungryzone, is a premium online food ordering website. Currently

having operations in Bangalore, Hungryzone allows one to place orders
online and make reservation online at participating restaurants for free.
Ordering from Hungryzone can help the customer discover new cuisines
for a family dinner or simplify the task of ordering lunch for an office of
20. Benefits include no telephone miscommunication, easy specification of
special requests and paperless menus for local restaurants right at
customers’ fingertips. Hungryzone aims at providing a convenient
platform for foodies to access restaurants and for restaurants to service
their clients.

Kwench, is a library solutions provider, bringing a paradigm shift to the

concept of corporate libraries. Founded by four alumni from IIM-
Ahmedabad, it enables companies to provide its employees access to
thousands of titles - with no capital expenditure, no administrative effort
and no physical space. Going much beyond providing books, 'kwench'
works with their clients in a consultative mode - facilitating learning and
development.

Karmic Lifesciences, is an ISO 9001:2000 certified, Oncology focused

Contract Research Organization (CRO) based out of Mumbai with end-to-
end clinical expertise and full service CRO capabilities. Karmic provides
concept to clinic services for new drugs as well as generics development
and its services include Regulatory Strategy/Submissions, Pre-Clinical
 Support, Clinical Trial Management, Clinical Data Management, Bio-
Statistics and Pharmacovigilance services. Karmic works for several
global and domestic pharma/domestic clients and has experience of
handling 30+ clinical studies. It has further pioneered the co-
development program wherein it is partnering with early stage R&D
innovators to co-develop and create joint IP on promising new molecules
in various stages of development and take them to market.

MobileNXT Teleservices P Ltd is a Bangalore headquartered company

with 22 stores running across India. MobileNXT stores are in 3 formats –
standalone stores, store in stores and virtual stores. MobileNXT also has
a tie-up with Shoppers Stop and Star India Bazaar (Trent) for setting up
store in stores in their outlets across the country. With Indian Angel
Network's support MobileNXT aims to have 500 stores all over India over
the next three years, creating an unparalleled buying experience for the
consumer.

Robhatah, Creators of a wide array of “intelligent” machines - Robhatah

is a robotics R&D and technology licensing company that offers robotics
technologies, concept & product development and consultancy services.
.

Initiatives taken in India to promote entrepreneurship:

1. Techno-entrepreneurship:
 The STEP programme initiated by the National Science and Technology
Entrepreneurship Development Board NSTEDB in 1984 in collaboration
with the all India financial institutions (IDBI, IFCI and ICICI). STEP
enables S&T person to cultivate entrepreneurship culture and fosters
close linkages between universities, academic and R&D institutions on
the one hand and industry on the other.
 S&T Application for Rural Development (STARD): STARD aims at
facilitating development of promising S&T based field groups and
innovative technologies related to rural development. It also has a
unique programme to support selected voluntary agencies with a
proven track record of innovative work in development and application
of technologies for rural areas.
 S&T Application for Weaker Sections (STAWS): This scheme is aimed at
the development of economically weaker sections of the society in
rural and urban areas. It focuses attention on specific S&T inputs for
improvement of rural artisans, landless labourers, etc.
 Women Component Plan (WCP): This programme is focused on women
to increase their contribution to S&T and development. It also aims at
promoting research, development and adaptation of technology;
improve the life, working conditions and opportunities for gainful
employment of women especially in rural areas.
 Special Component Plan (SCP): SCP aims at promoting research and
development under adaptation of technology to the needs of
economically weaker scheduled caste/scheduled tribe communities in
urban/rural areas.
 Tribal Sub Plan (TSP): TSP aims at improving living conditions of tribal
population with science and technological activities.
 Young Scientist Programme (YS):The scheme is focused on young
scientists who have adequate background of and training in fields of
science and technology and show inclination to undertake action
research projects, which are socially relevant and have application for
rural development.

1. Entrepreneurship in Agriculture and Allied sectors:

 The launching of the 'National Horticulture Mission (NHM)' as a

Centrally Sponsored Scheme with a view to promote holistic growth of
the horticulture sector through an area based regionally differentiated
 strategies, which include research, technology promotion, extension,
post harvest management, processing and marketing, in consonance
with comparative advantage of each State/region and its diverse agro-
climatic feature.

 Realizing the potential of horticulture in the North-Eastern region and

other special category States, a centrally sponsored scheme called
'Technology Mission for Integrated Development of horticulture in
North Eastern States, Sikkim, Jammu and Kashmir, Himachal Pradesh
and Uttarakhand' was launched. This Mission/ scheme is based on the
'end to end approach' taking into account the entire gamut of
horticulture development in a holistic manner, with all the backward
and forward linkages. It aims at establishing convergence and synergy
among numerous ongoing governmental programmes through
horizontal and vertical integration of these programmes, in order to
ensure adequate, appropriate, timely and concurrent attention to all
links in the production, post harvest and consumption chain.

1. MSME Expo 2009:

 The MSME Expo-2009 organized by the Development Commissioner
(MSME) at the 29th India International Trade Fair, was inaugurated by
Shri Dinsha Patel, Minister of State (Independent Charge) for MSME at
Pragati Maidan.. Shri Dinesh Rai, Secretary, Ministry of Micro, Small
and Medium Enterprises was also present on the occasion. Going
around the Pavillion the Minister praised the exhibits and the work
done by the clusters.
 The MSME Expo-2009 will help the SMEs to showcase their
achievements in the global market. This Expo will also provide
opportunities and foray for those SMEs who want to build up business
linkages. The SME exhibitors gathered in New Delhi from different parts
of the country have built up more than 85 stalls. The products range
includes consumer electrical & electronic goods, engineering products,
readymade & embroidery items, soft toys, health care, cosmetic and
 health products, food and allied products, carpets, shawls, home
furnishings and made ups, handicrafts and decorative items, gems and
jewellery, cotton and silk sarees, plastic household items, handbook
printing, jute products, pressure cooker and aluminium utensils, leather
bag, fancy bag, Jaipuri rajai, Kashmiri craft. Around 100 MSME
entrepreneurs displayed their products in the areas of innovation,
quality and R & D. At the Expo Stalls are earmarked for women, SC/ST
and entrepreneurs from North Eastern Region. The entrepreneurs are
provided stall space and other facilities at subsidized rates.
 Participation was invited from across the country. This year, the
representation is largely from Andhra Pradesh, Uttar Pradesh, Delhi,
Bihar, Rajasthan, Gujarat, West Bengal, Jammu & Kashmir, Haryana
and Punjab. The objective of the exhibition is the recognition of micro
and small-scale units by showcasing the technology adopted by them
in manufacturing items and also MSME EXPO is to provide a suitable
platform/place at reasonable cost to micro and small scale
entrepreneurs to showcase their products and technology and
according generate business including export orders. They get every
year million of rupees business from local as well as from overseas
business houses/units.

Conclusion:

In spite of all the measures taken and the facilities available to the
MSME’s, they still encounter the following challenges.

1. Production problems: Include raw material availability, capacity

utilization, and storage problems, high cost of raw materials and
other inputs
2. Marketing problems: Arises because of dealing in only one product,
cut throat competition, adopting cost oriented method of pricing,
lack of advertisement, not branding their products, unfavourable
market fluctuations etc.
 3. Financial problems: Include investment risks, procurement of loan
from banks and their repayment, meeting day to day expenses and
the like.
4. Labour problems: Include highly demanding employees,
absenteeism lack of skilled workers and transportation of workers.
5. Infrastructure problems: Unless and until you have the
infrastructure in its place the rest of the efforts are futile.
6. Legal aspects: Complex rules, regulations and procedures framed by
the Government.

According to a study, majority of small businesses consider finding and

retaining qualified workers as the most significant challenge to the growth
and survival of their business. State and federal regulations, economic
uncertainty, keeping up with the technology and access to adequate
capital are other major concerns of small businesses

However there is a huge scope for entrepreneurs in India and initiatives

such as ‘The Power of Ideas’ have paved a new way to explore such
potentials.