Mumbai: In seven of the eight companies that early stage venture capital firm IDG Ventures has put money in the management team is led by people in the 30-40-year age bracket.
Over half the 50 seed stage companies that the Indian Angel Network (a group of angel investors) meets every month to examine their “investability” are run by 30-somethings.
Are all these a reflection of the changing demographic profile of entrepreneurs in India? Or, is entrepreneurship becoming so celebrated in India that 30-40-year-olds are willing to let go of their comfortable corporate jobs to follow a dream?
Most venture capitalists and angel investors DNA Money spoke to seem to agree that there is more respect for entrepreneurship now than there was a few years ago.
Says Saurabh Srivastava, co-founder of the Indian Angel Network: “It’s not as much as it would be in the US or even Israel, but entrepreneurship has started getting its due respect here.”
As a result, more and more people are experimenting with it, age no bar. Whoever said only a young IIT passout could think of starting his own company?
Says Sudhir Sethi, chairman and managing director of IDG Ventures India: “The definition of an entrepreneur has got nothing to do with age and experience nowadays. It’s someone who has an idea and who is provided with adequate financial support to achieve his vision.”
That new dimension to entrepreneurship, and the changing notion of what is considered stable, is beginning to attract many corporate executives to set up their own businesses. If not start new initiatives, they are now at least more willing to switch from a larger company to a start-up in a functional role, something that would have been considered risky just a few years ago.
Sandeep Murthy, partner at Sherpalo Ventures, points out, “The tradeoff between being in a larger company or joining a startup may not be high, especially if it’s a start-up that has VC backing. Because, in a startup that’s perceived to have the resources to achieve its vision, there are better prospects for growth.”
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On sheer volumes, however, there are still more 25 and 26-year-olds who want to start businesses, because the opportunity cost for them is low. “But in terms of proportion, there is now an increasingly larger percentage of older people wanting to start a company or joining a startup in a functional role,” he says.
An oft-cited example of a top corporate honcho quitting his job to run an early stage venture is of Rajat Jain, managing director of Walt Disney India, who joined mobile value-added services company mobile2win in August 2007.
But, while Jain’s move has been celebrated, there are other lesser-known corporate executives who have assumed functional roles in start-ups.
Says Avnish Bajaj, co-founder of Baazee.com (which he sold to eBay) and the managing director of Matrix Partners India today: “The market cap of the Indian stock market has gone from $150 billion to greater than $1 trillion in the last five years.
So, a lot of 30- and 40-year-olds sitting on cushy jobs have seen some of their peer group make inordinate amount of wealth in the stock market either via Esops or equity ownership. There is a realisation that one can become rich on a salary but that true wealth creation happens on capital gains -you cannot live your life expecting supernormal returns by taking subnormal risk,” he says.
This, feels Bajaj, has resulted in quite a few senior executives looking at options of doing something in smaller companies. The only hindrance being that sometimes, these executives have family obligations and high cost lifestyles – so they want a big salary in addition to equity ownership, which obviously doesn’t work. “Over a period of time, I do expect that this will move further towards equity ownership culture and we will see increasing risk appetite,” says Bajaj.
But then, there are others such as Harish Gandhi, executive director of Canaan Partners, a technology-focused venture capital firm, who still feel entrepreneurship in India is still not as celebrated as it should have been. “That level of respect for entrepreneurship is still missing. So it’s still the 25- and 26-year-olds who turn entrepreneurs,” he says.
“The fun will begin when we see more 30- and 40-year-olds, given their prior operational experience, know-how to scale businesses faster and contacts they’ve built, turn entrepreneurs,” he says.
For Sethi, who likens the current entrepreneurial activity in the country to the Brownian Movement (the constant motion of particles of matter, whether in the solid, liquid or gaseous state), we ain’t seen nothing yet.
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