Change India: What makes startups attractive, successful

CNBC-TV18’s special show Change India, this week, discusses the entrepreneurial agenda for the country. Arun Jaitley in his maiden Budget focussed on what he sees as the government’s efforts to nurture the entrepreneurial ecosystem.

The big announcement in Budget 2014 was the Rs 10,000 crore fund for start-ups, how that is finally going to work out is a different question altogether but the government has said that it is clear that it wants to nurture entrepreneurs, it wants job creators to flourish in this country.

Kapil Sekhri, promoter & director, Fratelli Wines and Ambarish Gupta, chief executive officer & founder, Knowlarity spoke to CNBC-TV18 sharing their views on this upcoming industry, the kind of hurdles involved in starting up a business and what's driving the young entrepreneurs to take up this challenge.

Below is the edited transcript of the interview.

Q: You are a second generation entrepreneur and also a first generation entrepreneur. Is it easier starting up today? Take us through your journey of being able to start Fratelli Wines. Wines is now a growing opportunity in India but when you started off it was very nascent business. In terms of challenges to setup, dealing with farm land, dealing with farmers all of that what was that experience like for you?

Sekhri: It was very challenging because we have to go through so many regulations setup by the government because it is not just a consumer business, it is not just a lifestyle business. So, one has to deal with all aspects if business.

Collecting agricultural land is not easy; setting it up in the given framework of the government is not easy; getting the permissions to import plants for the land that you want is not easy. Post that acquiring the technology and the knowledge that was available was not easy.

Q: Is it easier today being an entrepreneur?

Sekhri: As a second generation, we are little privileged that we have other businesses to fall back upon and I am not going to deny that.

Q: So the capital provides you the cushion?

Sekhri: Absolutely, and also the comfort to fail. We always have been brought up by our father saying that the biggest failure in life is a failure not to try, so at least try. We are privileged that we won’t deny that.

Q: If it is easier Ambarish as the founder and CEO of Knowlarity new economy business, less government hassle, less legatorial approvals that are require. Is it easier and which is why we are seeing more and more entrepreneurs in this country first generation entrepreneurs moving towards technology or tech based companies?

Gupta: It is easier to do business today because there is more capital available; you see all the venture capital and private equity companies investing in new opportunities which has been created because of this upcoming middle class in India. So, capital is available, we have a lot of people coming back from where I came back from United States.

The technology talent is available. People who are graduating from Indian Institute of Technology (IITs) and Indian Institute of Management (IIM) look for job in India. They didn’t do that 10 years back- I went to US directly.

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Q: There is no denying the fact that opportunity and talent is available. The question is that what are the hurdles in the whole journey to starting up. Let’s talk about something that you said that there is easy money available and yes there is easy money available it is very clear and evident in the kind of evaluation the start-ups are being able to command at this point in time. Then you saw something like the start-up tax coming in which is not been resolved even by this government in its maiden Budget even as it setup Rs 10,000 crore fund and so on and so forth. So is there a mismatch between what the government intends to do as far as nurturing the entrepreneurial spirit is concerned?

Gupta: That is true. On one hand there is a Rs 10,000 crore start-up fund being created on the other hand you still see…

Q: Your section 56 of the income tax Act which nothing has been done about? 

Gupta: We are a cloud telephonic company. We are pretty regulated and the regulations are getting stronger and stronger which many times do not really support innovation to the level. So, there are two different things going on from the government’s side but the reason I feel it is easier to do business in India today is more because of capital the opportunity and the human resource that is available now.

Q: So the capital provides you the cushion?

Sekhri: Absolutely. Also, the comfort to fail like we always have been brought up by our father saying that the biggest failure in life is a failure not to try, so at least try. We are privilege that we won’t deny that.

Q: Is starting a business easier now with new economy business, less government hassle, less legatorial approvals? Why are we seeing more and more entrepreneurs in this country moving towards technology or tech-based companies?

Gupta: It is easier to do business today because there is more capital available; you see all the venture capital and private equity companies currently in India investing in new opportunities which has been created because of the upcoming middle class in India, 300 million middle class that is coming up.

Capital is available, you have lots of people coming back from United States. The technology talent is available, people who are graduating from Indian Institute of Technology (IITs) and Indian Institute of Management (IIM) look for job in India nowadays than they did 10 years back.

Q: There is no denying the fact that opportunity and talent is available. The question is that what are the hurdles in the entire journey of a start up? There is easy money available it is very clear and evident with the kind of evaluation the start-ups are being able to command at this point in time. Then you saw something like the start-up tax coming in which has not been resolved even by this government in its maiden Budget even as it sets up Rs 10,000 crore funds so on and so forth. So somewhere is there a mismatch between what the government intends to do as far as nurturing the entrepreneur something is concerned and then the action?

Gupta: That is true, on one hand there is Rs 10,000 crore start-up fund being created and on the other hand you still have doubts.

Q: Nothing has been done about the Section 56 of the income tax Act?

Gupta: We are a cloud telephonic company and are pretty regulated. The regulations are getting stronger and stronger which many times do not really support innovation to the level, so there are two different things going on from government side but the reason I feel it is easier to do business in India today is more because of capital the opportunity and the human resource that is available now.