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The riddle of creating wealth in the Indian digital ecosystem

LiveMint logoLiveMint 15-06-2017 A Staff Writer

Wealth creation in the Indian digital ecosystem will come from opportunities to create disruption, rather than innovation, by trying to solve the problems of the Indian consumer, said a panel of digital entrepreneurs and investors at the Mint Wealth Creators Summit.

“I think it is important in the Indian context to really to back disruptors. If you look at the last 70 years of the Fortune 500 list, 90% of those companies have died or become irrelevant. They died or became irrelevant not because they didn’t have the wherewithal, be it capital, scale, management capability, execution. But they died because they could not see what lies tomorrow,” said Nikhil Vora, founder and chief executive at Sixth Sense Ventures.

There is so much scope for disruption in India that it will create disproportionate value for stakeholders, so innovation takes a back seat, said Vora.

Indian entrepreneurs can create disruption by focusing on the numerous little broken things in Indian markets. “In India there are a lot of broken things as compared to US or Europe—whether it’s traffic, power, water, healthcare, housing, entertainment, everything is broken. So, each one of it, if you are able to make it less painful, more convenient, if you are able to solve it, then you can build a large business,” said K. Ganesh, serial entrepreneur, partner at Growth Story and chairman, Portea Medical.

While the scale of the opportunity is huge, there are many challenges; for example, capital efficiency.

“Google raised only $36 million before going public. While in India, it’s always copying a model and then steamrolling it with money,” said Sanjay Kukreja, partner, PE firm ChrysCapital.

“As an investor, when anyone brings up the ‘next this’ or the ‘next that’, we are extremely skeptical,” he added. “Because the journey is never the same, the context is never the same, the market sizes are never the same. And when you have something which is the ‘next something’, someone will get excited and will fund it. And we believe that when you get easy capital, the economics of the business are destroyed very quickly,” added Kukreja.

While capital might be available to entrepreneurs, they also need to be responsible in handling it. “When I speak to a lot of entrepreneurs in the ecosystem... I find it surprising that their mindset is that they will keep finding the next investor who will keep funding them. So, the mindset of the entrepreneur is also a problem, where they do not feel the obligation to return the money,” said Jitendra Gupta, founder, Citrus Pay, and managing director, PayU India.

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