Entrepreneurs need to be pragmatic, getting attached not the right solution: Ravi Narayan, CEO, T-Hub
In an exclusive interview with Zee Business Online, Ravi said that entrepreneurs need to be pragmatic, should find the right alignment while partnering with a company and also talked about the importance of right mentors for startups.
According to the Global Innovation Index by the World Intellectual Property Organization, India lags behind countries like Switzerland, Sweden, Denmark in innovation. Despite the strong base for research, institutions, business enhancement, the process of implementation is undeveloped due to various influences. Ravi Narayan, CEO, T-Hub, India's largest incubator for startups headquartered in Hyderabad, Telangana, believes that getting attached to your company is not necessarily the right solution for entrepreneurs. In an exclusive interview with Zee Business Online, Ravi said that entrepreneurs need to be pragmatic, should find the right alignment while partnering with a company and also talked about the importance of right mentors for startups. With a strong foothold in Academia, Government, Corporates and Startups, T-Hub is redefining the Innovation Ecosystem of the country and setting global benchmarks.
Here are the edited excerpts of the interview:
Q. How do you look at the current scenario for startups in India?
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Ravi: There has been a distinctive transformation in the way young entrepreneurs’ function. India has an immense talent-pool and the potential to innovate to disrupt traditional business models. Indian start-up ecosystem today has almost surpassed, what we may refer as the Maslow’s theory for needs. However, the need of the hour is to facilitate founders with a next-generation ‘innovation ecosystem’ which empowers the start-up venture in unleashing to their true potential.
Q. Explain why some of America’s biggest corporations like Microsoft, Google, Pepsi and others have successfully created accelerators for startups and made investments in them? And why should startups strike alliances with these giants and how can this be mutually beneficial?
Ravi: Large organizations worldwide truly embrace the need of a higher association between corporations and innovators of the future. We must remember that large enterprises have asset bases, customer access and business momentum, whereas startups have innovation on their side. The challenge is to design a proto-type of a confluence to happen.
The world today is relying on successes created by contrasting strengths. For established companies, partnering with startups and observing the world through their eyes is a way of seeing what’s coming in terms of disruption. Whereas, a start-up engaging with a large enterprise, will have better chances of not just understanding what the dynamics of the market are, but also be a recipient of the entire business ecosystem the large corporation has to their benefit.
Q. How does this partnership work?
Ravi: Across different contexts, we have found that either when large corporation facilitates developing an innovation ecosystem to lure an innovator or when efforts are made to strengthen a local innovation ecosystem, the partnership broadly produces a consistent set of benefits for local innovators or entrepreneurs. These include access to-
Common assets - including physical assets such as workshop and co-working spaces and financial assets like new savings and loan funds for innovators.
Shared infrastructure - including communication infrastructure and “relationship infrastructure,” such as new networks and linkages between members of the system.
New resources - including information, new know-how, and a workforce with enhanced skills specific to certain industry and innovation niches.
Favorable operating conditions - for local innovation, including changes in norms, rules, and policies to create a more-level playing field.
New capacities within the system - such as large-scale production, distribution, and collective action capacities that enable coalitions to achieve results that no single member of the ecosystem could have achieved on its own.
Q. Do you think this type of system could be adopted successfully in India as well?
Ravi: Let me talk about T-Hub’s Lab32 program. It is a six month long comprehensive incubation program, tailor-made for early-stage tech product startups. Through a series of six different playbooks, Lab32 provides guidance of immense value to the startups, supported by an outstanding community of top-notch corporates, mentors, partners and investors. It provides several opportunities to network with renowned industrialists and networking sessions.
At T-Hub, Hyderabad, we have succeeded in engaging the allies needed to create local environments that are conducive to facilitate both:
Emergence and success of local innovations.
Ability to adopt and adapt innovations from elsewhere.
Q. What are the chances of these relationships ending up in acquisitions and what are the things startups should keep in mind?
Ravi: It’s very important to find the right alignment while partnering with a company, to have a symbiotic relationship—and not one that has one person (more likely the bigger company), squeezing the other, six months or a year down the line. It’s critical to have a well-managed balance of power. The value big companies add to a startup, especially in the early stages, is immense. But that requires the management or whoever is working with the startups [from the big companies] to not treat the engagement as a vanity metric. Every startup wants to be a billion-dollar company, but the fact is that 90 percent of startups fail. That’s what some studies show. So, by working with large corporations, which are known to have a high-risk appetite, it would help reduce that failure rate.
Getting attached [to your company] and saying I have built this and am going to take it to nirvana or death is not necessarily the right solution. Entrepreneurs need to be pragmatic. If I were to think about it from a large company’s standpoint… if I believe that a startup is truly strategic for me and would love to have control of its intellectual property, then absolutely yes.
Q. What are the challenges faced?
Ravi: In the US, there about six angel investors per startup, whereas in India, for every 150 startups there is one angel investor. Large corporates in India certainly can play a key role here.
Mentoring - Most mentors in India come from either traditional industries or have the need to be trained to know how to work with smaller companies and give them ideas and perspectives.
Government support, enabling landscape and thoroughness, thought leadership, Critical mass of talent, regulatory clarity and thoroughness and funding for entrepreneurs are amongst other set of challenges.