Funding, lack of aspiration clog up nano entrepreneurship

There is a 'missing middle' we often don't talk about - those falling between self-employment and the fast-growing start-ups who are celebrated. These are the mass entrepreneurs, or nano entrepreneurs, or those who start a small business and hire three to five people. India, clearly, doesn't have enough of them. With the country's stark unemployment and underemployment problem, this middle needs enough fuelling.

One effort to encourage this segment is from The Global Alliance for Mass Entrepreneurship (GAME), which started in 2018. GAME is founded by Ravi Venkatesan (the former Co-Chairman of Infosys, former chairman of Bank of Baroda, and former chairman of Microsoft), serial entrepreneur Madan Padaki, and Mekin Maheshwari (who partly built Flipkart having worked seven years in the company). It recently released a report - 'GAME Landscape Resource: Study of Entrepreneurship Development in India' - that interestingly, just doesn't underline the challenges of the nano entrepreneur. It also talks about the challenges faced by organisations who work with such entrepreneurs, the many non-profits and programme implementation agencies.  

Here are three challenges pointed out:   

1. Appropriate source of finance turned out to be a recurring theme. "Short-term funding, funding exclusive to certain program components were among the concerns raised. What came through strongly from our discussions with the organisations was the unsuitability of the current forms of funding for entrepreneurship. Given the long gestation period involved in the life cycle of an enterprise, project-based funding was described as unsuitable," the report points out. Organisations stressed on the need for long-term funds that are more aligned to the risks and challenges of enterprise-building. "What was also pointed out as amiss was a lack of interest on the part of funders to support the entire process of entrepreneurship and focusing instead on more outcome-oriented pieces, such as skilling/vocational training," the report adds.

2. There is often an aspiration mismatch between entrepreneurs and the organisation trying to help them. "Setting realistic expectation with regards to the outcome of the program has been seen as difficult to drive. Several organisations reported the expectation of quick gains being particularly hard to tackle," the report states.

3. Organisations also pointed to the mobilisation of potential entrepreneurs as a headwind. There is, in short, an "inherent lack of aspiration towards adopting entrepreneurship as a means of livelihood". This is because India doesn't really have a culture of entrepreneurship. "Uptake of entrepreneurship is predominantly driven by 'need' rather than 'opportunity'. This has implications for an entrepreneurs appetite for risk that often manifests as a resistance to scale and grow," the report states. Organisations, therefore, have a tough time attracting students/to-be entrepreneurs.

Organisations face many more challenges, such as a lack of professionals who could work in remote locations. Nevertheless, there are positive signs too. New organisations, some of which have been founded by successful entrepreneurs, are using mobile technology and technology platforms. These technologies, the report feels, "are definitely going to change the game as far as entrepreneurship training, access to finance and access to markets are concerned, especially with youth".

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