By Amber Malhotra
The world needs to relook at how ventures are planned and built. The historical model of venture capital and private equity is made on the assumption of infinite growth. It is opportunistic and works on the premise — fail fast and winner takes all. It is akin to a derby race where time, acceleration, coordination between the horse and jockey is the key. The lucky one on a given day is the winner. This transactional model is based on customer acquisition and the capital allocation for sales, marketing, facilities, and human resources. In the last 25 years, the model had its winner and losers and in today’s world, where World Wide Web, was to have democratized businesses, we still have few large corporations, who not only dominate the world of business but also are more powerful than sovereign nations.
The Way Forward
The instability in the social equilibrium in this capitalist world is today visible across the globe. Today, therefore, is the time, where we need to tie up financial underwriting not just based on the financial return and stock market indexes, but cradle-to-cradle approach. Venture development rather than venture capital is, therefore, the way forward.
Venture development is a collaborative effort between stakeholders bringing intellect, capital and execution. Historically advanced economies like the USA, technological commercialization offices in the universities to some extent played this role. This got further extended to setting up of technological parks around university settings, where commercialization happened and startups got created. It took years for the USA to perfect this model and emergence of Silicon Valley as the mecca of unicorns, nurturing innovations was in a sensing result, where physical proximity engulfed the whole region as a mindset for innovation and entrepreneurship.
Micro Innovation Ecosystem
Historically India kept its academic and research institution separate and there is hardly any example of our prominent institutions or universities making an economic impact in the geographical area they are situated. We need to change that and make higher education institutes or universities central to our economic story, where research, academics, industry, capital, and government work together to create economic and social development models for the geographical area they are situated in. This will be the beginning of a venture development model in India as a micro-ecosystem for innovations and development of entrepreneurship and employability opportunities.
Let’s look at five areas — housing, education, healthcare, energy, and mobility — where we need to get our acts together to get basics right before we can become smart. These areas are critical for the sustainability of the Indian economy in the long run. We have one of the youngest populations in the world and need to keep them productive, healthy and appropriately skilled. Our housing shortage on an annual basis is a million units. We have fewer beds per person than global standards. We do not have a skilled workforce that is appropriate for today’s industry needs. Our energy needs from habitat, industry, and mobility will keep on increasing. How does one address such a scale in a world where technology is disrupting livelihoods?
Today the US faces its own challenges, as unfortunately, it could not create an equitable model of development. The US too, therefore, needs new thinking and a fresh approach. It is where there is an opportunity for India and the US not at government levels, but at universities and city levels to leverage each other’s capabilities for the benefit of their respective communities. We need to co-develop solutions not for India, but for specific locations with abilities to impact regions around them. Partnering with the US institutional partner by leveraging their R&D capabilities and process for innovation and commercialization with local India operating partners can help in creating an ecosystem of entrepreneurship and employability that is location-specific.
Rewarding Intellectual Capital
The key therefore for India for the next 50 years is to focus on developing and investing in the creation of intellectual capital that helps in creating world-class solutions. Universities-driven venture development model can target to create innovation districts around their campuses and attract capital, industry, small businesses, and government participation by thinking global but acting local.
Our institutions need to develop a culture of rewarding development of Intellectual capital and create pathways for its commercialization. This can be achieved by venture development — a process with a prerequisite of a strong programme to make it successful. Institution and industry should invest in developing the specific programme around a problem statement to encourage a path where the winner doesn’t take all but there are multiple entrepreneurs. It is about creating a mind aka Silicon Valley, but which is more equitable in wealth creation for its long-term sustainability.
(Amber Malhotra is the CEO & Managing Partner at the US-based venture development firm Sam Circle Venture. Views expressed are the author’s own.)
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