I’m strongly of the opinion that the government is good at building basic infrastructure and not in picking winners and losers. Here they are claiming that professionals will pick winners and losers.
We have data on this. Professionals are very bad at picking winners and losers. The success rate of venture capital is one out of nine, while the success rate of the average company starting up is five out of 10. Silicon Valley was not created by policy, but people doing innovative things on the ground. It is years of all kinds of infrastructure for entrepreneurial ecosystem -universities, ideas that entrepreneurship is a good thing, that failing is okay -all this cannot be manipulated with policy.
What is required then for India to be a true startup nation?
In the 17th century, there were books on science. Now assume if the government said we should teach science to a bunch of future technologists and hire investors to invest in them who will build the best technologies -we would have never gotten to the progress of 18th and 19th century if we built science that way.
We went and taught science to everyone right from school and what everyone learnt was scientific reasoning. And then some of those people went into science, with a small subset of them ending up inventing and through this we have created an engine of invention. A similar method should be used for entrepreneurship.
Today, we know how to teach entrepreneurship.
I think the government should invest in entrepreneurship experience just the way we did for science. It will take us a while to iron out how the curriculum looks like, but there are already people working on it.We know enough about it to break it into curriculum for different grades.
None of this investors can do, only the government can.
How should the government look at funding ideas then?
We should use something like the Y Combinator model or what Peter Thiel has spoken about. Invest small amounts of money in a lot of people. As some grow into companies that work well you invest a little more. And the rest who don’t grow, can become talent that goes into further growing these companies.
Don’t be too selective, just have a few basic criteria that people can meet, and some of these can ater combine into larger companies. Right now other nine of ten ust fail and neither of them can become an entrepreneur again. sn’t money important to acilitate entrepreneurial ecosystem?
Money is not key to entrepreneurship -it’s important at time of scaling up.
Two-thirds of companies that go public in the US never take outside unding, so it’s possible to make great companies that grow without outsideunding.