Power of Ideas
15

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Ties That Bind

From the Trenches

Personal Fin Tips

for Entrepreneurs

The close-knit Indian middle class family has many virtues, but encouraging entrepreneurship is not among them. With their
excessive concern, they are the first hurdle an aspiring entrepreneur must cross, write Harsimran Julka and Peerzada Abrar

n March 2009, the parents of IITDelhi alumnus Deepinder Goyal,

29, were perplexed to see their son
working from home. After a few
days, they began to worry. Their worst
fears were confirmed when Goyal disclosed that he had quit his cushy job at
consulting firm Bain & Co to set up a
foodie websiteFoodiebay.com. His
parents were worried and advised
Goyal to return to a job. But the company he founded, now called Zomato.
com, received $2.3 million (about `12.3
crore) in funding in 2011, broke even
with estimated revenue of more than
`3.5 crore in 2012, and has even expanded to west Asia and Europe. They are
extremely happy and proud now, says
Goyal.
Like Goyal, almost every aspiring
businessman finds the leap to entrepreneurship brings with it difficulties that
are not just economic. The fear of rebuke or rejection from family and
friends is in most cases their first challenge.
Resistance from families to risk is
one of the three biggest inhibitors to
entrepreneurship in India, the other
two being capital and awareness, says
Sanjay Anandaram, a venture partner
with Seedfund and an active mentor to
young entrepreneurs.
When IIT Roorkee alumnus and
founder of property portal
CommonFloor.com Sumit Jain, 28,
wanted to launch his own venture in
the third year of his engineering
course, his father, who owned a hardware business in Meerut, vehemently
opposed the idea.
I was restrained by the family, which
called me confused and told me to
study, says Jain.
Such resistance stems from deep-rooted cultural mores, according to sociologist MD Usha Devi, a professor at the
Institute for Social and Economic
Change in Bangalore. We suffer from
a dependency syndrome in India, of
working for someone than creating
jobs. Even the students in colleges are
taught to become employees and never
employers, she says.
Although thwarted by family on his
first attempt, Jain, who worked at
Oracle for a year after graduating, quit
his job to chase his dream. He rented
office space in Bangalore and cofounded a realty portal, CommonFloor.com
with two friends. In five years the company has grown from three employees
to 250, has won funding from Accel
India and Tiger Global, and is aiming
for revenue of $25 million in 2014.
It is the promise of such growth that is
encouraging entrepreneurs to push
back. Ankur Singla, a graduate from
one of Indias leading law schools did
not tell his parents that he had quit a
prestigious job at a London law firm to
explore a startup idea. Once he had a
plan in place he returned home to set up
Akosha, an online forum for consumer
redressal that now works with over 300
companies and has resolved 1.3 lakh
complaints.
But for every Singla or Jain who break
out of the mould there are many who
fail to make the leap. Children who
have nothing to fall back upon often
prefer secure jobs, says Isecs Usha
Devi. Not only at home, entrepreneurs
are black-listed in the marriage market
too, where they are mostly regarded as
unstable.
Entrepreneurs who wish to get married are told to go get a job, says Delhibased Ajay Pal Singh, 26, who quit a job
at S T M i c ro e l e c t ro n i c s t o s t a r t
HealthAssist.in, a provider of wellness

Starting a new venture is always a daunting

task for any budding entrepreneur. The paucity of capital to start, operate and scale a
new business often forces the entrepreneur
to dip into personal savings. For many in
business it is difficult to rigorously separate
personal finances from professional expenses yet some common pitfalls can be avoided.
USE OF CREDIT CARDS

Social Mindset
Which doesnt accept failure,
or the learning that failure
provides. Climbing corporate
ladder is acceptable, not
exploring new ventures

Family blockades to Entrepreneurship in India

Loans

Family Liabilities

Stay-at-home Spouse

Lack of Respect

Providing care to a
child, spouse or elderly
parents reduces the risk
appetite

The lack of a second income

for the family can deter
an idea from becoming a
business

Some communities in India lack

respect for entrepreneurship
and do not regard business
owners on a par with
professionals

Unfavourable
Marriage Market

Lack of Startup Advice

India lacks a startup ecosystem
where entrepreneurs can discuss,
share their social challenges and
seek advice from those who have
broken the social barrier and have
failed or succeeded

Potential parents-in-law
mostly see an aspiring
entrepreneur as unstable.
It can boil down to choosing
between an arranged marriage
and starting a new venture

Home/Car Loans taken for a

family puts stress on the
entrepreneur financially
and mentally, sapping him of
crucial energy and focus
required in the early years of
entrepreneurship

Academic Block

Fear of Failure
There can be trenchant
opposition by family when an
aspiring entrepreneur seeks
emotional support prior to
quitting a cushy job or rejecting a
campus offer. It induces a fear of
social boycott and failure

Teachers and Professors put

emphasis on securing a well
paying job after a degree/
diploma, than encouraging
students to experiment
with new products, start
companies or join a startup in
their early years

I had no doubt in mind that he could

utilise his tremendous energy levels
better. The only concern was the
opposition from the family

America celebrates its entrepreneurs, who

are its folk heroes, with their myths. Not
quite the case in Japan, Korea, Singapore and
India as far as Ive seen
BENJAMIN JOFFE

MEENA GANESH

Founder, Plus Eight Star

CEO of Edurite Technologies and wife of

Krishnan Ganesh, founder of Tutor Vista

plans to large companies. For the past

few months, Singh has been trying to
instill faith in his fiances father about
his business model. His company recently won funding of about $40,000 (`22
lakh) from the government of Chiles
startup programme. Things are better
in the family after the funding, says
Singh, who is still unmarried.
Even mature professionals struggle
with opposition from the extended family. When people ask me why I started
so many businesses, I say to them because I wanted to prove it to my motherin-law, says Krishnan Ganesh, 51,
founder and CEO of education company Tutor Vista.
Ganesh was a senior manager at HCL
when the entrepreneurial bug bit him.
At the age of 29 he launched IT&T, a
computer maintenance services firm
for corporate organisations. Although

his wife was supportive there was stiff

opposition from the rest of the family to
his new venture. Ganesh is now a serial
entrepreneur who has launched four
successful companies.
In 2011, UK-based publishing house
Pearson acquired a majority stake in
TutorVista for `577 crore, valuing the
five-year-old company at around `1,000
crore. As an entrepreneur he creates
fantastic deals in areas which you cant
even think about and they are win- win
situations for all, says his wife Meena
Ganesh, who is now also an entrepreneur heading education company
Edurite Technologies.
What if a spouse doesnt support your
idea of a startup? Then you can kiss
t h e ve n t u re g o o d bye, a dv i s e s
Debabrata Bagchi, 34, cofounder and
CEO of Do Circuits, his second venture.
The IIT-Kharagpur alumnus says he

made sure he paid back his home loan

and took his wife into confidence before
taking the plunge in 2010. His company
is now all set to raise a first round of
funding of about $1.5 million.
Venture capitalists say knowing the
background and mental status of an
entrepreneur is part of their due diligence. A company is like a little baby
and it is important it should not come
under any family pressure, says
Ramesh Radhakrishnan, partner at
Artiman Ventures, which manages a
global corpus of $750 million. At every
stage, investors question entrepreneurs about the family support to the
business.
But as large numbers of young
Indians choose entrepreneurship over
conventional careers they are willing to
go ahead and forge their own destiny.
Harpreet Singh Grover, 29, cofounder

Affordable Healthcare for the Masses

and CEO of CoCocubes.com, advises

aspiring entrepreneurs to go against
the family and take the plunge. You
dont want to be regretting at 40 years
what you could have done at 30. After all
you have only one life to live.
Grover did not disclose to his family
for several months about his decision to
quit a job as analyst in Gurgaon in 2007.
Two years later, CoCubes.com raised
about `3.5 crore from early stage investor Ojas Venture Partners.
As more young people break out of the
cocoon and take to entrepreneurship by
choice, industry experts are elated. It
is a great revolution we are seeing in
India today, says Anandaram. But the
Indian family has a lot more left to do in
fostering the dreams of its entrepreneurial children.
harsimran.julka@timesgroup.com

Crossword

Poor management of personal finances by a

founder often goes unnoticed as one of the
significant reasons for the failure of a new
venture. Using credit cards to plug the need
for ready cash in the business can lead to
growing debt that does not show up on a balance sheet. Most entrepreneurs who are
bootstrapping their ventures insist that outstanding amounts on a credit card from business expenses must be paid off immediately.
Any default on payments can affect the credit history of the founder. To put it bluntly,
they (credit cards) are for those who do not
understand the basics of managing cash,
says Manish Sharma, the founder and chief
executive of printing and documentation
solutions venture, Printo.
BUYING INSURANCE

Choosing the right insurance policy depending on the stage of the venture is an important choice for an entrepreneur. However, using personal insurance to fund business
expenses must never be an option. Thats an
absolute no-no, get insurance separately for
your company, it protects your venture and
is the right decision, says Mukesh Bansal,
founder and chief executive of Myntra.com,
an online retail venture. The need for insurance comes into even sharper focus in businesses that deal with physical inventory,
since it offers the entrepreneur protection
against events of a calamitous nature.
OUT-OF-POCKET EXPENSES

Many first-time entrepreneurs bear all the operating expenses of a new venture until they
raise an initial round of funding. However, reclaiming the spent money can be tricky. While
some choose to convert the money spent into
equity in the company, Printos Sharma suggests a different route.
There are very clear accounting guidelines set
out that allow entrepreneurs to claim pre-operating expenses, however the entrepreneur has
to ensure that the company maintains very
transparent books of accounts, he says.
SALARY ISSUES

Entrepreneurs who give up well paying jobs

to launch a business, tend to struggle with the
issue of drawing a personal salary at a cashstrapped company. Some have used innovative methods to overcome this by foregoing
immediate pay-outs. Instead the unpaid salary is treated as a personal loan given to the
company. Salary can be claimed at a later
stage and the amount due converted into a
personal loan, by the entrepreneur who is a
director in the venture, says Milind Borate, a
co-founder of Druva Software.
Biswarup Gooptu

5473

IAS officer-turned-entrepreneur plans to open 50 more low-cost rural hospitals in five Indian states

Starship Enterprise
RADHIKA P NAIR

Fo r m e r I n d i a n A d m i n i s t r at ive
Services officer Sabahat S Azims biggest challenge when he launched affordable healthcare chain Glocal
Healthcare Systems was to prove that
he could make the hospitals profitable.
Within six months of launching the
first Glocal hospital in July 2011 in
Sonamukhi, a town 126km from
Kolkata, the hospital had reached
break-even. A model that the 37- yearold entrepreneur has now replicated in
each of his other four hospitals.
They have proved that social good
and profit can go hand in hand, says
Sandeep Farias, Founding Partner of
Elevar Equity, which invested `15 crore
in the company along with Sequoia
Capital India in January 2011.
Most other hospitals that also offer affordable healthcare take up to two years
to become profitable according to industry estimates.
Glocal is now expanding operations
beyond West Bengal with plans to open
50 hospitals in Uttar Pradesh, Bihar,
Chhattisgarh, Jharkhand and Orissa
by December 2014.
It was the untimely death of his father
that led Azim, a trained medical doctor,
to launch Glocal in July 2010. My father died due to unnecessary treatments. I thought, if this can happen to
me, a doctor and an IAS officer, what
about others? says Azim, who found an
early supporter in M Damodaran, the
former Chairman of Securities and
Exchange Board of India (Sebi), who
became the Chairman of the venture.
Azim has known Damodaran since his

Healthcare for Everyone

Glocal Healthcare Systems
JULY10
Company
is founded

DEC14

JULY11

FEB13

First hospital operational

in Sonamukhi, a town
126km from
Kolkata

Begin construction
of rst hospital
outside West
Bengal

JAN11
Sequoia Capital India &
Elevar Equity invest `15
crore in the company

Expects to reach
55 hospital
mark

The process of change in

the government is quite
slow. I felt I could do more,
faster outside the
government

OCT12
Fifth hospital
at Berhampore,
a town 190km
from Kolkata

time as Secretary to the Chief Minister

of Tripura, a position he held between
2004 and 2006.
He is my first sounding board for any
idea. When I think of introducing
something new, my first thought is how
will Mr Damodaran react? he says.
At Glocal, his team has come up with a
protocol-driven model, where the computerised system will help the doctor
automate diagnosis of 42 diseases,
ranging from ischaemic heart disease
to malaria, which they identified as affecting 95% of the patients.
Other affordable ventures are also attempting to cater to the semi-urban and
rural market. Like Glocal, eight-yearold Vaatsalya also sets up hospitals
(smaller than 100 beds) in small cities
and towns with a focus on primary and
secondary care. However, Vaatsalya
leases out pre-existing hospitals and

APR14
Target Revenue
of `28.69 crore

other buildings and upgrades them to

high-quality hospitals.
Azim, a fan of FountainheadAyn
Rands paean to individualism, wanted
to design a hospital with just essential
infrastructure.
Timely backing from investors helped
convert the idea into a business. I had
a 30-minute meeting with Sabahat and
he spoke about focusing on a limited set
of diseases that constitutes 95% of
healthcare issues in the country. I was
hooked by this powerful idea, says
Elevars Farias.
Sequoias Managing Director GV
Ravishankar says Glocal fit their requirement of backing good entrepreneurs in large and attractive markets.
Glocal charges patients around onefifth of the fees a hospital with similar
infrastructure would otherwise charge.
It charges `10,000 for a caesarean sec-

DR SABAHAT S AZIM
Founder, Glocal
Healthcare Systems

tion, which costs about `50,000 in other

private hospitals.
Azim points out that he is able to
charge lower fees due to lower cost of
infrastructure and by eliminating unnecessary procedures. While a typical
100-bed hospital is about 70,000 square
feet in size, Glocal has been able to restrict it to 30,000 square feet thus keeping cost of construction lower. At
around `8 crore for a 100-bed hospital, a
Glocal hospital is built at about 50% of
the cost of a private secondary hospital.
The company aims to reach over `28
crore in revenue in fiscal year 2014.
As Azim begins Glocals expansion
beyond West Bengal, he is not resting
on his laurels. It has been exciting so
far but there is much more work to do,
he says.
radhika.nair@timesgroup.com

Dilbert

by S Adams