Starting a Venture in India

Background:
Starting a new venture is tricky and this is true even in the heart of silicon valley where entrepreneurs undoubtedly get the best infrastructure to support their fledgling start-ups. Ready access to large venture & angel funds, proximity to cutting edge technology, abundance of highly skilled manpower and above all an environment of taking risk have really helped the valley incubate some of the best known firms like HP, Apple, SUN, Google and Cisco to name a few. In the absence of these wonderful combinations, most other cities in rest of the country in spite of their best efforts have struggled to replicate it. In India we do not have anything like this to support the start-ups in such a organized fashion. Most of the entrepreneurial ventures culminate from brilliant individuals getting together (E.g. NIIT, Infosys, Suzlon etc. ) to form a winning combination single-handedly without much outside support at least during the baking stage.

The Core Issue
It is very interesting to note that in India, established business groups are able to diversify easily and more often than not become successful vis-a-vis newcomers. For example Reliance successfully diversified into Telecom in the last decade. Prior to that Wipro and Tata group (TCS) have done that when the opportunity for outsourcing IT presented itself. There are numerous such examples of existing firms which have successfully floated new companies or subsidiaries well beyond their core competencies. However several smaller start-ups (E.g. Pentafour, DSQ Software etc.) without any backing from a large corporate house really struggled to scale up and sustain their venture. Now the question which I want to raise here is the following: Are Tata's, Birla's & Ambani's are very successful serial entrepreneurs who can repeatedly take new ideas to market over several generations or there is some other inherent advantages for them which are difficult to duplicate. Structurally these large family-owned businesses do not necessarily posses the nimble and risk-friendly model which otherwise describes a typical start-up in the valley. So what do they have which other newbies do not!

Probable Reasons
(1) Access to Capital: Most of these firms do have access to the coffer of their parent firm to sustain the business through the difficult first several years. In the absence of a organized source of venture fund (most of them in India have started only in this decade), these older family owned firms have a clear head-start over the rest of the market.
(2) Managerial Resources: These firms do have a broad general management skills and mostly know how to hire the best person to run a given business. However when they go beyond their core set of skills like running a steel mill to running an IT firm, their ability can be questionable. However this may not be that critical in Indian context or may be I am not correct here!
(3) Ability to make things move: I believe this is the MOST important criteria for success and this is where Tata's know how to take a license, get an approval etc. from Ministry of Environment; something which is otherwise rather difficult to acquire. And because Ambani's, Ruia's etc. do have these in abundance, they can easily beat the rest in the marketplace. This is particularly significant in India where relationships with politicians and administrators can really make or break your plan. Since this is a very difficult skill to acquire or learn (I am not sure we read this explicitly in Indian B-Schools), we see a very few Murthy's or Shiv Nader's (Infosys and NIIT) the first generation of highly successful entrepreneurs in India.

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