Wednesday, November 30, 2011

Venture capital and PhDs in India - The problems

An amazing interview published in the strategist section of Business Standard revealed two basic problems hindering innovation and the start-up eco system in India. Nirmalya Kumar and Phanish puram (Aditya Birla India Centre) highlight very important points.
If we want to become a true innovation hub, we need to have more science and engineering graduates and PhDs. We need to increase education from the primary sector all the way till the PhDs. All this is needed if you want to develop products that can be seen by the rest of the world.
 Right now VCs are funding models that work, which they know will work and they need money to scale up. They are not funding ideas that may never work and that is our issue. It is more like a guaranteed loan to someone. It gives you good return but that is not the purpose of VC. That will come with more competition. There is change in the last couple of years and it will happen.
Two solve these problems we need a radical change in mindset. MBAs need to think of getting something more out of their degree than a high paying job and engineers need to look at technology and not an MBA. This change can be fostered by public policy measures that encourage students to take up research. It also involves a risk taking mindset within people pursuing PhDs.