18 December 2015 11:56:00 IST

The MBA Entrepreneur

Launching a start-up is easy but to scale up requires management skill and acumen

After Make in India and Skill India, Start-up India is the new slogan resounding across the country. Everybody wants to launch a start-up. But statistically, if you break down the number of entrepreneurs that come out of India’s top schools, it’s the engineering colleges that seem to produce more entrepreneurs than the B-Schools. For instance, one study pegs the number of entrepreneurs produced from IITs, annually, at 1,600, compared with the 200 that IIMs produced.

Does joining a B-school make you risk averse?

Raghav Verma, an IIT–Bombay alumnus and co-founder of tea cafe chain Chaayos, says, “I feel taking on debt in the form of a student loan for an MBA ensures that you are dependent on a monthly salary, which makes it impossible to take on the risk associated with a start-up.”

But the trend appears to be turning finally. In the graduating class of 2014, at least 20 IIM Calcutta students launched their own ventures, while 13 students from IIM-A’s 2014 batch opted to set up their own start-ups.

The common perception is that a B-School trains you for a corporate career, as the curriculum is all about managing businesses and not about starting a business. In the Silicon Valley, which abounds with tech entrepreneurs with an engineering background, there’s a view that an MBA degree kills creativity as it makes you risk averse. But here’s why some of our MBA entrepreneurs feel a management degree can equip you better to handle the pressures and risks of a start-up.

Getting a grip of business realities

“My MBA degree helped me with a basic foundation in business, and shaped my thinking around how a sustainable business can be built,” says Abhiraj Bhal, co-founder, UrbanClap and IIM-A alumnus.

Prasanth Nair, managing partner and country head at Inhelm Leadership Solutions, who has done his doctorate in management from IIM-A and after a 15-year career, co-founded an e-commerce firm in the consumer space, says, “To me, the management degree helped in understanding the business eco-system as a totality and also equipped me with an analytical ability.” Bhal agrees, “The approach of problem solving based on first principles has come in handy.”

For Jitender Sangwan, who has founded an agro start up Anubal Agro Products Pvt Ltd, his MBA from Symbiosis Institute of Management Studies helped him understand the corporate world. “It prepared me well to face challenges through case studies, live projects, and summer internship. These were the tools that enabled me to think global and understand different kinds of jargons. Now I know what is expected of me as an entrepreneur. It also helped me gain confidence in dealing with situations where most people break, while setting up their own business.”

Domain knowledge

For those launching tech start-ups, an engineering degree may be enough, but for certain verticals, such as HR, finance or marketing services, a management course gives the necessary grounding.

As Chandu Nair, an alumnus of IIM-A and the co-founder of Scope e-Knowledge, a knowledge process outsourcing company, says: “My partners and I first started a market research business which requires a certain set of skills which an MBA equips you with — quantitative, analytical, presentation and the like.” Nair describes how, as the business grew, they found that they needed to also draw upon their HR, behavioural and finance knowledge and skills learnt at B-School. XLRI alumnus Nabomita Mazumdar, Partner, CiteHR.com, an online community for HR professionals, echoes this when she says, “Many entrepreneurs believe that the MBA curriculum is mostly theory. But what I have found is that the theory part is required as well, seeing as how I am implementing everything I learnt at XLRI on a daily basis.”

The alumni network

You can probably learn managerial and business skills on the job, but one thing that B-schools — especially the top notch ones — give you, is exposure and network. As Prasanth Nair says, “One of the major advantages in going to a good business school is the network one creates, both in industry and academia. To me, there were both direct and indirect benefits — in terms of access, networks and guidance.”

Rajiv Srivatsa, COO and Co-founder of Urban Ladder, and an IIM-B alumnus, endorses this, pointing out, “The network adds great value, directly or indirectly. We have been able to get some of the smartest people on board with our B-school network, and also develop relationships with partners through our networks.” Bhal of Urban Clap points out that interacting with successful alumni from IIM-A such as Sanjeev Bhikchandani helped him immensely.

Chandu Nair pretty much sums it up when he says, “Who you know often matters more than what you know. And other things being equal, people like to do business with people they know. The network has helped open doors, cement relationships and cut through bureaucracy.”

Incubators on campus

Gone are the days when B-schools trained students for long corporate careers. Today’s campus placement cells actually evangelise start-ups to their students. And many top B-schools have on-campus incubators and accelerators, seeding and mentoring student start-ups.

Take the incubation centre at IIM Lucknow — Abhiyan — which offers a space for students interested in setting up their own venture, and helps them transform these into viable business propositions.

Similarly, Indian School of Business at Hyderabad has D-Labs and T-Hub, while IIM-A has the Centre for Innovation, Incubation, and Entrepreneurship that has kick-started quite a few enterprises. At IIM Calcutta, social enterprises get a leg up through the campus incubator. Amity University has incubated over a 100 start-ups.

Coming back to our original point of B-school students being risk averse, some B-schools — notably IIM-C — are now tackling that by offering campus placements to students even two years after graduating in case their start-ups fail.

Talk to MBA entrepreneurs and many will tell you that it’s the institute that pushed them to think of starting out on their own.

Nabomita Mazumdar of CiteHR says in her final term, her professor Madhukar Shukla encouraged her in this direction, urging her to start an online community for HR professionals. For those who argue that the world’s most successful entrepreneurs — be it Bill Gates or Dhirubhai Ambani — have no management background, the MBA entrepreneur has a ready counter.

It’s easy to launch an enterprise but to scale it up and take it to the big league, more often than not, the entrepreneur turns to a professional manager with an MBA degree. Go back to the Chaayos chain of Raghav Verma and Nitin Saluja, which is now in the midst of huge expansion, and they admit they are “hiring stellar MBAs”.

So, while an MBA is not really a prerequisite to become an entrepreneur, it does ease the journey.

(With inputs from Vinay Kamath, Pradipti Jayaram and Parimala Rao)