Respect Entrepreneurship

Is it fair or even right to rank startups? The ongoing Tata NEN Hottest Startup Awards 2008 contest seems to think so. Worse, the five winners will be picked via a public voting system that will be combined with an expert panel review. I don’t even know how that can work in a practical sense. NEN expects 800-1000 nominations, which also come from the public, out of which 30 will be shortlisted via public voting. Another round of public voting will decide the five winners. So what we have essentially is the reality television format and all its associated perversions being applied to entrepreneurship.

I’m all for startup contests. But the primary objective has to be to ensure that the winners as well as non-winning participants get real value from the exercise. For instance, business plan contests run by individual venture capital firms such as DFJ’s India Venture Challenge (2006) and Canaan Partners’ Entrepreneurial Challenge, both held in partnership with The Indus Entrepreneurs are primarily deal generation exercises.

Startups competing in such contests benefit in terms of raising some venture capital or at least coming up on investor radars. True that only about one per cent of startups who compete in such contests actually raise money, but even that one per cent makes it worth the exercise. Then there is the Proto or Headstart model of contests or showcases which help pre-funded startups connect with investors and potential customers. The Eureka! contest, organized by IIT Bombay and the oldest of the lot, is a bit different. The platform has been designed to encourage students to take to entrepreneurship.

The point to note with respect to all of the above stated models is that the monetary reward at the end, whether it is in the form of funding or a cash prize, is an add-on incentive to participate. More importantly, none of them aspire to attribute ranks to the participants. The real value-add is the exposure to investors, customers and other entrepreneurs which helps the startup fine-tune its business proposition. So, for instance, the Canaan Challenge’s jury actually spends 2-3 weeks with each competing company and mentors it through the shaping or sharpening of its business model before the final submissions.

Platforms such as the Tata NEN contest or any other so-called ranking exercise (some media companies and management consulting firms also have such rankings, though not by public vote) just trivialize the spirit and effort of entrepreneurship. Reality shows are all the rage now but, entrepreneurship isn’t entertainment.