How Indian family business created entrepreneurs in the US
Even before the startup ecosystems backed by venture capitalists and private equity firms became torch bearers of entrepreneurship, Indian family businesses had their skin in the game. According to the Family Entrepreneurship Report by the Global Entrepreneurship Monitor (GEM), 75% of entrepreneurs in 48 economies stated that their family was involved in starting a business as either co-managers or co-owners.
In fact, a good majority of startups around the world are family businesses and tend to have a longer life span than average firms. 30% of family businesses survive till the second generation. Family-owned businesses can get vulnerable while being handed over from one generation to another. According to the Family Firm Institute, 88% of current family business owners believe that their family will stay in control of the business for the next five years. However, according to succession statistics, only 30% of family businesses survive into the second generation, 12% remain viable for the third generation and only 3% of all family business survive till the fourth generation or beyond.
In India, family businesses contribute to about 70% of the Indian economy. The Indian Family Business is more of an institution that has fostered and nurtured entrepreneurship across continents. Economies abroad such as those of Malaysia, Myanmar, Singapore, and Africa have prominent family businesses from India’s Chettiar, Gujarati, and Marwari families.
According to a Standford study, four out of every 10 unicorn founders in the United States happen to be first-generation immigrants from India. And out of 1,078 founders across 500 unicorns in the United States, 90 were born in India. Interestingly, India is the third largest Unicron hub in the world with almost 90 unicorns of which 46 achieved unicorn status in 2021.
Family entrepreneurship are different from entrepreneurial ventures that are backed by venture capitalists and private equity firms that are driven by commercial goals, high valuation, and profitability. Family businesses, on the other hand, may be driven by the need to preserve the family legacy, and non-economic goals. Future generations are also known to start new ventures to demonstrate the family’s knack for business and astuteness.
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