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Less risk-takers at IIMs as economy looks up

Vinay Umarji Archana M Prasanna & Chitra Unnithan  |  Ahmedabad/Bangalore 

The premier Indian Institutes of (IIMs) witnessed a dip this year in the number of students opting out of placements to become entrepreneurs.

At IIM Ahmedabad (IIM-A), of the nine students who opted out of placements, only five decided to start their own ventures this year. Last year, nine students (including one of agri-business management) opted out to start their own ventures, even during the tough market conditions in 2009. As against that, 10 students had opted out of IIM-A placements in 2008 to start their own ventures.

Moreover, three students who had opted out of placements to try their hand at their own ventures in earlier batches (two from the batch of 2009 and one from 2008) came back and used the IIM-A placement service to get better offers. They all accepted offers from companies.

Similarly, at IIM Bangalore, three of the four students that opted out of placements have planned to set up their own ventures. This is a drop from last year, where seven students had opted for entrepreneurship. Institute sources said the new ventures were planned in the areas of education, energy and sport. One student who opted out of placement last year to explore a venture in media production returned for placement this year but did not take up any offers.

IIM Calcutta saw two students opt out of placements to start their own ventures last year, but didn’t find any entrepreneurs coming out of their campuses this year.

At IIM Lucknow, while the number of entrepreneurs hasn’t declined, it hasn’t taken a leap. Eight students had opted out of placements this year, of which seven decided to set up their own ventures and one was keen on appearing for the civil services examination. Last year, of the 267 students of the batch of 2009 at IIM-L, seven chose to start their own ventures.

“Like last year, there are seven entrepreneurs who decided to set up their own ventures this year. However, there is no correlation between the economy and entrepreneurship. There are a lot of factors, like the increase in batch size and more number of experienced students. One of the main reasons for an equal number of entrepreneurs as last year could be the fact that students have more work experience, and thus may have joined IIM with an entrepreneurial ambition,” said a member of the placement committee at IIM-L. Final placements at IIM Lucknow concluded on Friday, with a total of 370 offers being made for the batch of 315.

A buoyant job market beckoning students at the for greener pastures could be one reason for the drop in numbers. “Last year was a gloomy picture during placements which might have prompted students to look at their own ventures. This year, with the big finance and consulting offers back on campus, students have probably opted for it. Or, the decline in entrepreneurs could be coincidence,” said a student at IIM-K.

However, others like P D Jose, chairperson of placements at IIM-B, had a different take. He points out that “one should not forget to include students who gave up offers to join well-established companies in favour of smaller start-ups. They should also be included in the broader definition of entrepreneurship”.

Rahul Roushan, an IIM-A alumnus who had opted out of placement in 2007 to start his venture, a cricket stock exchange, believes two years of slowdown could be behind the decline. “More than the economy, confidence is the most important factor for anyone who wants to become an entrepreneur. Perhaps the meltdown must have affected students’ confidence levels. Also, if students from earlier batches who had opted out of placement to start their own ventures planned to return to placement, that could have played on their minds further,” he says.

Lack of funding, according to him, was not an issue, as most entrepreneurs do no seek external funding at the initial stage of the venture. “Unless the idea is patented, entrepreneurs do not look for outside funding at the start. However, even if it is required, a good idea will always find the attention of an angel investor,” he says.

“We cannot attribute a drop in the number of students opting to start their own venture directly to a better job scenario. It could also be a because of a batch mix, which tends to be different every year,” explains Saral Mukherjee, chairperson-placement, at IIM-A.

IIM Kozhikode, however, bucked the trend. Last year, there were two who had opted out of entrepreneurship; this went up to six this year. Kapil Jain, a student who opted out of placement to start his venture in B2B marketing communication with his batchmate, said the idea of promoting the venture had been with him even before he joined the institute.

“If the economy would have been very bad, I might have taken another six months to refine my plan. But, I was certain I would go ahead the venture. The economy is bound to recover and our plans are for the long-term,” he says.

First Published: Mon, March 15 2010. 00:37 IST