Akrati Anand is a final-year MBA student at IIM-Udaipur. She comes from a business family and knows the benefits of being an entrepreneur — flexibility, challenges and freedom from corporate rat race. "My father is his own boss," she says. But here's the twist. She is not ready to take the entrepreneurial leap yet. Despite four years of experience in IT, she has opted for placements to get a job in consulting. "I want market experience before starting my own business. The learning curve in consulting is steep. Also, markets are volatile now, everyone wants a safety net," she says.

Indian School of Business (ISB) graduate Naren Kashyap has donned an entrepreneurial hat in the past. He, along with a classmate, built 'Loop', an app to help ISB students stay connected. Loop encrypts users' personal, professional and social media contact details into an easily sharable format using QR code or NFC-enabled devices. Kashyap says the app got 650 downloads at ISB's annual networking fest that was attended by 2,000 people from across the globe. Kashyap, who has taken up a job as strategy manager heading user refund initiatives at Meesho, is interested in starting up if he can zero in on a "brilliant" proposition to solve a major problem. Till then, Kashyap, who borrowed money from relatives to pay for his B-school education, is happy working for other companies. "My father is a farmer. I don't come from a very prosperous family. If you have taken a loan of, say, ₹40 lakh, your first responsibility is to repay the debt. Starting something of your own immediately out of B-school may not give immediate returns," he says.

There are scores of B-school students like Anand and Kashyap who are opting for jobs instead of taking the entrepreneurial plunge after graduation. The Fortune India Best B-Schools Survey finds that entrepreneurial zeal is dimming at B-schools. The number of students starting own business right after graduating is in low single digits, say industry sources. At IIM-A, it is close to 2-3% (7-8 out of a batch of 300-400). Dr. Varun Nagaraj, dean at Bhavan's S.P. Jain Institute of Management & Research (SPJIMR), says only 1-2% students of top B-schools go into entrepreneurship directly. He adds B-school graduates typically launch their companies seven-eight years after graduation.

At Pune's Symbiosis Institute of Business Management, only 10.5% students started their own business in 2022 as opposed to 16% in 2020. In SVKM's NMIMS School of Business Management, 1.6% students opted for entrepreneurship in 2022 as against 3.6% in 2020. In 2022, only 1.3% students of Amity Business School, Noida, started own business compared with 6.9% in 2020.

What is dissuading students of B-schools from entrepreneurship right after graduation? One reason is economic uncertainty due to the pandemic and global disruptions caused by Russia-Ukraine war that have made stability more valuable than the call of heart. The correction in new sectors, especially edtech, along with subdued industrial growth, has made students cautious, says TeamLease Education Foundation's chief business officer, Sumit Kumar.

"The number of people going for entrepreneurship is low. I want at least 5% students to take the entrepreneurial route. For India to become a $5- trillion economy, we need jobs. Large manufacturing companies do not create jobs. We need smaller units and start-ups to create jobs in newer areas," says Prof. Ashok Banerjee, director at IIM-Udaipur.

Economic uncertainty is one reason. Another is large student loans. Most students want to start a business but only after working in stable jobs for some years and paying off their loans. "I believe most B-school students think of starting their venture at some point, even I do," says Udit Joshi, a 2022 graduate from Indian Institute of Foreign Trade, New Delhi. Joshi says a couple of his batchmates turned down placements to give shape to their business ideas. Also, a lot of start-up founders trace their academic roots to B-schools. Clovia founder & director, Neha Kant, for instance, is a 2004 graduate of Delhi's FORE School of Management. Jewellery start-up Melorra's founder & CEO, Saroja Yeramilli, has done PGDBM in marketing and finance from Xavier Institute of Management (XIM), Bhubaneshwar.

However, there are several factors restricting B-school students from embracing entrepreneurship right at the outset of their careers.

Loans, Course Set-up

MBA courses are expensive and most students take loans to pay fees. Dhairya Arora, who pursued his MBA in marketing from Institute of Management Technology (IMT), Ghaziabad, says student loans in India range from ₹20 lakh to ₹40 lakh. And students, many from middle-class families, cannot afford to opt out of placements. Arora wants to start up but has taken up a job at Whirlpool for now. "A job gives you stability," says Anand. "They have to find a way to pay EMIs. Also, fantastic placements at IIMs lure them to the easy road," says Banerjee of IIM-Udaipur.

"Financially, it doesn't make sense to start something unless they have strong financial backing or an idea that has already got support from investors," says Uday Virmani, assistant dean, BITS School of Management (BITSoM).

Loans are not the only issue. MBA programmes are not designed to encourage students to experiment. For instance, they do not allow students to drop out of a semester to pursue business ideas. "There is no time for reflection, contemplation. Also, modern companies require strong technology foundations. Brand new school graduates do not have what it takes to be founder-entrepreneurs of such tech-heavy companies. A founding team requires people with other skill sets and most of them are not going to be B-school graduates, many of them are going to be IITians, for example," says Nagaraj.

Engineering graduates get four years to dwell on ideas. At IIMs, although the duration of the MBA course is two years, students spend only 18-19 months on campus, says Banerjee. "In 18-19 months, they need to acquire a number of credits. The pressure is huge," he says. "In incubators at IIMs, the number of in-house students working on their ideas is very low," he adds.

Skills First

Most B-school students want to hone their skills by working for others before setting own ventures. "I had to have corporate experience. My sole focus in college was finding a suitable placement to enhance my capabilities," says Joshi. "Most people want to take up jobs initially to bridge gaps in confidence and knowledge. The Indian education system doesn't fully prepare you for the world," says Arora of IMT-Ghaziabad.

Naren Kashyap is working with Meesho due to learning opportunities there. Entrepreneurship is something freshers are reluctant to take up unless they have a business background, says Vivek Chakrapani, AGM, placements at FORE School of Management. Even graduates with some work experience prefer jobs in other sectors before establishing own ventures, he says.

Attractive Placements

Most students are also taken in by high salaries at placements. "In India, people go to a B-school for a job. The success of a B-school is defined by career outcomes," says Uday Virmani of BITSoM. "In last three years, IIM-Shillong has witnessed a 22% increase in recruiter participation. There was a 20.50% rise in average CTC from previous year. As companies offer better packages, students continue to prefer jobs," says Prof. D.P. Goyal, director, IIM-Shillong.

At ISB, average salary for class of 2022 was ₹34 lakh, a 20% jump over previous year. The ISB course helped students increase their salary by 173.75%, says Chandan Chowdhury, senior associate dean, career advancement services at ISB. At KJ Somaiya Institute of Management, average of top 200 offers was ₹13.55 lakh per annum as against ₹11 lakh the previous year. It has been growing 10% year-on-year, says director Monica Khanna.

"People who defer placements either have a family business or already have something going on before joining the B-school," says Kashyap. But there's an opportunity here. "The ecosystem of recruiters has changed. Earlier, it used to be traditional FMCG, banking and consulting firms. Students do not mind working with smaller companies that may not be that well known but are doing a smart job. Not everybody is looking to join a Cisco or a Microsoft. Many start-ups have IIM alumni, encouraging students to work with start-ups and gain expertise," says Virmani. Besides, many tech start-ups pay as well as traditional companies. "On average, consulting firms pay the best but tech firms (including new-age ones) can break the bank for someone they like," says Nagaraj of SPJIMR.

Societal Set-up

Buzzwords like entrepreneurship sound great but an average Indian family is not open to the idea of children taking undue risks. "Parents are still decision-makers. Students are under pressure to find stable jobs and settle down. We need a change in societal mindset to kick off entrepreneurship," says Virmani.

In U.S., it is acceptable to drop out of school, hang around on a friend's couch for a year and come up with ideas, but not in India, says Nagaraj. Subhasis Ray, Prof. at XIM-B, says a good social security system is the biggest differentiator. "You get unemployment subsidy. The unemployed also get basic medical care and education at subsidised rates. The social security net allows people to take risks. Also, the funding ecosystem is mature. Universities also give big grants, which is not common in India," says Ray.

Market Volatility

Pandemic-led market uncertainty and current macro instability have also lowered the risk appetite of B-school students. "The pandemic created uncertainty, leading to people looking for more stable jobs. Entrepreneur- ship has slowed, but it's a temporary blip," says Sanjay Shetty, director, professional search & selection and strategic account at Randstad India. According to the firm, about 70% graduating students currently opt for jobs as opposed to entrepreneurship. "There is a huge correction across start-up sectors. People are becoming a little cautious," says TeamLease's Kumar.

XIM-B's Ray says students are also realising that start-up funding is one thing but it doesn't say anything about the company's performance. "Among mature students, there is scepticism about the start-up story. They don't know whether the companies will sustain and make money. They are asking many questions, which was not the case before pandemic," says Ray. Only those with die-hard entrepreneurial spirit are taking the plunge.

Backing Their Students

B-schools are trying their best to reverse the trend of falling entrepreneurship. The steps being taken range from offering deferred placements to setting up entrepreneurship cells and changing curriculum.

SPJIMR, for instance, is incorporating subjects like product management, entrepreneurship and systems dynamics. "For example, we offer two product management courses. In one, we ask students to play the role of a product manager in an established company. In the other, they play the role of a founding product manager of their own company," says Nagaraj. BITSoM has a specialisation called entrepreneurship and innovation. Besides, the B-school invites start-up founders. IIM-Udaipur courses cover AI, blockchain, automation, and social and digital marketing. "The curriculum is evolving. The projects are becoming more practical, requiring us to go to the market," says Arora of IMT-Ghaziabad.

Besides, almost all B-schools now allow students to defer placements for a year or two, giving them time to ideate and build their own business. "Students defer campus placement primarily due to their start-up ventures but seldom participate in placements later," says ISB's Chowdhury. "Maybe their ideas work or they are able to get jobs," says Virmani. IIM-Udaipur has a similar arrangement in place.

That's not all. As part of summer internships, IIM-Udaipur students have the flexibility of interning with a start-up or pursuing their own ideas. "We are also telling students that if they want to work on an idea beyond MBA courses, we will provide them stipends. The stipends may not be hefty but are enough to cover their EMIs," says Banerjee.

IIM-A runs IIMAvericks summer internship as well as fellowships for students. As part of the programme, students who opt for entrepreneurship immediately after their degree earn a regular salary that helps them continue paying off their loans. If the students don't find success after two years, they are allowed to join the placement process through the institute. "Last five years' data indicates that, on an average, eight students from a batch of 300-400 pursue entrepreneurship immediately after MBA, which is a good number. Last two years (2019-20, 2020-21) were different because of the pandemic. However, the above-mentioned average has been maintained, except in 2020, when Covid-19 was at its peak," says Prof. Chitra Singla, associate professor, strategy area and chairperson, Centre of Innovation Incubation and Entrepreneurship at IIM-A.

To encourage entrepreneurship, ISB has created a start-up ecosystem with its Isprout programme for students and alumni. ISB also offers a "Plan Your Own Venture" programme under PGP. "More than 10% ISB alumni are entrepreneurs, and we would like to improve this in the coming years. Invariably, ISB students have been starting their own ventures after working in corporates/start-ups for a couple of years after graduation," says Chowdhury. ISB's I-Venture programme fosters entrepreneurship and nurtures start-ups. It administers business incubators that provide 'Start-to-Scale' support for entrepreneurship. It also runs multidisciplinary research initiatives and academic programmes that create and strengthen entrepreneurial mindset and rigour. "We have specific programmes to cater to entrepreneurs and ventures of all stages. I-Venture @ ISB is working towards creating a strong ecosystem of mentors, VCs and academicians," says Chowdhury.

FORE School of Management has set up an entrepreneurship cell helmed by a faculty-in-charge. "Almost every month or two, we hold conclaves and seminars on entrepreneurship where students can meet successful entrepreneurs," says Chakrapani.

The initiatives have the potential to change the nation's start-up ecosystem.

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