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Importance of Entrepreneurships in Today's economy
Introduction
What is entrepreneurship? Who qualifies as an entrepreneur? If these questions leave you uncertain, you are not alone. There is no universal agreement on how to define entrepreneurship or the people who practice it. Since we are putting on the mantle of start-up analysts, we may as well dissect the concept properly.
The term entrepreneur traces its origins—like many slippery, sophisticated words—to French, with its earliest usage dating back roughly five centuries. In today’s information age, it has evolved into a full-blown buzzword. Every idea, side hustle, or app prototype seems to fall under its umbrella. There is a need to have a dispassionate assessment of entrepreneurship, and evaluate its impact on society, the economy, and value and wealth creation.
The Oxford English Dictionary calls entrepreneurship “the activity of making money by starting or running businesses, especially when this involves taking financial risks; the ability to do this.” By that yardstick, even a well-built brokerage firm ticks the box. But textbook definitions fall apart in the real world. A more useful way to look at it is this: entrepreneurship is either about building greenfield ventures that create new economic value or forcing major structural shifts in existing businesses. India is at a pivotal stage here. Many of its so-called unicorns are not creating anything fundamentally new; they are repackaging or aggregating existing revenue streams. The value largely stays confined to those plugged directly into the business. FMCG has existed forever, so the real question is whether “quick commerce” is entrepreneurship or just another distribution channel marketed as disruption.
E-commerce is the exception. It pulled millions online and cleaned up product and price discovery. That single shift unlocked entire downstream industries—logistics, warehousing, digital payments. Once the pipes were laid, the network effects kicked in, giving new brands the confidence to launch and scale. That ripple spreads to manufacturing, design, quality control, and support services. In other words, it’s one of the few spaces where growth for one player genuinely expands the playing field for everyone else.
Entrepreneurship & Economic Theory
Entrepreneurship, in its classical sense, is an economic function—nothing more, nothing less. It is a sharp departure from the personality-driven mythology that dominates today’s start-up culture. Early economic thinkers saw the entrepreneur as a necessary actor in a functioning market. Cantillon framed them as risk-bearers operating under uncertainty, engaging in arbitrage and enabling price discovery. Others viewed them as agents who reallocate resources from lower to higher productivity, pushing the economy toward more efficient outcomes.
By the 20th century, the lens shifted. Schumpeter recast the entrepreneur as the force behind “Creative Destruction,” the individual who disrupts the existing equilibrium through innovation. This is not cosmetic tinkering or channel expansion; it is the kind of shift that rewires industries. When looked at through this framework, entrepreneurship becomes the engine that destabilises outdated systems and replaces them with more productive ones.
History offers a concrete parallel in the Industrial Revolution. At the time, it was widely criticised as a dangerous experiment destined to trigger mass unemployment and social unrest. The fear was predictable: machines would replace labour, and productivity would come at the cost of livelihoods. Instead, the opposite happened. Entirely new sectors emerged—textile machinery, railways, steel, chemicals—and with them came millions of jobs that previously did not exist. Old roles disappeared, but far more were created across manufacturing, engineering, logistics, accounting, design, and maintenance. This is the kind of transformation economic theory attributes to genuine entrepreneurship: not shifting profits from one pocket to another, but expanding the economic frontier itself.
The spurt in opportunities led to a whole new age in Europe that spread on to the rest of the world. Man’s spirit of endeavor, adventure, and greed had led to several explorations, establishments of the traditional trade routes, exchange of cultural and social ideas. The new entrepreneurs that came about as a result of the Industrial Revolution turned science into commerce, building industries and factories that employed workers. At the turn of the 18th century, roughly 2% of the world’s population lived in cities. That number has steadily been increasing since then and is now at 60%. The elaborate businesses required supply chains, distribution, raw materials, record keepers and other professional classes that emerged as a result. The workers employed by these businesses also became customers and helped boost aggregate demand. En masse migration to the cities also expanded the demand for construction workers, construction material and housing.
Benefits of Entrepreneurship
Entrepreneurship is driven by innovation, enabling productivity gains, personal wealth creation, and job creation. These facets are often taken as gospel truths on face value. Several other benefits include agency, autonomy, social impact, satisfaction, and gratification. We can split them into individual, collective, societal and stakeholder benefits. For individuals, it is the ability to build something bigger than themselves, something that they would be remembered for, building personal wealth, for the business or social enterprise started, it is a matter of convenience, growth, progress, efficiency and agency, for the investors, it offers a chance to earn stratospheric multiples on their investments. Societies tend to benefit, at least in theory, from more choices and competition which is generally a net positive in terms of economics. There are also additional sectors and markets that are created as a result.
A great example of this is the difference between the first, second, third and fourth industrial revolutions. The first one was driven primarily by mechanization, and using fossil fuels to make production faster and more efficient. The second industrial revolution brought with it other greenfield sectors like electricity, mass production, standardization, and economies of scale. This created other opportunities in the form of comparative and absolute advantage in their infancy, which would be further punctuated over the course of the 20th century.
Post the Second World War, the world saw an unprecedented era of economic growth and progress. Several of the wartime innovations were adopted into civilian sectors. These were spread across the board, with commercial aviation being the biggest beneficiary of wartime innovation in planes, radar leading to the discovery of microwaves, and the production at scale of penicillin that revolutionized medical procedures. Warring armies need to be well fed, and that helped boost the FMCG space with packaged goods, freeze dried products, instant coffee, powdered milk and even packaged meals in the form of TV dinners.
Wars have historically acted as powerful catalysts for entrepreneurial activity and innovation. While this view might spark debate, the urgency and immense challenges posed by wars often compel individuals and societies to innovate and develop new solutions. For instance, medical science—particularly surgery—advanced significantly during the American Civil War in the second half of the 19th century, as the availability of unclaimed corpses enabled detailed anatomical study and practical experimentation. Similarly, the War of 1812 stimulated the growth of American textile manufacturing due to trade barriers, and the Civil War boosted the pig iron industry. World War I accelerated chemical industry advancements, while World War II propelled rapid expansions in electronics and aircraft manufacturing. More recently, wartime entrepreneurship in conflict zones like Ukraine highlights how people start businesses not only for survival but to restore control, support their families and communities, and contribute to national resilience.
Additionally, the American Civil War had a significant indirect impact on India’s infrastructure development. The disruption of cotton supplies from the U.S. to Britain during the war increased the demand for Indian cotton, exposing weaknesses in internal transportation. This contributed to the British colonial administration’s push to expand the railway network in India for more efficient export of raw materials. Funded largely by Indian taxpayers under the British Raj, the railways facilitated exploitation but also laid the foundation for modern infrastructure, enabling faster movement of goods and troops. This railway expansion significantly changed India’s economic landscape and was crucial in shaping its colonial and post-colonial development.
Despite the destruction wars bring, they have repeatedly ignited entrepreneurial drive that results in lasting economic and technological progress, with both innovative breakthroughs and infrastructure developments like railways serving as enduring legacies.
The End of History? The Continuation of the Economy
In 1992, Francis Fukuyama’s The End of History and The Last Man boldly proclaimed that with the Cold War behind us, America stood supreme in a newly unipolar world. Democracy and capitalism had emerged victorious—the so-called "good guys" in a definitive clash of ideologies. These twin pillars, Fukuyama argued, would now form the unshakable foundation of a new global order. Yet, while influential, the book is often criticized for offering an overly simplistic narrative. It glossed over the complex realities of economics, technological innovation, and perhaps most importantly, the relentless human pursuit of wealth and progress—the timeless quest for the proverbial city of gold that propels capitalism forward.
The collapse of the Soviet Union and the Eastern Bloc created opportunities. Driven by labour arbitrage, liberalisation, outsourcing, and offshoring, a new business class dawned. Whether or not they should be considered entrepreneurs is a matter of academic discussion, what cannot be debated is the creation of income, and subsequently wealth in China, India, Bangladesh, and of late, Philippines. The ability of the internet to aggregate massive volumes of information also led to tech platforms that aggregate demand, and control supply. While they may have started as marketplaces, the overall expansionary nature of these businesses over time has led to rent-seeking, profit shifting and a consolidation of wealth.
Thrust Sectors
Being an entrepreneur is easy, being a successful entrepreneur is bloody difficult! The ecosystem of entrepreneurship rewards only the survivors and the climb is hard with a lot of pitfalls. But, never let that bother you. Have a security blanket or a backup plan before you take the plunge, and look to solve the problems of tomorrow, day after and the times to come. There is merit in making businesses more efficient, competitive, and growth is non-compromisable, but keep a lookout for tomorrow. You can make your money either ways, either in building efficiency and aggregators, or expanding into the greenfield sectors. The latter is high uncertainty and requires almost everything to work in your favour. A simplistic way to think about entrepreneurship and brainstorm ideas is to visualize queues and bottlenecks and how to solve them. Here’s a look at some sectors of tomorrow viewed with an Indian lens.
Technology and Digital Innovation: Startups in AI, fintech, healthtech, edtech, cybersecurity, and SaaS solutions are thriving, supported by increased digital adoption and venture capital funding. Tech is powering automation and smarter decision-making across industries.
Renewable Energy and Clean Tech: With government investments soaring in solar, wind, battery manufacturing, and microgrid solutions, entrepreneurship in clean energy is booming, reflecting India’s ambition for a sustainable future.
Healthcare and Wellness: Healthcare startups in telemedicine, diagnostics, mental health, medical supply chains, and fitness tech are expanding rapidly, driven by rising health consciousness and increased healthcare spending.
Agritech and Food Supply Chains: Technology-driven agri-solutions such as drones, soil sensors, and direct-to-market platforms are transforming traditional farming and reducing wastage.
E-commerce, Logistics, and Manufacturing: The digital backbone supporting e-commerce and logistics enables scalable opportunities, while manufacturing benefits from government schemes like Production Linked Incentives (PLI).
Urban and Rural Entrepreneurship: Growth is spreading beyond metros into Tier-2 and Tier-3 cities and rural areas, promoting inclusive innovation and new business models.
Pollution control and waste management have emerged as critical thrust areas for entrepreneurship, especially in India’s rapidly urbanizing environments. Cities face severe challenges with air and water pollution, mounting plastic and electronic waste, and inadequate disposal infrastructure.
Entrepreneurs are innovating in smart waste segregation, recycling technologies, biodegradable packaging, clean air solutions, and water purification systems, addressing urgent ecological and health concerns in urban centers.
These sectors benefit from supportive government initiatives like Startup India, skill development programs (Skill India), funding access, and economic reforms fostering a nurturing environment for entrepreneurs. The vast and youthful Indian market combined with global investment interest makes entrepreneurship a pivotal engine for India’s economic growth in 2025 and beyond.
Defining entrepreneurship is a difficult ask. What is more evident and clear is that the human mind will yearn for more and that will continue to spur new business ventures. Startups come out of competition, which, by and large, is beneficial for the economy. One thing leads to another, and the pie expands. The expanding pie creates new sectors and industries not envisaged before, and thus the wheels of progress keep on spinning. We need to think of entrepreneurship as an outcome of an ecosystem as opposed to standalone miracles. The latter might happen but are deterministic. A probabilistic structural approach will likely deliver better outcomes for our economy, society and country. There is also a need for handholding and keeping everyone on the bandwagon. Economic inequalities will lead to apartheid and uneven access to methods of learning, education, accessing information and knowledge. A clean environment and access to health must be non-negotiables. Climate change, on the balance of probability, is a reality that we have to confront and solve. Small incremental solutions can lead to the next big bang. Let VentureEdu lead the way!
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