During the last decade, we have seen a boom in the number of start-ups, springing up across the globe. But just a little before that, people used to fear about starting a new company and who ever tried was looked upon with weird lens. And hats of to the entrepreneurs who tried starting their venture before the startup boom where initially getting capital (pre-seed or seed fund) and secondly the entire process of establishing the company at least in India that was extremely bureaucratic and tedious.
Today there is help on both fronts where the access to capital is much easier and the govt has also relaxed norms. And that’s the reason India is among the top 5 countries in the world in terms of number of startups with more than 10k+ registered startups.
But before we get deeply involved let me clear who exactly do you call a startup. For me a startup is a young company that searches for a an unknown or unique business model to disrupt existing
markets or create new niches. Often we see startups creating blue oceans and not jumping in a red ocean and a trend where many have used technology as a great enabler to create differentiation.
Till a few months back and even now start-ups are the in thing and all aspiring graduates want to have their own company. As slogans of many companies say be your own boss, and everyone thought that all I need is just need a great idea to start a new business. Once the idea is pitched there will be a line of investors dying to invest money in the idea ultimately making the founder an instant millionaire.
But there is a swarm of startups that have started their organizations based on the premise that they want to solve a consumer problem. This to me a real startup who right from the word go is successful since the vision is to help the consumer. In this competitive world every company is trying the one up manship and in this rat race the focus on the consumer is lost somewhere.
Hence its critical for startups to keep the consumer benefit or solving a genuine problem in mind at the core. The moment a startup starts chasing valuations, the game completely changes and it loses its edge since all the key metric of customer satisfaction changes to get more topline. Also one more important value that is often overlooked by most startups is profitability as it’s all about getting the product / service right and then scaling it which needs more capital.
And sometimes the founders aren’t to be blamed since the investors too are looking for exits and hence the aggressive push on the toplines. We have more than enough examples in India like snapdeal, flipkart who have billion dollar valuation but profitability is elusive. In some cases profitability is no where in sight but still some investors go ahead which baffles me, there must be a strong reason but I guess ………….. may be its like stock pump more money when the stock go down to average buying costs. And that’s why we see no of deals going down but investments going up significantly, can be decoded as investors are putting more monies with lesser number of startup so they are now being choosy about who they invest with.
I would relate this phenomenon with the gas guzzling american muscle cars which are very flashy & extremely fun to drive but suck out fuel like its nobody business.
Some of the top deals in 2017 led by Softbank, Tencent, Sequoia Capital, Alibaba, Microsoft, ebay, Tata fund, JERA, TPG, China Lodging Group, Naspers, etc
The govt too is playing its part by promoting startups and digitizing the economy to boost business and cut bureaucracy. But as compared to the other nations there is a long way to go but at least the seeds are sown not just at the top-level right down to the school level. Where we are competitions started for the most innovative idea and not just a project but a business project which will pavé the way to Indian version of Elon Musk or Steve Jobs.