The fast-growing Indian economy is experiencing a startup boom. The numbers, according to the trade pundits, are only going to see a steep rise. There were approximately 3000 startups in the year 2014. This number is expected to quadruple by the year 2020. These burgeoning numbers can be attributed to a bunch of factors including the changing mindsets and increasing involvement of local and international Venture Capitalists. The markets are now more open towards new ideas and enterprises. Also, no longer are potential entrepreneurs looked upon with raised eyebrows. Funding woes, while still persistent, have been reduced over the years with more investors interested in investing in the smaller firms. They are willing to risk investing in new players in the game.
That said, there still are a few issues that need to be addressed in order to provide a more conducive environment for startups to thrive. Here are the 5 key support-systems startups seek to really take off:
The success of an idea or an enterprise often depends upon a clutch of external factors. And, ironically, most of those factors are beyond the control of the entrepreneur. An entrepreneur cannot decide what tax policies to implement and which ones to abolish. When we talk about conducive environment, it largely means the various policies and regulations of the government. Among the biggest hurdles for Indian startups is dealing with the government departments and navigating complex compliance regulations and an opaque taxation system. Simplifying and unifying the tax system in favour of these businesses has been demanded since decades. The launch of the Startup India initiative in 2016 has created hope for startup growth but the full potential is yet to pan out. With government announcing a multitude of policies to support startups brighter days may be ahead.
The biggest constraint for startups is procuring office space at and affordable price or rent. Size, facilities, cost, and location are all constraints. Sometimes, renting an entire space is not affordable or necessary for these small enterprises. Owing to this, India has of late seen a boom in shared working spaces known as the co-working offices. Operating from a co-working space not only helps in curbing the expenses but it also provides a platform to interact with other startups in the vicinity. The social interaction leads to an exchange of ideas and the opportunity to stay in tune with the latest developments.
Big names like SnapDeal, Flipkart, Zomato and Ola have changed the understading of the funding ecosystem for startups in India. In 2014, SnapDeal was valued a little bit over $2b when it raised $627m. Recently, Zomato bought a US based startup Urbanspoon in a $50m deal. It was the largest purchase of a US based company by an Indian startup. Ola has been valued a little over $1b in its 3 years of operating. These and many such players have turned the tables for funding of startups in India. Some of this funding is also finding its way into the smaller, less celebrated startups. A number of angels have sprung up to help out startups in the early days. Generating cash is also back in the focus. Both, the investors and founders have started looking up to making real profits from the unlike previously when the aim seemed to be to grow top line only.
Market Maturity and Customer Acceptance
The volatility of the markets plays an important role in deciding the future of a business. It’s vital to understand the fundamentals of the market one is operating in or looking forward to venture into. The constantly changing patterns bring forth new challenges. Startups need to be equipped to tackle these challenges head on. The maturity of the markets and the consumers is a key factor in ensuring start up success in this situation. As the consumers become more discerning they are willing to appreciate the true benefits of the offerings from the startups. The market starts focusing on the value rather than the cost. This allows the startups to focus on building a long term strategy that is based on excellence and on building enduring customer relationships. In this scenario the true worth of the offering ensures survival, not the steep discounts driven by the deep pockets of the business.
Strategy is useless without the capability to execute. Excellent execution needs capable, committed, and passionate people. Finding the right talent with this inherent capability and at a price point that the startups can afford is a critical gating factor in the startup’s progress. As the startup grows it needs to scale the workforce – this demands access to a wide and deep pool of talent that is interested in working for startups. The iconic startup centres like USA’s Silicon Valley were built around the fulcrum of a similarly rich talent pool.
India is the said to be the fastest growing startup economy in the globe and the Prime Minister’s focus on supporting the startup culture has inspired many. For the next stage in the journey of India’s exciting startups, the focus has to shift to providing the right enabling environment. Chances are it will be the areas highlighted in this post that will form the core of that enabling environment!