Over the last couple of years, the “start-up” lexicon has been firmly etched in our psyche. Fuelled by the smartphone growth and increasing Internet connectivity, entrepreneurs see new, hitherto unexplored markets opening up. The government too has decided to its bit with programs like "Startup India" that provides tax benefits, funding opportunities and a fast track process in a bid to help more start-ups take off. From all the hype surrounding start-ups, it would seem that all it takes to build a successful business is an innovative idea and some working capital and voila, in two or three years, the founders would turn into multi-millionaires or even billionaires. Isn’t it?
Sadly, this is almost never true. For every Bansal, Sharma and Aggarwal, there are countless others who didn’t make the cut. While the reasons for failures could be many, the ecosystem is far from perfect. Setting up a business in India is not without its challenges. Getting a company registered, obtaining licenses depending on the nature of the business, dealing with the bureaucracy are some of the biggest hurdles faced by an entrepreneur in the country and it should come as no surprise that India is ranked at 130 in the ease of doing business.
However, perhaps the biggest challenge of them all is to get funding or staying funded.
According to a report from Venture Intelligence, VC (Venture Capital) firms made 405 investments in India worth $1.4 Billion during 2016 compared to 512 deals worth $2 Billion in the previous year (42% decrease). The forecast is gloomy for this year as well. It seems the start-up culture has undergone a cleansing of sorts. Many companies have had their valuations slashed and institutional investors and venture capitalists are thinking about profitability, demanding revenue rather than just growth. For an investor, there is always the grim reality that a majority of start-ups fail. Unlike publicly listed companies, where they can the track the stock price movement, investors are dependent on the monthly or quarterly reports. Also, obtaining previous financial data is not possible as many would have just started a few months back
There has been a great degree of introspection among founders and entrepreneurs as well. In a recent InnoVen report, 63% of the surveyed founders said they had an unfavourable experience when it came to raising funds in 2016 with nearly half not being able to raise any money. Nearly 65% also felt that there is a start-up bubble. Many VC backed companies are moving away from chasing valuations and growth and thinking about the business model, the unit economics and profitability.
In the past, founders, after swinging into operations mode, were quickly burning through cash, chasing growth over revenue. The justification was though they were losing money on every customer; the volumes would make up for it and would often state that Google, Apple, Amazon and Facebook went through a similar phase. However, the difference was the above tech giants were consolidating hardware and developing new technology whereas many Indian start-ups were just giving away cash in every transaction. It isn’t uncommon, therefore, to see a young business on a meteoric rise, and then disappear into oblivion. In the race to disrupt the ecosystem, many start-ups forget that they have to deal with the “real world” as well.
Future entrepreneurs need to consider this while gearing up to disrupt the economy. Adequate funding and the right guidance can make all the difference between success and failure. Making elevator pitches to VCs can be great, but one needs to have a comprehensive plan in hand to succeed. That’s where “Pulse - The Venture”, a joint initiative of Network18 and DS Group, comes in. The initiative will play a catalyst role for entrepreneurs, by not only providing them a platform to showcase but also to fund them (in case they win) to the tune of Rs 1 crore. This is why, for all the budding entrepreneurs that are finding it difficult to raise the funds, “Pulse – The Venture” is that one ticket to stardom and success. So, go for it, and send in your entries to Entry Form .