Hurdles and success ingredients for a startup

There are multiple problems that startups face in India, foremost brings access to the right talent, hiring the right talent for any startup is a huge challenge, as either one does not get access to people with the desired skill set or there are mind blocks that candidates have before joining a startup. In addition, the nature of the startup and the quality of the founders play a big role in attracting talent, however there is a common perception that many people want to join startups which may not be true in all cases. Getting talent from the corporate world is expensive, and extremely difficult to convince people to move from a stable role to a startup. There are many young people who get carried away by all the noise around the startup world, however it’s not necessary that those people may be best suited for all startups, as enthusiasm to learn is important but having a pre-defined skill set makes things easier. Followed by inadequate capital availability which is a huge challenge plaguing the entire ecosystem. While one hears a lot about the quantum of fund raising done by the successful startups, what is often ignored is how low our bandwidth of funding is. The success rate of getting funded by the ecosystem currently is sub 1%, those are extremely poor odds and is one of the biggest challenges facing the entire ecosystem. In addition, the banking system in India, is hardly startup friendly, and even though the government is trying to create schemes to help startups, we are a long way away from a structure where adequate seed/growth capital is available for startups in India.

Then, there is lack of mentorship as mentors are extremely important where the founders are young as they may not possess all the necessary skills required to make a company work. In addition, the role of the mentor cannot be just seen as someone who spends the occasional time with the startup, the mentor is driven by ensuring that all their experience and skills are available for the startups, and in this regard the quality of mentorship is sometime inadequate. In addition, the ecosystem around organized mentorship is extremely poor, and more structure should be created to ensure proper mentorship especially for young companies. Inadequate business models is another challenge, because most young people are fascinated by startups, and tend to get drawn in by all the fancy stuff, in this regard what ends up happening is either the business models get copied from other markets which may necessarily not work in India, or they are not thought out in detail to take into account all the possible scenarios that may emerge while running the company. Also one important point that ends up getting missed, is that for any company to scale successfully the size of the problem being solved for needs to be large, lots of time people try to look at solving small problems which may not have much scope from a business scale up point of view.

Then lack of domain knowledge is one of the biggest problems faced by startups, the fact that people start companies in spheres they may not have adequate domain knowledge in. This may work well in a sun rise industry or if one is trying to create a new market, however in most other spheres domain knowledge counts for a lot, and having the necessary experience in the sector adds a lot of value. This is a critical point as it gets often ignored by young companies.

There are a series of reasons to Analyze why some startup fail and some make it. The success rate of startups is sub 1%, that means only 1 in 100 startups survive and scale up. While there is no fixed mantra of success, but some keys that do contribute like the quality of the team is an important reason for success, its high caliber good talent which is often the defining factor, in addition to a great quality of team it’s also important for the promoters of the company to have the necessary leadership abilities to ensure that the best from the team can be extracted. Second, availability of capital, adequate capital available at the right time is also a very important constituent to success as it can definitely make a significant impact in the journey of the company. While availability of capital does not guarantee success, however lack of capital can definitely be a death knell for many companies. Also, vision of the founders, which is often gets ignored, but the vision of the founders, translating into the vision of the company is often the decisive factor is ensuring that the company is successful. Most founders are driven by this vision and ensures the passion which flows through the entire company giving it the necessary ammunition to success.3Size of the market: While a bigger size of market does not guarantee success, it ensures that there is a possibility of multiple successful companies being possible in that market, which through sheer probability increases the chance for success. In addition, a larger size of the market ensures multiple business models being possible to be evaluated for success

There are many ingredients which go into ensuring the success of the startups but the below point mentioned are necessary for every successful company which includes the right People, passionate founders and employees, plans and goals for the organization, good work culture, access to capital, commitment to the vision of the company, solving a sizeable problem

The ecosystem in India is definitely far better now that what it used to be in the past, in addition there is a lot of enthusiasm about the startup space and this energy if channeled correctly can have significant advantages for the entire nation. Let us highlight why we feel India is more conducive to startups today.

One, they start with vibrant ecosystem, the startup ecosystem is vibrant and young. Lots of important stakeholders are participating to ensure success of this overall space. Second, low fear of failure, which is now embracing a culture, where it’s okay for startup founder to fail. This is extremely important as it significantly increases the risk taking abilities of companies. While we are still far away from having an adequate capital structure for startups in India, however we have made considerable progress through variety of VC/PE, Angel Investing Groups and other structured groups/entities providing capital for young companies. India is one of the youngest countries in the world as per its demographics and this is having a huge successful impact on the startup ecosystem, as more young people are taking up entrepreneurship, many young people work in startups and we are solving problems in new and innovative fashions which are a reflection of the overall demographics of India. The government of the country is also an important force ensuring the success of the startup ecosystem, as they are trying to create policies to ensure success of young companies. Also with new initiatives like StartUp India, Digital India and tax initiatives around startups etc the government is also encouraging the startup ecosystem.

So we are definitely on our way to ensuring that as a country, we can have a robust and vibrant ecosystem to promote innovation and drive growth through our young people and young startups.