We asked experts about the all-important question, read to find out what they said:
Note to Readers: MC ExpertEye is a weekly series of articles that will dive deeply into an important topic by seeking answers from experts.
Nine out of every 10 startups die. While this is a known fact. What is not known to many, are the challenges that these startups face while starting up which eventually leads to many of them shutting shop.
We asked a bunch of experts to hear their views. Take a look at what they have to say.
Ashish Kashyap, Co-Founder and Chief Executive Officer of INDmoney -- Single biggest challenge of starting up is building a frugal team. And it has become more challenging than what it was 10 years ago. Over supply of private capital has created this in equation for a company just starting up.
Anubhav Jain, Co-Founder, digital lending startup, Rupifi: Starting-up is never easy. There are a lot of tough times an entrepreneur faces while building a company from scratch. These range from market research, idea validation, customer acquisition and scaling, raising funds for growth, to even the smallest but critical things like registration, paperwork and accounting. However, in my opinion, the biggest challenge of starting-up in today's times is building a rock-star initial founding team.
With more capital and booming start-up ecosystem, talent availability has become a big challenge for founders. Getting the right people in the first few years, especially if one has limited capital in bank or is still not a well-known brand is always tough.
Founders look for people with risk appetite and the right culture-fit in a start-up environment, and finding such people is difficult, especially with well-funded start-ups offering very attractive compensations to the best talent across the country. During such a phase, it becomes extremely critical for a Founder to find people who share their passion to solve a problem and jump into this journey with them.
Deepak Abott, Co-Founder, fintech startup, Indiagold: Macro environments in the country are favoring the risk takers as growing economy is opening up lot of new opportunities in every sector. A combination of a right founding team with a workable idea and a passion to solve an identified problem are the right ingredients for starting up. Having said, startups journey is full of challenges which test the founder’s faith almost everyday. The top challenges are raising the capital, building the right team, finding the product market fit, sustained growth and managing the regulations/compliances.
However, there is one challenge which is not seen easily but plays an extremely important role in the early phase of this journey ie. keeping up with the rapidly changing dynamics. Founders have to stay focused on their mission yet keep an eye on external factors which could alter their approach (covid accelerated that learning). Maintaining the right course is important and startup’s success and failure is often determined by that despite having the right team and the required capital in place.
It isn’t easy to know if your startup is on the right path. Only way to overcome this challenge is to stay focused on the end goal, be flexible with your approach, stay nimble, stay lean (at least till growth stage) and don’t be swayed by every shiny thing that come your way.
Jitin Bhasin, Co-Founder, neo-banking startup, SaveIn: In the wake of Covid-19, societies and businesses across the globe have had to face harsh realities across sanitation, health as well as economic well-being, all at the same time. The pandemic has significantly altered the course of most existing businesses, by inflicting unprecedented damages to sales, profitability as well as human capital.
Several products and services that were relevant in the pre-Covid times suddenly find themselves completely out of favor, thereby creating an existential crisis. However, disruptions caused by Covid-19 have also enabled rapid advancements in technological innovations and adoption across the board. For entrepreneurs starting in this phase, this situation presents unprecedented opportunities, but they are also faced with a unique set of challenges.
As per me, the single biggest challenge is to manage near term fears and uncertainties across stakeholders, act with empathy and patience while not losing sight of creating products and services that would have a lasting and positive impact not only now, but also in the post pandemic world.
Sanjay Mehta, Founder and Partner, 100x VC: A lead investor is equal to the first cheque. Very few people within India would like to go first to make that financial discovery. No one can actually ask others to start looking at their portfolio company. It is really difficult and almost impossible. This is because most of them have their regular businesses, such as in the case of angel networks. There are very few full-time angels who would be doing this very effectively. So, finding a lead investor becomes a little tricky and challenging within the ecosystem. But, it is essential to get the perfect lead investor for your startup.
Many seed-stage good deals do not get funded. The most common reason behind this is that most of the investors are reluctant to invest in a new deal having a similar question in their mind as to why no one else is funding this deal. Many times, it is tough to become the first one to invest. Investors do not want any risks which are quite large in new startups.Most of the VCs, angels and angel networks will pay heed towards your lead investor. Everybody would like to see social proof that you have validation from somebody who knows this business, has invested much more than anyone else and understands the whole VC space. So, social proof is required saying why they are making this investment. Therefore, your lead investor is your brand as a startup.