Startups have 6% to 8% time higher possibility of getting successful in United States of America as compared to India, the reason being the lack of required ecosystem.
As per the report of IBM Institute for Business Value and Oxford Economics, 90% of Indian startups fail within first 5 years of their inception, while rest 10% don’t survive for more than another 5 years.
Indian startups are facing several severe challenges like:
► Increasing manufacturing cost
► Decreasing sales and revenue
► Low profits margins
► High market competition
Let’s decode the reason why Indian startups are failing, what are challenges they face, and what can be done to make India a startup hub from Mr. T.V Mohandas Pai, Former director of Infosys and Chairman of Manipal Global Education.
### **Startup Ecosystem in India**
Although there are presently around 40,000 startups in India, out of which only 10,000 have got funding, whereas 30,000 have still not got any funding.
► These startups have created a value of Rs 10 lakh crore until now.
► 1-1.5 lakh people are employed in startups every year
► These startups have employed 6.5 lakh people
Take a look at how startup ecosystem performed in India in last 5 Years:
► At present, in India there are 26 unicorns (billion dollar startups)
► 30 startups are in position to become unicorn in 2 years (less than billion dollar)
► $40 billion (3 lakh crore) have been invested in Indian startups in last 5 years
► $13 billion in 2017-18
► $12 billion in 2018-19
However, the disappointing fact is that out total money invested in Indian startups, just 10% was from India, and 90% came though FDI.
### **Success and Failure Rate of Startups in India:**
Before going deep into the reasons of startup failure, we must know success and failure rate of Indian startups.
In every 100 Indian startups there are:
► 60 successful
► 10 blockbuster
► 20 very good
► 30 running business
► 40 fails
### **Lack of Funding for Startups**
Although India holds 3rd position in startups after USA and China, there are very less startups funding in India as compared to them.
Annual startup investment in top 3 counties is as follows:
► India – $ 10 billion: 90% FDI
► China – $ 65 billion: 65% local investment
► USA- $ 120 billion: 100% local investment
**Why there is lack of Funding for Startups?**
► Indian capitalists are not willing to pump money in startups and technology
► Indian banks are not wanting to invest in startups
► There is a lack of understanding of business and industry among investors
### **Steps to start a successful Startup**
As suggested by one of India’s most successful entrepreneur, Mr. Mohandas Pai, startups must follow below given steps to avoid debacle.
#### **Look for burning problem:**
Find out the burning problems of customers. Conduct research and survey to study customer’s need and demand.
#### **Design solution with technology:**
What comes next is designing a perfect solution for that burning problem with the use of technology.
#### **Execution:**
When the solution is found out, the next important step is to roll out the execution strategy.
#### **Team Building:**
For accomplish all the above steps you need to build a team of three kinds of people as given below:
- ► Visionary: Bring people who have vision to do something big
► Technical personal: Bring people who have technical expertize
► Marketer: Bring people who are expert in marketing
#### **Get Funding:**
There are around 450 venture capitalists to whom you can ask for funding by presenting them your idea and vision.
#### **Perseverance:**
One of most the important things that all startups have to follow to achieve their entrepreneurial goal is – perseverance.
**If your startup fails, you gains experience that nowhere can be gained.**
### **Cost of Doing Business in India**
In India cost of starting a startup as compared to that of USA is very less.
It can be understood with the fact that, the thing which needs to spend Rs 100 in USA, can be done just for Rs 15 in India.
The advantage for startups in India:
► Although, the returns are low, the cost of starting a business in India is very inexpensive as compared to USA.
► There is a high potential of getting big value chain in India.
► Being an IT hub, starting a business has become cheap and convenient as never before.
► You can launch your product/service through internet at low cost.
### **Which type of Startups are Successful in India?**
Indian entrepreneurs are picking up B2C (Business to Citizens) business model as it easy to start and attract consumers.
However, it is also comes with high risk due to high failure rate.
On the other hand, B2B (Business to Business) business model is difficult to start and run for to its nature of work.
### **Future Generation must Not be burdened by Debt**
If students graduating from universities are overburdened with the education loan, they won’t be able to think about becoming an entrepreneur.
They will go on searching for a job to repay their loans, making startup a distant dream.
As such, to remove the financial burden from students, scholarships must be given, that can consequently motivate them to be entrepreneurs not jobbers.
As an example, in USA, students are under the burdened with loan of $1.5 trillion, that curbs their entrepreneurial abilities.
**Future possibilities for Indian Startups**
In the next 6 years, Mr. Mohandas says, Indian startups will grow seamlessly owing to the technological and socio-economic reforms India going through.
India has all the indicators of being a booming economy in the years to come as given below:
► Growing economy
► Increasing consumption
► Stabilized population
In 2025, India is poised to have 1 lakh startups that will create value of 35 lakh crore ($500 billion).
► 30 lakh people will get employment in these startups
► India will have 100 unicorns