Table of Contents
Question
- India has the third-largest ecosystem for startups, yet 80-90% of Indian startups fail within the first 5 years of their inception. In light of the above statement, Discuss the StartUp scenario in India and address the key reasons behind failure of startups.
StartUp in India
- A startup venture could be defined as, a new business that is in the initial stages of operation, beginning to grow and is typically financed by an individual or small group of individuals. It is a young entrepreneurial, scalable business model built on technology and innovation wherein the founders develop a product or service for which they foresee demand through disruption of existing or by creating entirely new markets.
- The start-up ecosystem has its fare share of detractors. They argue how majority of start-ups are destined to perish. Only a handful of start-ups survive, and still fewer flourish!
StartUp in India
- An entity shall be considered as a Startup:
- Upto a period of 10 years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
- Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded Rs 100 Crore.
- The entity is working towards innovation, development or improvement of products or processes or services, or if it’s a scalable business model with a high potential of employment generation or wealth creation.
- Entity shall not be formed by splitting up or reconstruction of an existing business.
Satrtup Scenario in India
- India is the third largest (After US & China) start-up ecosystem globally (but by number of start-ups rather than Quality of Startups) with more than 15,000 start-ups established in 2020.
- India also stands third in the global list of the number of companies that have attained unicorn status after US & China.
Why Number of Startups are rising?
- Rising demands for the population
- Role of Technology & Corporate Connect
- Government policies
- Start Up India & Action Plan
Issues with India Startup Ecosystem
- Shortage of Financial resources
- Finance not a guarantee of success
- Poor revenue generation from the idea
- Lack of skilled personnel & flawed hiring policies
- Intense competition
- Poor Branding & growth strategy
- Lack of Risk appetite
- Digital Divide
Bias towards Tech
What is needed?
- Viable Financing mechanisms
- Remove administrative bottlenecks
- More consumer-centric startup models needed
- Focus on Tier II & II (Shift from urban to Rural)
- Address digital divide in India
- Proper branding and strategy tools
- Focus on deep technology along with traditional startups
- Make in India, Start up India, Digital India, Atmanirbharat bring enthusiasm in early-stage startups which needs to sustained for success.
Latest Burning Issues | Free PDF
WhatsApp