The Changing Landscape of the Indian Startups

India is the land of diversity, which is even reflected in its business ideas. The varied startup ecosystem has unlocked the true potential of India. With the rising number of startups, from 726 in FY 2016-17 to 65,861 in FY 2021-22, the country has revealed the entrepreneurial state of its youth population. The government sustained efforts through several schemes like Startup India, Pradhan Mantri Mudra Yojna, Ministry of Skill Development & Entrepreneurship, etc., has accelerated the opportunities for Indian Startups.?

The transformation in India is not just limited to specific sectors. We have witnessed startups solving problems in 56 diverse industrial sectors.

Things changed a bit after the global pandemic Covid-19 hit the world.?

• Earlier the Indian startup ecosystem thrived with successful startups like Big Basket, Oyo, Ola, Delhivery, etc.?
• The country had more than 25 unicorns till January 1, 2020, and Indian startups had received $14.5 billion in funding.?

• Even during the global pandemic, In 2021 itself, India witnessed the birth of 44 unicorns with a total valuation of $ 93 Bn., which showed a positive sign of recovery.?

But it proved to be the silence before the storm and things start to change since march 2022.

What went wrong?

The chronicles of fascinating Indian Startups took a negative turn when the topic of Global recession came into existence as soon as the growth momentum of businesses slowed down after covid.?

• In India and the US, the central banks have increased interest rates that have caused a slowdown in Startup and public investments.?
• Indian startups, which were earlier defined by the terms Bulk hiring, Creativity, Fast Learning Curve, and Career Growth, have been now described by layoffs, cost-cutting strategies, career instability, etc.?

• Due to the economic downturn, the right hand of startups, Venture Capital funding, showed a huge downfall. From the quarterly funding of $17.1 Bn in Q3, the tally fell to $14.5 Bn in Q4 2021 and then $11.8 Bn in Q1 2022.

• With low financing, these unicorns started to focus on restructuring, cost-cutting, and economic units resulting in massive layoffs. The fascinating image of Indian startups got questioned because of around 9,518+ layoffs by 23 startups.

Startups blamed inadequate funding, whereas VCs raised concerns over the unprofitable stage of startups, but amidst all, thousands of dream seekers lost their chances of dreaming!?

The Road Ahead

Analyzing the current market environment, it is shared by data industries that a global recession is about to hit the world. Some big firms proved that it’s already here!

Like Microsoft joins the club of big tech companies to cut jobs by laying off 1,800 employees, Google is slowing down its hiring.

Tesla followed with an announcement of a 10% reduction for its salaried workforce. Musk also warned his employees to either return to the office or quit.

For a startup ecosystem, funding is the biggest concern which is backed by the profitability of the Startup and when it comes to being a profitable startup very few have managed to crack the code till the date. This has hit the funding sentiments of VCs resulting in lower investments than previous year. The road ahead is not very fascinating for startups but it’s also not doomed enough to give up.?

• Certain government schemes like SMRIDH, RAMP, CBFTE, MSG etc.are giving assistance in financial, technical & subsidies support. Some corporations like Maruti Suzuki, Microsoft, Qualcomm etc. have? also upfronted in supporting the growth of startups through partnering with them.?
• A recent news by Inc 42, also published a list of the top 31 investors (venture capital funds, venture debt funds, angel networks, others) who participated in the funding rounds of Indian startups in the first half of 2022.?
• A recent iconic move has also been made by Google to robust the growth opportunities for budding entrepreneurs. The MNC has launched Startup School India Initiative to assist and train 10,000 startups in small cities.???
• One of the biggest upper hand which is most commonly avoided by Indian Startups is bootstrapping. The current lack of financial support can be tackled by bootstrapping startups. The process is slow and requires patience but if done effectively it gives you complete control over your business and makes your future funding easy to receive.
• Competing with global companies is tough but on the other hand inflation is giving rise to the demand of unbranded goods and here startups can take a leverage with their sustainable innovation.?

?My last article has emphasized the art of bootstrapping. You can read that here https://www.dhirubhai.net/pulse/art-bootstrapping-saurabh-singh

Being a country with the largest youth population, the entrepreneurial drive of the country is accelerating. But the startups need to rethink their business model according to the current economy.?

The challenge is not to create another 100 unicorns but to sustain the current unicorns.?

The tale of Indian startups has been to a lot of ups and downs. Challenges like fierce competition, inadequate funding, failure to plan, Knowledge & skills gap, unrealistic expectations, economic recessions etc. have changed the landscape of the Indian startup ecosystem. But to overcome these challenges actions like knowing your customers, understanding the competition, cost optimization, innovative execution etc. will help the entrepreneurs to grow sustain and add value to the industry.?