Indian Start-ups -Issues , Challenges and Opportunities (Road map for starting a successful venture)

Indian Start-ups
-Issues , Challenges and Opportunities
(Road map for starting a successful venture)
Dr. Gopaldas Pawan Kumar
BE(Mech.), MSc(EBM), MBA , PhD.
Associate Professor
gdpawan@gmail.com

Entrepreneur(ship)
• Doing something new or something different is a necessary condition for a
person to be called as an entrepreneur.
• Entrepreneurship is defined differently by different authors.
• Comprehensive definition : It is the process of creating something new
with value by devoting the necessary time and effort, assuming the
accompanying financial, psychic and social risks and receiving the
resulting rewards of monetary and personal satisfaction and
independence” (Robert D. Hisrich and Michael P. Peters ,1998)
10-10-2020Dr. G.D Pawan Kumar 2

Profile of a Start-up
• It is a new business that is in the initial stages of operation, typically
financed by an individual or small group.
• The objectives of a start-up are to be one’s own boss and create
employment
• It is a scalable business model built on technology and innovation.
• Develops a product/service through disruption.
• Focused on entrepreneurs in IT and ITeS segment working towards
innovation and development of products or services.

Definition of Start-up Enterprise
A start-up is defined as a ‘temporary organization with scalable business
model’.
According to the Ministry of Commerce and Industry, GoI, it is:
ii) A registered entity not more than 7 years old.
iii) Has never crossed an annual turnover of Rs25Crs in any preceding
financial year.
iv) A company working towards innovation and development of products or
services that have high potential of wealth creation or employment
generation.

Attributes of Start-up Venture
Grant Thornton (2016) define start-up business as an organization which is
a) Incorporated for three years or less.
b) Is at a funding stage of Series B or less.
c) Is an entrepreneurial venture/a partnership.
d) Development, production or distribution of new products or processes.
e) Has a revenue of up to INR 25 Cr.
f) Is not formed through splitting or restructuring.
g) Employs 50 people or less.

The Start-up Ecosystem
 Till 2019, there were around 9000 Start-ups.
 Cumulative valuation of start-ups was $95-101Bn.
 Direct employment -390k and Indirect around 14-16 lakh.
 21% of Indian start-ups were primarily focusing on global markets.
 The ecosystem has become a launch pad for a larger number of start-ups.
(Source: NASSCOM- Zinnov Report,2019)

The Start-up Ecosystem
(As of 2019)
 1300 Start-ups were established in India
 Total Unicorns grew to 24. (7 Unicorns in 2019)
 Direct employment created crossed 60,000.
 Total funding received is over $4.4bn.
 Active institutional investors - 390 in numbers.
 Active incubators and accelerators amounted to 335 numbers.
 Number of industrial verticals with active start-ups-20+

Various Start-up Verticals
 Enterprise-19%
 Healthtech-14%
 FinTech-10%
 HRTech-6%
 Edtech-6%
 Retail & Retail Tech-5%
 Travel and Hospitality-4%
 SCM & Logistics-4%
 Real Estate and Construction-4%
 Automotive-4%
 Industrial & Manufacturing-3%
 Food & Foodtech-3%
 Mobility-3%
 AgriTech-2%
 Others-13%

Government of India Initiatives
• Make-in-India : to attract foreign investments in the manufacturing sector.
• Increased the foreign direct investment (FDI) limits and strengthened
intellectual property rights (IPRs).
• Start-up India : to build a strong eco-system for nurturing innovation and
Start-ups.
• Stand-up India : promoting entrepreneurship among women and SC/STs.

GoI Initiatives(Continued)
• Digital India : to ensure government services are made available to every
citizen through online platform.
• Atmanirbhar Bharat Abhiyan : to make India "a bigger and more
important part of the global economy", pursuing policies that are
efficient, competitive and resilient, and being self-sustaining and self-
generating.
• The five pillars of ‘Atmanirbhar Bharat: economy, infrastructure,
technology-driven systems, vibrant demography and demand.

Issues and Challenges of
Entrepreneurs
• Financial Resources.
• Revenue Generation.
• Team Members.
• Supporting Infrastructure.
• Creating Awareness in Markets.
• Exceed Customer Expectation.

Issues and Challenges of
Entrepreneurs (Continued)
• Tenacity of Founders.
• Cumbersome regulations.
• Growth Decelerators.
• Lack of Mentorship.
• Lack of a Good Branding Strategy.
• Replicating Silicon Valley.

Opportunities for Entrepreneurs
• With benefits and convenience of new products, viability of start-ups is
not difficult.
• Demand and consumption of goods and services would drive innovation
and creation (Mittal, 2014).
• With right product, success could be high with opportunities for exports.
• With 130Cr population , high demographic dividend and 1.5 Cr joining
the workforce annually would give fillip to Indian economy.
• High penetration of IT and internet.

Opportunities for Entrepreneurs
(Continued)
• Multicultural and multilingual regions need innovative solutions to health,
education, infrastructure, sanitation etc.
• Each problem provides a unique opportunity to create a business around it.
• India's tele-density brings in convenience and reach to consumer
segments(TRAI,2017).
• The reduction in data charges help start-ups disrupt traditional businesses.
• GoI’s digital push is going to improve connectivity.

Reasons for Euphoria
• The bottom-of-the pyramid space in India is a potential market.
• Change of mind set of experienced executives from being salaried class
to becoming risk takers.
• Huge investments of $14.5bn in start-ups and the success stories luring
other enterprising people.
• Venture capitalists and angel investors are aggressive and gung-ho on
Indian start-ups.
• Investments by business leaders is a strong reason for encouraging
individuals.

Popular Start-ups
(Source: Adapted from “17 start-ups to Watch”, TOI, 2017)
S.No.
Area of Operation Name of the Start-up Firm
1
Online food delivery/Grocery SWIGGY, ZOMATO/BIGBASKET
2 Edutech BYJU's , UNACADEMY , UPGRAD , VEDANTU
3 Fancy OnlineGames DREAM11,MPL,FANFIGHT,FAU-G
4 Hospitality/Travel OYO/MAKEMYTRIP
5 Online beauty products NYKAA
6 Taxi Aggregators OLA
7
Online Furniture URBAN LADDER,PEPPERFRY
8 Insurance POLICYBAZAR,ACKO
9
Online fish, meat delivery FRESHTOHOME,LICIOUS
10
Big data analytics for trade PEELWORKS
11
Online pharmacy/Healthy Lifestyle PHARMEASY, NETMEDS, MEDLIFE/CURE.FIT
12
Platform to get local businesses online MEESHO,PAYTM MALL, DUNZO
13
Logistics management software FAREYE,CITTA,NISSI,TRIMBLE,ZEDEX
14
Lifestyle tracking platform HEALTHIFYME ,PEERBITS ,GOQii
15
Payments solutions for credit/debit cards PINELABS,CASHFREE,RAZORPAY
16
AI-driven solutions for retailers STAQU, iLENZE, WAZZAT
17
Packaged ready-to-cook idli /dosa batter IDFOODS,RISHTA

Valuations of Indian Unicorns
Start-Up Valuations in $ and INR( $=Rs70)
Paytm $16 billion (Rs. 1,12,000 crore)
Oyo Rooms $10 billion (Rs. 70,000 crore)
Ola Cabs $6.32 billion (Rs. 44,240 crore)
Byju’s $5.75 billion (Rs. 40,250 crore)
Swiggy $3.3 billion (Rs. 23,100 crore)
Udaan $2.3 billion (Rs. 16,100 billion)
Zomato $2.18 billion (Rs. 15,260 crore)
Delhivery $1.5 billion (Rs. 10,500 crore)
Policy Bazaar $1.5 billion (Rs. 10,500 crore)
Lenskart $1.5 billion (Rs. 10,500 crore)
InMobi $1 billion (Rs. 7000 crore)
Dream11 $1 billion (Rs. 7000 crore)
Big Basket $1 billion (Rs. 7000 crore)
(Source:Officechai,2019)

Start-up Opportunities
- Low-end Ventures
Affordable snacks and
tiffin's
Traditional
health drinks
Franchising of
businesses
Waste management in
Tier -2 &3 cities
Media support
services
Food
Processing
Washing and ironing Solar energy products
(Lamps..)
Support for retail
businesses
Supply of drinking
water in small packets
Training for
employment
Pharmacy&
essential supplies
Diagnostic Centers IT and ITES Local food delivery
(Source: Author’s Perspectives)

Start-up Opportunities
-High-end Ventures (Export Oriented)
(Source: Author’s Perspective)
Auto-Components Organic Farming
Engineering Goods Biotechnology
Horticulture Ayurveda Products and Medicines
Floriculture Software Exports

Reasons for Failure of New Ventures
Based on analysis of 101 firms ,the reasons for failure are listed below:
• 42% failed as the product had no market.
• 29% firms ran out of cash.
• 23% did not have the right team.
• 18% closed due to pricing issues.
• 17% firms had poor product.
• 14% failed due to poor marketing and
• 8% had no investor interest (Griffith,2014).

Conclusions
• The current economic scenario in India is on expansion mode.
• The Indian government has put a number of liberal policies and schemes
in place.
• Contributions of start-ups will have cascading effect on economy and
employment generation.
• Initiatives like ‘Make in India’, ‘Start-up India’, ‘Atmanirbhar Bharat’ etc.
will encourage entrepreneurs to join the band wagon.

Conclusions(Continued)
• Entrepreneurs should avoid the pitfalls which could kill an enterprise.
• Being a country with large population, opportunities available are many for
start-ups.
• Start-up ecosystem could arrest brain drain improving availability of local
talent for Indian companies.
• Some of the start-ups may become unicorns.
• Public/private institutions cannot provide employment to every student
coming out of college, as such, entrepreneurship is a viable alternative for
Indian youth.

Thank You
Dr. Gopaldas Pawan Kumar
@ gdpawan@gmail.com
https://www.researchgate.net/profile/Dr_Gopaldas_Kumar/research

Indian Start-ups -Issues , Challenges and Opportunities (Road map for starting a successful venture)

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