By Aleem Sheikh, Founder & MD, Talisman Ventures Pvt. Ltd.
The Indian startup Talisman Ventures has developed the innovative app named TimeOutApp that addresses the challenges of nomophobia and increases your productivity over phone usage.
As an entrepreneur, I know about failures. Have made mistakes; at the same time have been fortunate to learn from it. The story of a start-up is an abridged version of a life journey, a start, growth, maturity and an exit.
The start-up scene in India is not new. One can trace its origin back to the last decade of the previous century before internet technologies made its entry into the Indian market. Since then, it has grown steadily; though it saw a significant spurt post the smartphone market entered India in 2007. Presently, we have got 300 million smartphones and growing. Also, the largest user base for Facebook, Google, and WhatApp.
According to the industry body; NASSCOM, India has the third highest number of start-ups in the world, crossing 4200-4400 with a projection of more than 11,500 by 2020. The U.S. and the UK top the list. At the same time it's the world's youngest start-up nation with most of the founders,almost three out of every four,are under the age of 35, this reflects the potential one can harness.
By all reasons, we should be happily dreaming of multibillion-dollar initial public offerings and a vibrant exit system, but we are not. Take the case of Grofers, which raised $120 million - that’s over Rs. 750 crore. A few months ago, Grofers laid off its staff, publicly admitted it lost Rs. 24 lakh a day and ended up. TinyOwl walked a similar path lying off around three hundred employees.
The year 2012: Locon Solutions Private Limited flagship brand Housing.com starts operation from the beautiful campus of IIT Bombay. Twelve students come together to develop an online portal with the vision to simplify the daunting task of house hunting. The project is an instant success. Traffic increases so do fund. Within two years the company is valued at Rs. 300 Crores and has four rounds of funding from top investors.
The year 2014: The Economic Times runs a front page story that three co-founders have quit Housing.com since 2012. (The Economic Times, Bangalore Edition, August 05, 2014). It incurred a loss of Rs 48 Cr on revenue of Rs 1.48 Cr in the fiscal year, 2014. The crisis of confidence brought by the unicorn meltdown is a lesson for the new breed of startups that is evolving with an estimate of 3-4 every day. Most start-ups take an entrepreneurial plunge without a roadmap, believing that no model or template apply to their new venture. That's wherein they hit a road block.
We need to understand the missing link behind the dying startup. India’s digital economy is poised for a bright future. It’s just that we need to look at what the Indian ecosystem is getting right and what it is not.
What the Indian Ecosystem Got Right
1. Market consolidation, acqui-hiring, technology acquisition, and customer acquisition are the primary drivers for the increase in M&A of Indian startups.
2. With the growth of momentum in M&A in India, investors are getting more exit opportunities.
3. Startups are adopting new ways to attract and retain top talent.
Where It Distracts
1. Product: Indian startups are often alleged to be copying foreign startups without much thought on how to make in India.
2. Target group: Internet customers are close to 700 million, but consumers (people who can afford to pay for substantial data packs and possess credit cards) are only 150 to 200 million. The first focus is always to serve the premium population which is around 20 million people and extrapolating the data to 1.2 billion Indians. The need is to identify the difference between customers and users and not extrapolating the study of elite customers to 1.2 billion populations.
3. Over ambitious: To build a billion dollar valuation, overlooking logic. As the case with Grofers or for that matter Flipkart whose cost has gone down to 9 billion dollars from 14.5 billion. Startups are acquiring customers and then not focusing enough on their experience and retention.
4. Team: Investors see the dream shown by the founders, but the vetting process of the team is not thorough. The idea should be to bring professionals with cross-dimensional expertise on the team, carefully analyzing and vetting potential hires.
5. The Brand Building: The startups should look at engaging customers in building brand presence, creating a more utility-driven approach for consumer base consolidation rather than depending solely upon short-term measures such as discounts, coupons, deals, etc. for customer aggregation.
Wed innovation to problem-solving
These are elementary mistakes that start-ups make. Start-up life is not in the spotlight. It’s about disruption. It’s about innovation. Building a start-up is about solving the problem, not chasing ideas.