InMobi became India’s first unicorn in 2011; Open is the 100th in 2022. Just about 15 years ago, VCs were not excited about internet companies in India and their ideas; in contrast to that, we are in a time when the investors are making a beeline to invest in Indian start-ups. Some of the recent listings of these have not performed very well in the stock market; investments in the recent times have fallen a bit; some companies have announced layoffs; some reports in the media point to a picture of a gloomy future. Yet the mood has not dampened significantly and rightly so! What do we take away from this?
Strong Fundamentals
Nobody can take away the favourable tailwinds that are fuelling this growth. India is a huge market, its economy has been growing and hence, backed by increasing disposable income, the demand for products and services is on the rise. For a foreseeable future, this trend is irreversible. Consumers are equipped with smartphones and are comfortable transacting digitally.
At the same time, our academic institutions have been encouraging entrepreneurship. The risks associated with start-ups are no more a forbidden territory for a significantly large number of families given the economic prosperity in the environment. Failure of an enterprise or a job loss as a consequence is not as taboo as it was in the past. These social changes have been strengthening the tailwinds for the development of the ecosystem.
Most importantly, finding investors, mentors and employees is no more a Himalayan task. The norms around investments are getting established. There is no dearth of innovative spirit in India. USA and China are the markets which have more unicorns and decacorns than India. If we can keep the policy framework up to date and provide high-quality education on a sustained basis, India could well be the largest start-up ecosystem in the world.
Sustaining the goodness
Though India has taken long strides in developing the start-up ecosystem, we have to sustain the pace and preserve the spirit. Else, the danger of losing the plot is quite imminent. The challenges could emerge from government interventions in the area of labour laws, income tax regulations, foreign investment policies, company law provisions and the like. For example, the idea of reservation in employment by private enterprises can deter the ease of doing business.
Non-availability of the right talent at the right time is an important enabler for the development and rapid growth of our start-ups into unicorns and decacorns. Not only the government bodies but also the private enterprises have to come forward in keeping the supply at pace with the demand. A close collaboration between the efforts on the supply side and the demands of the employers is crucial, going forward.
Leadership practices and governance are typically the hallmarks of the long-standing enterprises which have stood the test of time. For start-ups, most often, the leadership team does not have the depth of experience that the CXOs of large enterprises have and hence could find themselves at sea when faced with challenging issues. They need to acknowledge the gaps and use the necessary reinforcements in the form of seeking input from coaches and mentors. They need to use interim staff or freelancers to take up specific challenges and solve them rather than trying to do it themselves. Employer brand takes a long time to build and no time to crumble. Hence, careful crafting of leadership practice is essential.
Innovation at the core
Indian ecosystem of start-ups has the tailwind advantage; however, at the core of every thriving start-up is a unique idea that solves a problem in a superior way to the others. Copies of an idea do not work if they are deployed in the same market at the same time. The uniqueness of an idea brings a set of customers who stay loyal or advocate the brand. The solution has to be unique or the execution of a known solution has to be unique. Examples are: Flipkart and Amazon, Swiggy and Zomato and many more. Their solutions are greatly the same, but they thrive because they continue to differentiate in some ways and have been able to hold the attention of their customers.
Secondly, the timing of launching the brand is an equally crucial factor that differentiates a winner from an also-ran brand. If an organisation does not leverage an opportunity for merger or acquisition or investment at the right time, it could cease to survive in the long run. Spotting the right opportunity and seizing upon it at the right time is a critical success factor!
