India has the second largest Start-up ecosystem in the world and it is projected to witness a growth of around 10-12%. This has been possible with the huge available funding from Angel investors and government aided funds for early phase Start-ups and the available local talent willing to join a Start-up or starting their own. Though an idea is a genesis for a good Start-up sometimes having an India is not enough. In 2016 more than 200 Start-ups fails and closed their operations. What certainly led to their closure, this puts a question mark on the sustainability of Start-ups that have grown like mushrooms in the Indian economy. This failure of Start-ups is not taking a slowdown and seems like it is as steep as it was at the time of beginning when Start-up culture had thrived in India. It as a matter of important concern to crack the reasons as to these Start-ups fails to do business. Start-ups provide an immense opportunity for employment along with contributing to the national economy.
After researching through a list of concerns and case studies the probable reasons why Start-ups in India are facing challenges to survive are as follows:
- Innovation: According to a joint survey by IBM and Oxford Economics despite the entrepreneurial strength 90% of Start-ups fails within the first five years and Innovation is one of the major reasons for this. Copying the ideas from Start-ups of the West cannot be fruitful always.
- Poor Leadership: Of course the founders of most of the Start-ups are sales/business oriented with less knowledge of the actual groundwork necessary for the success of Start-up. In case of Startup which perhaps is the most successful area in Start-up field, the people with fancy titles such as CEOs, CTOs, CIOs themselves have less experiencing of writing any code or creating the entire framework.
- Laws: The Startups in India do not strictly follow the rules and laws laid by the government as compared to the Startups in the US, Israel, UK, etc. The rules for employment contract are usually not very strictly followed and we have heard of many instances where employees have complained of not getting salaries on time, long hours of work, irrelevant hire and fire strategies, etc.
- Effective team: The most important aspect of a successful Startup is its team. A Startup with efficient team members has high chances for survival and the trust of team members in the spirit of a Startup company is what will surely work for them. Also, one part to consider here is that the availability of skilled talented people. In the case of tech Startup, there is scarce availability of highly skilled candidates as the ones from top premier institutes are already hired by MNC’s leaving the SMEs & Startups with a limited lot.
To control this rate of failure of Indian Startups one should first evaluate the need, feasibility, and acceptability of an idea before shaping it into a company. Doing this one becomes surer about the sustainability of his/her idea.