Top Reasons: Why Start-ups in India are failing

start-ups in India

Start-ups in India are the world’s second-largest Start-up ecosystem and it is expected 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:

  1. Innovation touch in Start-up is missing:  According to a joint survey by IBM and Oxford Economics despite the entrepreneurial strength 90% of Start-ups fail 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.
  2. Poor Leadership of young Start-ups: 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 the case of Startup which perhaps is the most successful area in the 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.
  3. Laws governing the Start-up culture: The Start-ups 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 contracts 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.
  4. Effective founders team of Start-ups: 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.

Why Start-ups are the future hope?

For a country with such a gigantic population of youths, Start-ups will play a major role in creating employment for them. Hence Start-ups should be nurtured and managed well by experienced industry experts. The Start-ups should be mentored by leaders for achieving success. Commenting on the partnership, Chris Daniels, Vice President, WhatsApp said that India has a great ecosystem of startups which are making a huge impact in all sectors of the Indian economy

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.

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