What defines the Indian Startup Ecosystem? According to a recent study by IBM on ‘Entrepreneurial India’, India is the world’s third – largest startup ecosystem, but 90% Indian startups fail within the first 5 years. Why?
Study Focus and Sample Size
The IBM study, “Entrepreneurial India” is based on interviews with more than 1,300 Indian executives, including 600 startup entrepreneurs, 100 venture capitalists, 100 government leaders, 500 leaders of established companies and 22 educational institution leaders to analyze the macro impact of startups on the economic growth of the country. It further explores how proactive engagement between startups and established organizations can impact the growth of startups, the culture of established organizations and the overall impact on Indian economy.
Current Scenario of Indian Startup Ecosystem
It was found that 77% venture capitalists believe that the topmost reason for the failure of Indian startups is a clear lack of pioneering innovation. Most Indian startups emulate already successful ideas and models existing in other areas. Factors like lack of a skilled workforce and lack of funding are also significant roadblocks in the journey of Indian startups since top quality talent is required to boost growth and funding is essential at both entry and exit stages. Other roadblocks like lack of formal mentoring, poor business ethics and lack of experienced leadership were also mentioned.
On the other hand, executives revealed that India also possesses a certain range of advantages like economic openness and a large domestic market which are unique to India and can be exploited thoroughly by Indian startups.
Importance of Startup Ecosystems with Stakeholder Engagement
The study stressed upon the importance of ecosystems for India’s entrepreneurial economy and also recommended increased stakeholder engagement. This can help startups harden their business models and accelerate growth while enabling established companies to share in the entrepreneurial spirit of innovation and agility.
Impact of Startup Activity on India’s Business Ecosystems
The rise of an entrepreneurial culture has had a significant impact on India’s Business Ecosystem. In recent times, the market valuation of startups has grown significantly with a three times increase in investments over the past four years. The government has also promoted entrepreneurship by reducing corporate tax from 30% to 25%. There has also been accelerated development of rural areas with approximately 35% startups being set up in tier 2 or tier 3 cities.
Conquest Mentoring Sessions
A spirit of mutual cooperation is key to self – sustaining global ecosystems and that is one important message that comes across from this study. In its quest to aid the Indian Startup Ecosystem, Conquest conducts mentoring sessions for the top 50 startups which give startups an opportunity to directly meet the stalwarts in their field and gain valuable insights from their experiences, in varied fields like customer acquisition, fundraising and product management. We heartily congratulate the top 50 of Conquest 2017 and wish them luck for the journey that awaits them.