Monetising of Flipkart and its acquisition by Walmart is a dream success story of the Indian start-up world. This signals the coming of age for our startup industry. India is increasingly being recognised in the world as a land of startups. The trend began at least ten years ago. Interviewing a group of applicants for admission to the Fore School of Management in Delhi a decade ago, I was surprised that even then, around half of the applicants were entrepreneurs. They understood that to succeed they need to equip themselves with tools of management and business. 

Cities like Bengaluru, Chennai, Pune and even Hyderabad are the preferred destination for startups in India. I covered, Surge a global tech startup conference in Bangalore, a couple of years back and Indian tech startups came to the event in hordes. All major investors from HNI, angel, venture capital and private equity were in attendance. Indian startups are traveling to learn and interact with others in global startup events in Hong Kong, Europe and the US. 

Of late, this startup movement has expanded beyond the technology space and into other traditional areas like food, energy, education, etc. We also know that for every successful startup there are at least dozens of others who are struggling to succeed. While in Silicon Valley failure is regarded as a feather in one’s cap, the acceptance of failure in India is not that widespread. The pressure to succeed for Indian founders is great.

Startups world over and in India face a set of common challenges. They struggle to raise capital, find the right market for their product and innovation and it is difficult for them to attract the right workforce to man their venture. Then, there are others that take off quite nicely but are unable to sustain growth. After a while, they wither away. 

Let me briefly outline the discussion points against each challenge:

Financing:

A startup needs to realise that investors too are like them. They are professionals seeking to sell capital to a business that will give them a promise of high return. Investors play in the risk capital space. They scout for ideas and concepts for them to fund. 

The startup founder, therefore, must come up with a business case that is strong enough to convince the investor that funding the innovation will give him an excellent return. Investors are willing to wait and put a risky bet on a great idea. It is all about pitching the idea to the right group. 

Unlike Silicon Valley, it is important to note that Indian investors look at not just the idea and the Founder bringing the idea to them, they in addition look for evidence and data that indicates a track record of market success. This attitude is all pervasive in the Indian investing community and is true even for the Indian Angel investors.

Marketing:

Startups often struggle to find the right market for their innovation. A systematic approach to market assessment and market analysis is required. Founders need to familiarize themselves with basic market analysis tools to successfully approach their target market. 

Market size estimation, market segmentation, conducting dipstick tests, analyzing feedback, assessing the potential for growth, are some of the critical surveys and analyses that go a long way for successful market-entry and market penetration.

Staffing:

Startup’s struggle to find willing personnel to staff their venture. They often end up paying more than the market wage and even then, are just able to secure a sub-optimal workforce. There are a few startups, though, who get to secure the best and the most innovative talent to their venture. 

Attracting talent is an interplay of leadership, motivation and communication. Retaining quality manpower is the next challenge. People who are willing to join a startup in preference to established corporations look for an experience. Offering experience and an opportunity to learn are essential requirements to get a quality team.

Even after the startup has overcome the above challenges, they still find it difficult to sustain themselves and grow. 

Markets evolve over time and organisations need to be nimble enough to adapt themselves to the changing market conditions. Even, established companies like TCS, undertake major organization changes every four or five years. It is instructive to see how they manage this periodic change and successfully re-align their workforce to the changes. 

Successful organizations are organizations that learn. They continuously reinvent themselves and become more and more productive. Startups require to learn from other successful startups. They also need to prepare themselves for the future and adopt management practices that will enable them, not just survive but also thrive and grow up into building successful entities. 

Sudhir Ahluwalia

Author: Sudhir Ahluwalia

Sudhir Ahluwalia is a business consultant. He has been management consulting head of Tata Consultancy Services, an IT outsourcing company in Asia, business advisor to multiple companies, columnist and author of the book "Holy Herbs." Ahluwalia was also a member of the Indian Forest Service. He spent more than two decades of experience in the Indian Forest Service studying natural ecosystems. Holy Herbs: Modern Connections to Ancient Plants is his second book. He is a columnist who writes in the US based leading global natural products industry publication – natural products insider.

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