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REASONS FOR INDIAN STARTUPS FAILURE
1. BANARAS HINDU UNIVERSITY
INSTITUTE OF AGRICULTURAL SCIENCES
PRESENTED BY:
Darshan Kumar B R
Roll no. : 18412AGE004
ADVISOR:
Prof. P.S.Badal
Dept.of Agricultural Economics
2.
3. Contents:
• Definition
• Introduction
• Startup scenario
• Major startups in India
• Why 'No' to start a startup?
• Why startups fail to takeoff?
• Conclusion
• References
4. Definition: What is startup...?
According to the government notification, an entity can be identified as a startup.
up to 10 years from the date of incorporation.
If its turnover does still not exceed 100 crores in the last five financial years.
It is working towards innovation, development, deployment, and commercialisation of new
products, processes, or services driven by technology or intellectual property.
A startup is a young, dynamic company built on technology and innovation wherein the
founders attempt to capitalize on developing a product or service for which they believe there
is a demand
5. Introduction:
About 45 percent of India's population is under the age 35 years. A few of the
youth in India are aspiring to become entrepreneurs for making India a potential
'Startup Nation'
India is ranked 77th out of 190 economies on the ease of doing business,
80th on the ease of trading across borders and
121th on the ease of paying taxes.
India is ranked 137th in case of starting a business
States’ Startup Ranking 2018:
Best Performer : Gujarat
Top Performers : Karnataka, Kerala, Odisha, and Rajasthan
11. While in 2016, the major reason behind a large number of startup
shutdowns was said to be lack of funding, in 2017 lack of market
demand became the primary reason for the startup shutdowns.
ecommerce sector witnessed the maximum startup shutdowns
among Indian startups. The next sector which witnessed maximum
startup shutdowns in India is fintech and hotel accommodations.
Delhi witnessed the maximum number of startup shutdowns in 2017
to the tune of 10. To be specific, Gurugram alone witnessed some
seven startup shutdowns this year. While Bengaluru took the
second stage with just four startup shutdowns
12. 50% of the founders, post-shutdown, have joined another company and
are working on leading positions such as category head, CEOs, VPs and more.
77% of Indian startups lack new technologies or unique business models.
Since 2015, 1,503 startups have closed down in India. due to the replication of
Western business models, and not lack of subsequent funding from the
investor.
India ranks 52nd on the Global Innovation Index (GII) list, which is 28 places
behind China.
13. Why startups fail to takeoff?
1. Building a wrong product
• 42% of the startups that begin enthusiastically thinking they will change the
world, are actually not needed at all. .
2. Not being able to build the right team
• In a hurry to launch their product early, startups tend to build teams with
people who have little or no interest in the product idea.
14. 3. Lack of unique value propositions
• If product fails to deliver one or more UVP as compared to similar products available in market
already, your product is bound to fail.
• at least four UVP which will help you stand out and give a competitive advantage increasing profits.
4. Lack of persistence
• No strong passion for the product,Not able to persist through the bad times
• Bad times question the faith of founders in their product.
15. 5. Failing to pivot/change direction
• Due to the love for their initial/first product, building a wrong product, do not pivot.
• leads to wastage of time, resources and money too, eventually leading to failure.
6. No mentors or advisers
• Going alone there are more chances of you making mistakes .
• Mentors can guide you in day to day decisions to avoid falling off the cliff.
16. 7. Slowness to launch
• Every idea dies if it is not implemented on time.
• Secondly, your product may actually leave behind
the competition, which leads to product failure.
8. CEO / founder(s) unable to make decisions
• Clear vision about startup. helps in making quick and
efficient decisions in critical times.
• Unclear of their own path,leads to wrong decision.
17. 9. No business plan
• Every startup must create a business plan to articulate every
single aspect
• Business plan will give you a clear idea of your operations.
• Lead to lose one or other important aspects of startup.
10. Unaware of competitors and changing market condition
• Should be address regularly and carefully
• Launching something which is already there in market or over
pricing products which are available at cheaper rates etc.
18. 11.Conflict between cofounders and lack of a common vision
• It is important that they should be on the same page.
• Differences between founders affect growth of the startup.
• They struggle to raise fund.
12. Not raising funding at the right time
a) No Time for Experiments and Analysis
• Housing.com and TinyOwl. These are the biggest failed startups of India more than Rs 100cr funding.
• b) Share Distribution Problem
• Too much urgency in raising the fund or apply for funding before achieving a good level
19. 13.Lack Of Innovation
• copy cat of successful global ideas.
• one can copy an idea but cannot copy the brain to run business.
• entrepreneurship need to be unique and creative.
14. Wrong Salary Combinations:
• Buying leaders instead of preparing leaders.
• 70%-80% of startups are hiring employees from big companies
by paying double salary
• "The aim to become Rich, Not to Look Rich"
20. 15.Wrong Combination of Branding Vs Marketing
• Importance in acquiring a customer.
• Branding increasing the trust among customers while marketing generates customers to acquire
them.
• It dependent on 2 things, 1st is your target market and 2nd is your competitor.
16. Replicating Silicon Valley
• Indian startups get influenced by Silicon Valley models which may not succeed in Indian
scenario.
• Indian infrastructure in roads, internet, electricity and telecom penetration
21. 17.Technology
• Technology infrastructure -Appropriate IT-infrastructure has become a need for Indian businesses
• Absolutely vital for new startups to train their employees
18.Cyber security
• Most startups have a B2B business model.
• No back-up plan to keep the startup company running
19.Growth Decelerators
• Parts of the startup, sometimes become hurdles in the growing stages.
• The influence of incubators, institutes and similar organisations.
• Needs proper coordination among the organizations for mutual benefit.
22.
23. 20.Financial Resources
• Family members, friends, loans, grants,angel funding, venture capitalists,crowdfunding
• 85% of new company’s reportedly underfunded indicating potential failure.
• 43% of startups in India borrow from informal sources.
21.Revenue Generation
• As the operations increase,force startups to concentrate on the funding aspect, thus, dilute the
focus on the fundamentals of business.
• The challenge is not to generate enough capital or spending but to expand and sustain the growth.
24. 22.GOVERNMENT POLICIES, TAXES AND REGULATIONS:
• ANGEL TAX- 30% of funding above FMV
• FDI and FPI policies
• Lack of startup policies
• Labour laws: about 250 labor rules at the central and state levels
• Corruption: about 80% of Indian entrepreneurs says corruption getting worse.
• Global Intellectual Property Center’s International IP Index 2019, India ranked 40 out of the 50
countries
26. Conclusion:
• Startups and small bussiness have a vital role in economic development.
• As per CMIE unemployment report,states with better startup performance having less
unemployment rate.
• The government and instiutions need to work more on employability rather than
employment because graduates lack in skills.
• For better economy there is need of young working people to begin innovative startups
and a better government to create conducive atmosphere to scaling up
27. References:
• NASSCOM
• State Startup Ranking — Vikaspedia
• Yourstory/Startup bharat
• World bank report
• https://www.businessalligators.com/why-indian-startups-fail/
• https://www.researchgate.net/publication/323855305_INDIAN_STARTUPS-
_ISSUES_CHALLENGES_AND_OPPORTUNITIES
• https://www.quora.com/Whats-preventing-Indias-youth-from-entrepreneurship
