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New entrepreneurs and failing startups

The period of entrepreneurship boom seems like seeing its end in India. From what started as a series of innovative and successful startups making newspaper headlines, startup failures have started taking space. Here are a few pointers for you in case you find yourself answering questions around this topic:

  • IBM Institute for Business Value and Oxford Economics conducted a study, Entrepreneurial India, which found that 90% of Indian startups fail within the first five years. Some reasons cited for this were:
    • Lack of new technologies or unique business models
    • lack of skilled workforce and funding,
    • inadequate formal mentoring and poor business ethics
  • In India the limelight startups are mostly a copy of other successful models, such as Flipkart followed Amazon, Ola followed Uber, Oyo Rooms followed Airbnb. All these only improved upon an already established proven model of working. As against China, which has its own Google in Baidu, and Amazon in Alibaba.
  • Lack of Innovation in Indian startups becomes evident as only ‘Asian Paints’ featured in Forbes’ 25 Most Innovative  Companies, and Gillette India in Innovative Growth Companies.
  • Some initiatives that have been established to promote startup culture:
    • Make in India,
    • Startup India program,
    • Ministry for Skill Development and Entrepreneurship,
    • Intellectual Property Facilitation Centers and
    • Other Incubation programs
  • A survey by ITIF, U.S. based think tank revealed that the country’s poor performance in developing human capital is mainly because of its failure in investing on education.

  • Patents, a yardstick of Innovation:

According to the World Intellectual Property Organization, India filed 1,423 international patents in 2015-16, while Japan filed 44,235, China 29,846 and South Korea 14,626. Over 70% of the patents filed in the country are by MNCs; Indian companies and academia share the remaining 30%.

  • Some startups that shut down:
    • Peppertap, LocalBanya, GrocShop: For these, the cost of acquiring new customers was too high. As against these, what BigBasket seems to be doing right is that it acquires, and packages products, rather than just connecting suppliers and buyers.
    • iProf, Purple Squirrel in education space
    • Zoomo
    • Doormint
    • TinyOwl, ZuperMeal, BiteClub, Zeppery, iTiffin

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