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Most Indian Startups Create Jobs, Clone Western Ideas and Close Down Due to Lack of Funds

With India scaling its way up to become the third-largest startup ecosystem, the picture might seem rosy on the outside but accounts for further unemployment as more and more startups pull the curtains down.

Rounak Kumar Gunjan | News18.com@Rounak_T

Updated:July 9, 2018, 2:53 PM IST
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Most Indian Startups Create Jobs, Clone Western Ideas and Close Down Due to Lack of Funds
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New Delhi: The Indian startup space is a throbbing job-generator, however, mere replication of Western ideas and lack of technical innovation is forcing venture capitalists to restrict funding , resulting in slow decay of entrepreneurial ambitions.

In a report by IBM Institute for Business Value and Oxford Economics, it was found that 90 percent of Indian startups fail within the first five years. And the most common reason is lack of innovation.

Despite the fact that market valuation of Indian startups has grown significantly over the past four years, the study, “Entrepreneurial India,” states that 77 percent of venture capitalists surveyed believe that Indian startups lack new technologies or unique business models.

With India scaling its way up to become the third-largest startup ecosystem, the picture might seem rosy on the outside but accounts for further unemployment as more and more startups pull the curtains down.

Meanwhile, India’s enthusiasm towards startups has taken a dent as well. Number of new internet and technology start-ups launched in the first nine months of 2017 slumped to 800 from more than 6,000 in all of 2016, according to data from Tracxn, a start-up tracker.

“Since 2015, as many as 1,503 startups have closed down in India. And the major reason is due to the replication of Western business models, and not lack of subsequent funding from the investors,” says Rishabh Lawania, founder of Xeler8, a market intelligence platform recently acquired by a Chinese venture capital firm. The highest number of failures were in logistics, e-commerce and food technology.

Experts are of the opinion that artificial intelligence machine learning have been adopted in retail and banking as well, but India remains to be a follower market. “What you see in the US today will start appearing here tomorrow,” said an expert.

US based think-tank Information Technology and Innovation Foundation (ITIF), in a survey in 2016, ranked India among the bottom of a list of 56 countries on global innovation. The ITIF study revealed that the country’s poor performance in developing human capital is mainly because of its failure in investing on education.

New technologies emerging in India can be ascertained from the number patents applied for. India filed 1,423 international patents in 2015-16, while Japan filed 44,235, China 29,846 and South Korea 14,626, according to the World Intellectual Property Organization.

Currently, India ranks 66th on the Global Innovation Index (GII) list, which is 41 places behind China. The GII report said India has the ingredients needed to become a global driver of innovation, including market potential, talent pool and an underlying culture of frugal innovation, but “relative weaknesses exist in the indicators for business environment, education expenditures, new business creations and the creative goods and services production.”

News18 interviewed three startup owners in India who are making a niche for themselves in the ecosystem, to under how the country is shaping up for new-age entrepreneurs.

Shachin Bharadwaj, Co-founder & CEO- Sminq. The startup through its app broadcasts real time information.

What was the idea behind your start-up?
The idea cropped up when we the co-founders i.e. Shachin Bharadwaj, Santhosh Nagarajan and Sheldon Dsouza, who previously worked together in food-tech start-up TastyKhana.com, were contemplating different ideas for starting a new venture. During that time, my wife was pregnant and there were regular visits to the hospital. During our visits, we had to wait in long queues with long waiting hours even after taking appointment. The problem was similar when we went out for shopping – we were not sure if product will be in stock, what will be parking situation or what is the rush at the store. These problems gave rise to the thought that there is no real time information of places around you, something that you can check before you step out to get live information.

What problems did you face on the way?
If you talk about challenges, there are quite a few challenges while working in this industry such as dealing with the already established leading competitors and keeping yourself updated with the latest trends and technology to fulfil the ever-changing needs of the users. Another big challenge is to become trustworthy and secure platform that can save our users from online harassment and false information.

Your thoughts on the current start up ecosystem of our country?
As an entrepreneur, I feel that India’s start-up ecosystem is growing exponentially. The spirit of entrepreneurship has evolved drastically over the last few years. The launch of the start-up initiative by the government of India has empowered many young entrepreneurs to come up with various innovative ideas that would create a huge impact in the lives of the individuals and would also add value to the start-up ecosystem.

Mughilan Thiru Ramasamy, Cofounder - Skylark Drones, provider of custom drone products and services.

What was your idea behind the startups?
We were building drones for various international competitions in the past decade, won some awards from Lockheed Martin, NASA, and others for our systems engineering and design. Through our experience we found that drones can be used to solve various problems in our society across sectors ranging from infrastructure, mining, utilities and agriculture, which inspired us to start an organisation solving such problems.

Major problems that you faced in the journey included?
There were multiple problems that we faced early in our startup journey—biggest amongst which would be access to capital, greater access to seed capital would accelerate a lot of startups to path of success. Hardware and product startups usually have greater need of early capital, and also have limited traction to justify the same.

How do you analyse India’s startup space?
Over the last 4 years, the startup ecosystem has matured and has come a long way, more good ideas are getting funded, and it is evolving to become more stable. However, there are some good schemes from the government that can get fast-tracked. For example —Collateral—free SIDBI loans to early stage revenue generating startups can help them scale much faster

Nilesh Palresha, Founder – EarthFood, Residue-free Farming firm.

How did you come up with EarthFood?
I have always been a keen observer and often noted the humongous increase in the amount of fertilizers and pesticides being used on the agriculture produce, which in turn would be consumed by the masses leading to some serious health disasters. Keeping this in mind we realised that there needs to be an alternative solution to this problem, which ultimately gave birth to Earth Food. We produce our own exotic and Indian vegetables that are free of residue.

What are the problems that you have faced?
Following were the problems that I faced during the inception of EarthFood:
• Residue free farming being a fairly new concept in the field of agriculture it was thus important to make people believe in the concept of our vegetables as these fall between organic and normal
• Make people choose buy branded vegetables
• Initial manpower for operations

Your thoughts on the current start up eco system of our country?
As a second generation entrepreneur I feel that India’s burgeoning start-up ecosystem is at an amazing phase currently. The spirit of entrepreneurship has evolved drastically over the last few years. An industry report by NASSCOM suggests that there has been a considerable increase in the number of start-ups in the country. India is considered as home to 4,200 start-up generating 85,000 employment opportunities. The launch of the start-up initiative by the government of India has empowered a lot of young entrepreneurs to come up with various innovative ideas that would create a huge impact in the lives of the individuals and would also add value to the start-up ecosystem.

(This story is part of News18 series #onthejob. The next story delves into how fresh graduates from premier colleges are grappling with joblessness)
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