Bikky Khosla | 13 Sep, 2016
A Bangalore-based start-up analytics firm has recently compiled India's first 'Deadpool' list, cataloging nearly 800 dead or dying technology start-ups, which are from diverse segments of technology, including e-commerce, online education, mobile software, etc. In the past few years, India has seen a start-up boom that has pushed the number of tech start-ups in the country -- according to the Economic Survey published in February -- to more than 19,000. And now we are getting our own version of dot-com bust! Many, however, do not see this list -- which is not public and accessible for a fee -- as something to worry about.
The most cited cause of these failures is poor business model. Many of these start-ups entered into business without any strategic plans, and with expectations of quick returns they burnt a lot of cash on marketing or through discounts. Investors too judged them based on their popularity, without assessing their long-term sustainability and ability to make profit. The list includes a number of copycat companies, indicating that lack of differentiation and invention is another cause of failure. It is also pointed out that many of the start-ups failed to move out of metro sectors. In many a case, lack of marketing skills and not having the best technology are also cited as causing these failures.
The government contends that it is only a lean phase and far from a bust. A senior government official said that the failure could be due to start-ups' inability to scale up during a global slowdown. According to him, funds is not a problem as funding is coming through angel investors and venture capital investors. This view sounds logical though in the recent months the flow of such investments has dropped to some extent. Most importantly, I think we can see it as a sign of changing attitudes of our entrepreneurs towards failure. Despite all these debates, the need for providing a better start-up ecosystem to our entrepreneurs cannot be denied, however. The government has a lot to do in this respect.
Meanwhile, the Centre has recently approved six proposals to set up centres of excellence to promote and fund start-ups. Under the National Initiative for Development and Harnessing Innovation (NIDHI), a programme steered by the Department of Science and Technology, the government has earmarked Rs 500 crore to scale up the start-up ecosystem. It is also reported that the department has partnered with some large international corporates to initiate technology-driven, innovation-based programmes. If it really helps our start-ups then such moves are always welcome.
I invite your opinions.