The Modi Government started the year 2016 with a ‘Big Bang’ for startups. A lot of dreams, new policies, millions in funds, tax waivers – the ‘Startup India, Standup India’ song was sung so well, that the entire startup community danced to its tune, with a wave of excitement even reaching the international corners. It was today, last year, when Modi has first time announced his ambitious mission of Startup India.
But is that enough for a country like India to startup?
All the above efforts are towards starting a venture, but what about the execution phase? Lots of promises were made to make the startup system robust, but here we are, almost a year into it and at the edge of celebrating our seventieth Independence Day – as a startup, we are still struggling with the basic issues.
Where on one side we are talking about smart cities, the digital revolution, and bullet trains, on the other hand, there lies no focus on updating the basic infra of the country. So, this Independence Day we reach out to industry veterans and startups to understand what are the issues that are stopping ‘Young India’ from really starting up and how we can overcome them.
Basic Requirements Need To Be Met
Among all other requirements, good roads and a communication system for employees to commute forms utmost importance. Any startup, ecommerce company or hyperlocal business thrives on their performance in delivery service. B2B startups thrive on the sales of their executives. The current infrastructure of the country is so weak, that it took just one good rain shower to wash away all the rules and communication systems. And with people stranded on the road, work gets delayed and business performance deteriorates. Something similar happened earlier this month.
The so-called ‘tolerant’ nature of Indian startups is the real reason for the poor infrastructure in the country.
Rohan Bhargava, co-founder of an online cashback site CashKaro, firmly believes the so-called ‘tolerant’ nature of Indian startups is the real reason for the poor infrastructure in the country.
As he tells it, “The Indian people are perseverant and to some extent have learnt to accept that one-day rain can cause floods, the Internet will get disconnected multiple times a day, unexpected traffic jams will make us late for meetings and so on.”
As stated by Samar Singla, founder of the online auto aggregator portal Jugnoo, “Rains create a lot of operational issues for us. Due to waterlogging on roads, there is a steep fall in supply of auto-rickshaws and our phones start buzzing with complaints. The auto-rickshaws either become unavailable or reach the destination later than the scheduled time. On the contrary, the demand increases abruptly, creating a huge mismatch between the demand and supply, and impacting our business enormously. Apart from this, we even witness frequent cancellations owing to rains as the condition of roads across the route is usually not anticipated beforehand by drivers.”
A similar story is shared by Gaurav Joshi, founder of ExtraCarbon, a waste management company. “When we started business one of the housing society estate manager asked us if we can provide services in the rainy season too. I said of-course without even thinking twice but the next day I had to eat my words. Why? Because we couldn’t arrange transport on time. Not only sales team even our operation team did not reach on time.”
Just one big splash of rain in our country and the Internet and power is down in most of the regions. The water clogged on roads due to inefficient drainage system results in long traffic jams, ultimately reducing employee productivity. The 15 km-long Gurgaon traffic jam a few days back is an apt example of this pain point. And this is not the issue with Delhi, even other bigger cities like Mumbai, Bengaluru and Pune, which are considered as startup hubs, are facing such problems equally.
The ‘Bandh’ Culture
A recent facebook post by Thirukumaran Nagarajan, co-founder and CEO of online grocery delivery app, Ninjacart, questioned the ‘bandh culture’ in India.
“Really don’t understand the concept of Bandh (strike). These guys tried vandalising our Warehouse but we somehow negotiated and got them out. The problem is these guys don’t even know why they are doing this and what cause they are fighting. All are young vella (jobless) local guys, who are paid to do whatever they want to do in the name of Bandh and terrorise people. Really dunno (don’t know) when as a country we move away from this culture. Just really dunno (don’t know) what the parties who called for the Bandh achieved,” said Nagarajan.
These kinds of situations not only result in just late deliveries or employees absent in office but also lead to cancellation of meetings, postponing events and more, ultimately affecting startups enormously.
Difficulty In Raising Funds At Idea Stage
Any entrepreneur in India needs to focus on three areas before starting up: market opportunity, differentiation and business model. Moreover, there are very few investors who willingly fund a startup on the idea-stage without even a prototype built.
As explained by Rakesh Deshmukh, co-founder at Indus OS, the Indian entrepreneurship ecosystem is not fully matured like it is in the US. There are no major exits to talk about and the investor focus is towards companies who can replicate and execute a business model that has already worked in China/US.
During an earlier interaction with Inc42, Yash Kotak, founder of a social networking site for selfie communication (that shut down in July this year) said, “One main learning that we got from Znapin is that it’s really difficult to raise money in India, especially at the idea stage. You cannot get money here without any prototype or a solid pitch deck, just on the basis of a great idea.”
An entrepreneur gets drained because of internal and external resource constraints including funding, infrastructure and government apathy.
Manoj Gupta, CEO and founder of CraftsVilla further shared with us that the current Indian societal ecosystem trains us to be risk-averse, less experimental and more settled in life. On top of this even if an entrepreneur rises above, he gets drained because of internal and external resource constraints including funding, infrastructure and government apathy.
“Beyond the bonhomie of Mr Prime Minister, sad to see nothing substantial happening on the ground. As entrepreneurs, we believe more in action than words. It’s high time the government reflects that,” he said.
Immature Talent And Lack Of Complementary Skills
The founding team of any startup is the key to its success, not only at the managerial level but also at the ground level. Deshmukh believes that Indian tech talent is not fully matured yet and tech for scale and UX needs to evolve keeping in mind the Indian audiences. He further said that without complementary skills in the founding team, the startup won’t survive for long.
During an earlier interaction with Inc42, Samar shared similar pointers. “We have to deal with drivers who are uneducated and are not much comfortable using smartphones. We have our own training programmes, but then how much can a single company do? This has to be an industry initiative. We are actually trying to look up skill development in India, like a tie-up with the government, to impart some basic learning to the drivers so that it becomes easy for them to adapt the technology. A guru-chela (teacher-student) system is needed that as an industry is not working for us, and somebody really needs to address that.”
Asian Giants like GrabTaxi (active in six major Asian countries) has a basic training system in place where the drivers are given smartphone and CRT before being allowed to adopt the driving programme.
We have talked about the problems plaguing the startup ecosystem. Now, what screwdriver can we use to apply in these situations?
We need good infrastructure in the cities for Startup India before any other policy implementation.
What The Government Can Do?
According to Samar, major reforms need to be contemplated by the government in key areas such as public transport, roads and communication. Adding to this, Vikram Upadhyaya, Chief Mentor & Accelerator Evangelist at GHV Accelerator says, “We need good infrastructure in the cities for Startup India before any other policy implementation. We need a good drainage system, zero traffic and best health system and quality agri products before MakeinIndia succeeds. It looks like Swachh Bharat has been implemented only at 0.5% tax level, nowhere else.”
On the other hand, Manoj wants to see easier compliance procedures, relaxed FDI policies, lesser taxation, startup hubs with good roads, accommodation and internet infra, more incubation centres in universities and easier processes of mergers and acquisition and listing norms in public markets.
Sandeep Aggarwal, founder of Droom adds another vertical to this. He believes that India’s growing number of startups and the evolved Internet-enabled companies need a foreign listing platform to raise capital. The cost for access to capital is still very high and the avenues of infrastructure for research and development still remain underdeveloped. “The exemptions in capital gains tax and tax on profit will ensure that a startup focusses to innovate and uncomplicated rules with lesser government intervention and shall be the factors for job creation and sustainable growth,” he added.
Rohan further adds that the so-called tolerant nature of the Indian startups needs to be mollified by undertaking steps in building a world class infrastructure and thus removing the day to day frustrations which make us less productive. “Also, curbing bureaucratic red tape will help in building a strong foundation and to achieve a sustainable independent start-up environment,” he added.
India’s growing number of startups and the evolved Internet-enabled companies need a foreign listing platform to raise capital.
What The Startup Community Can Do?
Saurabh Kochhar, CEO of foodtech startup FoodPanda believes that every startup should aim to resolve one exclusive issue that is at the core of any industry. “If you have that, then there are enough support systems in place,” he says.
He further explains that the right exposure at the right time is key and that is also one of the biggest challenges. “It is important for an incubator and funding firms to look for ideas and budding entrepreneurs in deeper sections of the country/society and not just the urban metropolitan crowd. This would give us a varied startup landscape and possibly a better access to problem-solving in various verticals,” he adds.
Sumesh Menon, co-founder of mobile-tech company U2opia Mobile also admits that in a time where there is a startup winter in the country, it is important that there is adequate support within the ecosystem to create opportunities for entrepreneurs to continue building great products and innovate without the fear of failure.
Rahul Singhal, co-founder of Applop believes that it’s enthusiasm that drives a startup, but an improvement in basic amenities would be really helpful. Gaurav, on the other hand, suggests that startups at city level should build a task force where they can come forward to inform the government where they should be spending money and should stress on meeting government officials at regular intervals.
The startup ecosystem in India is currently thriving with loads of ideas and innovations.
However, to really pull them off the grounds, a strong infrastructure involving good roads, proper drainage systems, and high speed & regular Internet will form the three basic pillars. We know that nothing can be changed in just one day, but a small initiative by the government or even the startup community itself could definitely pave the way for a better future.
As Bhavin Turakhia, co-founder and CEO, of Directi aptly concludes here,
It hasn’t even been a year since the Startup India initiative was launched and the government has already taken significant steps towards encouraging and promoting startups across the country. The launch of Startup India Hub, along with the provisions made for startups to get tax exemptions under the Finance Act, 2016 are some of the initiatives under the larger programme, to make the startup environment suitable for budding entrepreneurs. Agreed, there might be some issues in terms of infrastructure, but the situation today is much better and more conducive than it was a decade ago.
“In my opinion, the only way budding entrepreneurs can overcome any obstacle and succeed in the startup ecosystem is by believing in themselves. There is enough capital available in the market, thus young entrepreneurs have to think of innovative ideas at a fundamental level.”
Well, India. What are we waiting for? Let us roll up our sleeves and dig ourselves out of the ditch. We did it 70 years ago, and today is no different. Jai Hind.