India is home to more than 57K startups, the majority of which are early stage organisations
As the funding winter hit hard, the third quarter of CY22 saw startup funding dip by 82% YoY, deal count go down by 28% YoY, and the average ticket size fall by 54% YoY
Abhishek Pandey of Google Cloud explains how the tech giant’s initiatives can help early stage startups reach their full potential
Startups have played a critical role in driving India to the fifth spot among the world’s largest economies. The country is home to the third-largest startup ecosystem, with more than 57K companies residing here, according to an Inc42 report. Most of these are early stage startups knocking on the door of innovation and striving to find a product-market fit. However, getting the right kind of help at the right time has helped many young companies aspire and achieve big.
Spurred by various key initiatives by the Indian government (Standup India, Startup India) and private enterprises (Google for Startups and the like), the future of the Indian startup ecosystem looks bright and exciting, albeit with a few speed bumps along the way.
As a fast and furious funding winter descends on Indian startups, many are struggling to survive while others have put the brakes on their aggressive expansion plans. In Q3 2022 (July-September), startup funding dipped by 82% YoY, deal count was down by 28% YoY, and the average ticket size fell by 54% YoY, an Inc42 report stated.
Given the current scenario, triggered mainly by several macro factors, key stakeholders believe that a ‘reset’ is needed for startups and investors to get the business basics and valuations right.
“I have been a founder myself, and I can empathise with the pain that a lot of founders go through. But at the ground level, the innovation is still pretty much there, and demand in the country remains robust,” said Abhishek Pandey, head of venture capital and startups at Google Cloud.
So, how can early stage startups navigate these hurdles and achieve hypergrowth?
Staying at the forefront of technological changes, Google Cloud (and its ilk) acted as a catalyst for the Indian startup ecosystem, fostering innovation and entrepreneurship for the long term. The tech behemoth engages with early stage startups through different buckets, namely, financial support and growth enablement.
As the funding winter has served startups with a sharp warning – be frugal, deploy wisely or suffer – access to an experienced mentor and growth partner supporting young businesses is always a great help.
“We have industry-leading financial support for early stage startups. We provide a two-year runway, thus making financial support a table stake,” said Pandey.
Additionally, startups are not always aware of the capital-efficient technology tools they can use for sustainable growth. At times, they also become overwhelmed by the innumerable tech solutions available today. Furthermore, human nature being what it is, people want to stick to what they have already used instead of trying something new.
This is the domain where Google Cloud can help early stage startups by guiding them to choose the right tech stack at the very beginning. It prevents them from being saddled with technical debt later in their journey to find product-market fits.
For context, most startups end up paying technical debts with time, money and resources for choosing speed over quality.
Watch Vaibhav Vardhan, cofounder and CEO of Inc42, in conversation with Abhishek Pandey, head of VC and startups at Google Cloud, as the duo deep dives into the current state of early stage startups, the challenges they face and how the tech giant is accelerating their product-market fit and hypergrowth.
As we look to the future, two themes tend to stand out – startups building for Bharat and those building for Web3.
“The Bharat story remains very, very robust, and we are very committed to investing for the next billion users,” said Pandey.
As for Web3, it is still a technology searching for a killer app, he believes. Apparently, there are many contenders out there, and Indian startups will have to take it in their stride.
Can early stage startups steer ahead and make their mark globally?