Planning to build a startup? Here are things to make it failure proof

With the government announcing a host of policies and benefits for startups, India has officially entered into the entrepreneurship era. But there is a lot of confusion at the ground level that budding entrepreneurs face. Issues could range from ‘what is the right mentorship’ to ‘how to get funds’. Keeping in mind these challenges, NASSCOM started its ‘10,000 Startups’ programme, where it has vowed to scale up the ecosystem in India.

Under this programme, NASSCOM aims to enable incubation, funding and support for 10,000 technology startups in India over the next 10 years. The efforts are going in the right direction, but there is a lot that still needs to be done.

TechGig.com spoke to Rajat Tandon, vice president, NASSCOM’s ’10,000 Startups’ programme, to understand the issues faced by new ventures and what can make them failure-proof. Excerpts…

Most of the startups in India seem to die even before they take off. What are the possible reasons?

Startups in India die mainly because they fail to raise enough funds during the initial stage. To overcome this issue, companies should ensure that their products are meeting a specific need of the market and are innovative enough to create a ripple in the system. To minimise initial loss of capital, entrepreneurs should pilot their projects effectively, gathering as many insights as possible.

One should remain flexible, never be stuck on one idea or one path and always be open to trying different things to iterating and experimenting.

Sometimes, there is a lack of support from existing founders and internal issues within the team, which ultimately result in seizing of operations.

For a start, a credible and compelling incubation programme definitely helps startups understand whether or not their idea can be transformed into a successful venture. In line with this, we introduced NASSCOM Warehouses. We incubate startups from a diverse range of verticals. Our space helps entrepreneurs learn, work and accelerate their companies.

How conducive is the environment in the country for entrepreneurs?

India currently has massive funding and access to technological resources making it one of the best moments for the development of the largest startup ecosystem. This is truly the best time to become an entrepreneur in India. We have a very encouraging government who along with industry players like NASSCOM are aiming to expand the entrepreneurial culture in the country. This is the first time that any government had drafted special policies and initiatives to upgrade the startup ecosystem in India.

Getting early-stage funding is a tedious process. How do you simplify it and what are the places startups can go wrong?

Early-stage funding is no longer a tedious process. With Department of Industrial Policy and Promotion launching an exclusive portal for startups, the process will now be more structured and comparatively easier for the entrepreneurs. The portal will bring all the entities of the startup ecosystem together and enable an easy exchange of information among them. These entities include venture capital funds, incubators, seed funds, accelerators, angel investment funds, and the whole government machinery. In this way, the tedious and complicated process for new companies to get the business started will be eliminated.

What are the sources for early stage funding?

Insufficient funding is one of the key reasons why new businesses fail today. Therefore, it is very crucial to have enough funding for a startup to mature. Many-a-times entrepreneurs underestimate the amount of money they require not just to get starting but also to keep running the business. Early-stage funding can not necessarily be a huge amount; sometimes these early investments can be quite small but can support the company to maturity.

Bootstrapping, seeking angel investment or applying to incubators could help raise early stage funding.

What are the attributes should one look for while selecting mentors?

Selecting the right mentor for your startup depends on what you want to get from the mentoring relationship. It’s extremely important that the mentors you look for have been successful in a particular area. The mentor should understand your product well enough so as to provide the right growth strategy.

How have incubators and accelerators fared in India, with the startup ecosystem gaining momentum?

Multiple indicators point to the fact that this ecosystem is not only undergoing rapid evolution but also becoming increasingly attractive. In the last one year, we have seen an increase in startup incubators and accelerators aiming to build a sustainable ecosystem for budding entrepreneurs. These platforms continue to emerge not only in metro cities but also in smaller towns thereby encouraging entrepreneurs to come forward with innovative ideas and products.

What are the major advantages to startups in India vis-à-vis those of the Silicon Valley and what are the major disadvantages that Indian startups face?

Startup ecosystem in the Silicon Valley has evolved over the last 25 years, and the entrepreneurs and investors are equally mature. Having said that, we can’t also deny the quick leap that Indian startup ecosystem has taken in the last 2-3 years, which is commendable. Of course there would be some obvious differences in the entrepreneurial cultures of both the countries, but we are glad that gradually we are trying to match up to the West.

What are the kind of startups that are attracting maximum funding, from within India and from the West?

Consumer-focused startups attracted maximum investments in 2015 with e-commerce leading the space. Substantial interest was also generated by the logistics and hyper-local startups. Internet of Things (IoT) is another segment which is slowly attracting investor attention.

How does Nasscom provide backing to the Indian startup ecosystem?

The significant percentage of startups are focused on Indian and overseas markets. Hence there is a need for support on market access and also training in areas where they need supplementation. To nurture and empower the passionate entrepreneurs in India, the ‘10,000 Startups’ programme has introduced a series of initiatives in partnership with Google, Microsoft, IBM and Amazon Web Services.

• Startup Warehouse to create a micro-ecosystem where startups and entrepreneurs can work together, share their learnings and best practices

• Readying women for entrepreneurship: The ‘10,000 Startups’ programme has partnered with Black Box Connect to build a conducive landscape for women entrepreneurs in India

• InnoTrek is another initiative that is giving the brightest tech startups a chance to go to Silicon Valley, get access to global VCs and connect with some of the biggest tech giants of the world

• Konnect Sessions –Funding, Acceleration, Mentoring and Enterprise is an impact measurement framework

• To accelerate digital transformation at the startup level, we have also launched Techstartup.in, an online platform that serves as a centralised hub for India’s tech ecosystem city-b-city providing information and resources to help turn ideas into businesses, deliver valuable tools for tech startups, and connect citizen entrepreneurs to opportunities in the tech ecosystem

• NASSCOM Industry Partner Programme (NIPP), an initiative launched to foster sustained engagement between large corporates including GICs and innovative technology ventures across India. The programme is acting as a bridge between product startups and large IT-BPM companies including multinationals such as Google, Microsoft, Intel, Motorola, Sony, Allstate, Lowe's, Accenture, Dell, Wipro, CA Technologies, UBS and Zafin, among others.

How do you ensure that the startups get the benefits extended by the government?

The government of India has announced a number of initiatives to improve ease of doing business and encourage the growth of startups in the country. There are policies in these initiatives which will reach the entrepreneurs directly.

What should a startup keep in mind while making a pitch for the investment?

During the pitch phase to investors, it’s essential to substantiate your business model to be viable. An investment pitch must clearly outline the market opportunity that is realistic to your business. Further, it is important that entrepreneurs identify and target investors with similar interests or portfolio investments in the past.

What are roadblocks for an evolved startup that has received some rounds of funding? Do you help them as well?

Despite having raised good investments, many startups struggle to survive the competition and eventually die a slow death. This usually happens because of reasons like lack of efficient team management, absence of right mentorship and guidance and not having a good brand strategy. Often these startups are unable to efficiently manage the funds raised and are ultimately forced to shut down their businesses.

Diksha Gupta

Source: Techgig.com