India's start up bubble inflated with hype about to burst?

BENGALURU: Graduates are scratching heads over placement issues as many start ups have withdrawn their job offers owing to shortage of funds. Recently, startups had been the most sought after choices for students but they are now delaying or taking back offers as many of them have either shut down or trimmed their operations. The hiring percentage has also gone down as startups are under pressure to make profits.

Is India’s start up bubble, inflated with hype about to burst? It would be vaguely similar to the real estate bubble that was the primary cause for the economic meltdown several years before in the US that apparently sent waves rippling across the world economy, luckily the Indian economy among many swiftly got through but that of some EU countries are still struggling to get back on their feet. Sheer ignorance led to the economic meltdown; the overconfidence that real estate investments would never go awry.

Comparing the startup hype to such ignorance may be an exaggeration. After all, the idea of entrepreneurship is definitely a motivation to youngisthan and we are by no means criticizing the government initiatives to promote the same. Yet, Forbes states that 90% of startups fail and the youth, more often than not fail to see beyond the glamorization of entrepreneurship. The wrong notions that ‘create an app and you are a rich CEO.’ Or ‘Looking to be an employee of big corporations is pretty old school.’ Besides, the IT services sector is overcrowded with startups banking upon similar ideas as opposed to agriculture, defense, aerospace, space tech (that one is probably beyond reach).

Most of the starts ups that do come out successful are either those initiated by ‘experienced’ folks who have had clear vision of their ‘idea’ filling the scarcity or those who have built it up from scratch with minimal resources. What startups need is talent, not just a bunch of administrators and mentors. And thanks to the rather outdated education system, one of the few ‘real’ places to acquire such hands on work experience is through the stringent training programs of corporations. Startups are forced to hire the best talent at whooping costs with the belief that the strategy would work but more often end up self deceived

Though entrepreneurship icon and idol Steve Jobs have said that people don’t know what they want until you show it to them; it falls in to a narrow range of product offering. If it were true in its entirety, many product offerings of tech behemoths like Google, Apple, Microsoft etc. would not have ended up miserably. According to iSprit (umbrella body of Indian IT/ITES product companies) website, it is roughly estimated that for Rs 100 invested by VCs in a start up in India, US and Israel they make a gain of Rs 110 (without considering inflation), Rs 500 and Rs 700 respectively over a course of a couple of years.

Nonetheless, fingers crossed, let’s just hope this is a mere fluctuation indicative of the Indian startup landscape and hope all parties including the government, VCs and Entrepreneurs adopt a more practical approach whilst having a plan B up their sleeve. Let the spirit strive and thrive.

Source: techgig.com