In the last 3 to 4 years, we have seen some exponential growth in the Indian startup industries.
But taking a closer look at the data, it turns out that a lot of startups have shut down in the last
year. This even includes some well-funded startups, too. Even e-commerce major Flipkart had to
shut down its ebook and music selling the platform.
Talking about numbers, 212 startups were shut down during the year 2016, which almost double
the number of start-ups closed in the year before that, according to the data analytics firm Tracxn.
One of the major startup to shut down was the grocery delivery service PepperTap. Started in
2014, PepperTap had raised over $50 million from Sequoia capitals and Snapdeal. The other
major casualty was the closing of laundry service provider DoorMint. Even Ola had to close its
café and grocery(Ola store) services. Help chat stopped the chat assistant service in its app. Ola,
Flipkart and Snapdeal faced several devaluations in the last year. Another major closure was that
of AskMe.com, the company laid off around 4000 employees and saw resignation of 650
persons, after successive failure to raise funds.
According to the CEO of Future group Mr.Kishore Biyani, “Ninety percent of startups I have
seen had no meaning at all. They are nonsense.” According to him, the startups are dubbed as the
new sexy thing, but it might not be successful as we hope for. A similar comment was made by
former Infosys director Mohandas Pai, according to him 90 percent of all the startups might not
succeed. He said that only 10 percent of all the ventures are being successful, while around 25
percent of them might be able to sustain in the market. While we might not want to believe these
gentlemen but eventually they might just turn out to be true. In an interview with times of India
Mohan Kumar, ED, Norwest Venture Partners India said, “This is a natural progression, when
you look at the ecosystem, not more than 20% of the startups succeed. Two to three years after a
startup’s inception is a time when you see high mortality. There is too much competition, and
only a few survive.”
Government policies like Startup India, Digital India and Make in India are surely helping the
startup industries. So, the question still remains how long these startups will survive and would
turn into profitable ventures? According to the Economic Survey 2015-16, India is housing more
than 19000 startups technology based startups. India is third largest startup economy after United
States and UK. China and Israel are right next to India in this line. The total fund raised by Indian
startups in 2016 has also seen a decline from the previous year. By the end of 2016, India had 9
unicorn startups (evaluation of more than 1 billion), this may look a great number, but at the
bottom of the pyramid, it’s the survival of the fittest kind of scenario. Each day almost 2-3 new
startups are popping up.
Given below is the predicted data(in billions of dollars), for the funds raised by Indian startups,
provided by Nasscom and visualized by theAtlas.com
While there is no reason for us to be pessimistic, but we need to keep in mind that startups have a
success ratio of only 20-30% across the globe, whether it’s in India or in the Silicon Valley. Let’s
hope that India does not face a similar situation like the dot-com bubble faced by United states in
2000-2001. We can only hope for the best from our economy