The Problem with Indian Startups
- Ishnoor Singh
- Jan 29, 2024
- 2 min read
Often referred to as a land of startups, India has faced an implosion of several startups the the past few years.
This is quite evident when we see the piece of data below:
The image on your left shows the number of government recognised startups in India from 2016-2022.
This number has changed severely over the past few years- from only 471 recognised startups in 2016 to around 26,542 recognised startups in 2022!
Not only this, the country also reached a milestone of 100+ Unicorn Startups in the year 2022.
All of this sounds pretty interesting right? But what if I tell you, that more than 2000 startups in India failed last year?
A report by IBM institute for Business Value and Oxford Economics found that 90% of the Indian Startups fail within their first 5 years.
In fact, even the startups that reach the status of a unicorn are unable to end up being profitable.
India has 105 unicorn startups (subject to change) but only 23 of them are profitable!
2022- the same year when India saw 100 of its startup become unicorns- also delivered a sharp blow to the Indian Startup economy, with losses piling up and huge layoffs from several well-reputed startups like Vedantu, Ola, Cars24, etc.
This is the harsh reality of the Indian Startup Ecosystem.
The problem? it is the lack of innovation!
Most of the Indian startups offer an already existing product in the market with only their brand name being the differentiating factor. A product that doesn't stand out from its competition is a product bound to fail.
Furthermore, most of the successful Indian startups like Zomato and Ola are just Indian counterparts of already successful startups from the west like DoorDash and Uber. There is JUST. NO. INNOVATION. HAPPENING.
The Indian startup ecosystem is poised to soar to unprecedented heights on the day when innovative and diverse startup ideas begin to emerge from within the country. Unfortunately, that day is far away.
The entrepreneurs of the country need to chase value creation instead of valuation
Everyone wants investor money but no one wants to come up with an innovation that puts india in the leading front with respect to the entire world. In my opinion, no unique innovation takes place in india and most of the startups are cheap Walmart versions of those already doing well in the USA
perhaps this is same reason for the failure of several indian IPOs
Really informative Ishnoor! Its really important to delve deeper into the reason why new and upcoming businesses can't make it big in India.