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Why do startups fail in India?

Initiatives like Make in India, Startup India, Ministry for Skills Development and Entrepreneurship, Intellectual Property Centers, etc. all could have stirred up growth. However, innovation remains the biggest missing component of the Indian start-up puzzle.  Although India has provided a positive economy for the start-up ecosystem to thrive with the various startup initiatives, the start-ups that are growing are mere clones of Western ideas.’ OLA and Flipkart being the obvious examples.

Evidently, India lacks innovation despite being the third largest startup ecosystem. According to a study by IBM and Oxford, for exactly the same reason, lack of innovation, 90 percent of startups fail 5 years after start-up. 77 percent of venture capitalists believe that new technologies or unique business models are lacking for Indian startups. Some other reasons cited by Forbes for the imminent failure include lack of skilled workforce, inadequate funding and lack of mentors. In fact, India needs start-ups in areas such as health, education, sanitation, transport (not another Ola idea), alternative energy management, and so on. These areas provide greater scope for improving the quality of life in the country and innovation. While the current trend shows that the majority are IT-friendly.

Failure to innovate is not the only thing holding back Indian startups. Lack of vision, lack of market understanding, bad skills, and poor execution are some of the other major concerns. All of them can be traced back to the lack of skilled workers and mentors for emerging businessmen. The education system of India can be blamed for most of the problems reported. If we delve further into the student’s education system, we can see that there is no surprise about the lack of innovative approach in Indian children, given that the country’s education system does not provide the child with a chance to think out of the box. The monotony of the workforce in India is something that all young adults try to escape.

According to experts, India is the following market and cannot be blamed for adopting Western ideas. The poor levels of competence are to be blamed. India has no competition for meta-level startups like Google, Facebook, and Twitter. In contrast, China with a similar population and economy is miles ahead in terms of development – as showcased by designing its own search engine Baidu to compete with Google. Also, Alibaba, an e-commerce seller has displaced Amazon.

However, there is still hope. The experts say that India’s economic openness and the widespread national market are important advantages in addition to strong government promotion of entrepreneurship that has strengthened startup culture. Inputs from established companies, start-ups, risk capitalists, the government and higher-quality and educational institutions are important aspects of the development of the India entrepreneurial economy and the important elements of the improvement. The inputs play an important role in promoting the development of the Indian economy and reap rewards. Indian managers correctly recognized the economic openness of India as an advantage for the business, and our country has large risk capitalists ready to invest in innovative business ideas. Banks like HDFC have, for example, recently been seen in mentorship programs to help accelerate fintech innovations. India is a country with enormous potential and we are responsible as citizens to harness this potential of developing the economy.


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