The Startup scene in India took off after it realized the potency of this sector. This was not because of some magic and it obviously didn't happened overnight. This took a long time. It took off due to many internal reasons like massive Fundings, growth of Angel Investors chain, boom in technology and the need to change.
The startup ecosystem in India is the 4th largest in the world. India has produced some very famous startups like Paytm , OYO Rooms , Redbus , Zivame. In 2018, 8 startups were evaluated at $1 Billion. But among a ocean of startups, why only 8 ?
Is India a saturated market?
India stands unchallenged , holding the second spot in global population. It is a major economy that is dependent equally on both the rural and urban sides. However, major startups serves only the pat living in the urban areas. Due to this the population of the rural areas go unnoticed. The main problem is here. Too many startups are serving a very small part. This makes the economy more and more saturated. This chasing of very few customers by a lot of companies makes the startups to fail.
Problems for startups in India
- Fear to take risk: A major problem is the Funding in India. Investors in India lack trust and the risk taking factor. Only a portion of investors have the will to give in to a new comer. Due to this a majority of startup population cannot succeed.
- Managing the Business: After a business takes off and starts to shape up it is required to be maintained well. Not only from this point. The founders should take care of the management from the start to prevent the company from going into problems like debts.
- Pressure from the surroundings: There's a term for people who gym. Its called ego lifting. Ego lifting is something that is born out of jealousy and pressure from friends. Startups also follow this. This leads to their downfall.
Why Foreign countries?
Countries abroad provide a lot of scope to Startups. Moving abroad gives the Startup a broader audience. A more technological advanced audience. Apart from all the money saving and tax reasons. Moving abroad also enables the startups to gain fame for being associated with foreign countries.
Using better infrastructure
What we all already know is the fact that India doesn't have a proper infrastructure. Our nation lacks financially, technologically. All this affects the infrastructure directly. Startups move abroad to use the better infrastructure.
Foreign countries have hubs and clusters. Countries like Estonia have special things to provide. They are minimal taxes, low rent places and many other things. Countries like these have there own angel investors chain. Different countries specialise in different sectors. For example Israel is known fro its strong base in Security and Agriculture.
When it comes to population or number of customers. India is not behind. So, wheres the issue? The issue lies in the fact that not a major portion of the population is through with the technological advancements. Not many are interested to know about what goes around in the world. This narrows the range for any startup in India.
To increase the sales and the range startups move abroad.
To find money one should know where to look. Only 8 Indian startups made about $1 Billion in a year. The failure rate is much more than the success. So, current India is not a place to look for money. Due to this not many investors come forward in order to fund the startups.
So, Indian startups move abroad to get the investments rolling. Above this the population outside India has a very acceptable mindset.
“Businesses, by very definition, are aspirational and going international is part of it. It gives more exposure, better access to financial investors, and of course a hope of revenue growth,” said Yugal Joshi, vice-president of Texas-based consulting firm Everest Group.
Favourite countries for Startups
In the recent few years Serbia has seen US companies building up operations there. Serbia is changing rapidly to evolve into a hub for application development , programming and IT outsourcing. The reasons behind this sudden change is the multilingual and well educated population. They also provide for fancy and attractive incentives for IT investments from other countries.
The countries small yet talented workforce and closeness to Asian markets, makes this a good option for startups. The country also attracts a lot of immigrants who are highly qualified.
Estonia is a place with one of the highest per capita rate in terms of startups. Estonia is the most suitable place for entrepreneurs. It has a very entrepreneur friendly tax policy. It provides many attractive incentives to foreign investors.
India too appears in the list for suitable places. But the country is still like molding clay. It is still building and it would take time. It would take time to generate investors or a proper ecosystem. But for now India is not a suitable ground to play for startups.