Dauntless! That is what defines the Indian high-tech startup ecosystem, which continued to grow through a pandemic and propelled the electronics industry to aspire for a new goal—a $300 billion industry by FY26. Realising this ambitious goal is no mean feat as the very drivers of this goal continue to struggle to emerge out of the struggling startup stage and become an established business. Yashasvini Razdan from Electronics For You writes on how high-tech startups can steer through the challenges that come their way.
Eight years ago, on August 15, 2015, the Prime Minister of India announced a new initiative called the Startup India Campaign to catalyse startup culture and build a strong and inclusive ecosystem for innovation and entrepreneurship in India.
In the past eight years, India has grown to become the third largest ecosystem for startups after the US and China. In December 2022, the Department for Promotion of Industry and Internal Trade (DPIIT) declared that the number of startups in India has grown from 452 in 2016 to 84,012 in 2022 of which 23,773 came into being in 2022 itself.
Despite the glorious numbers, 90% of the startups fail, of which 10% fail in the first year and 70% fail between the second and third years. Many would attribute this to a lack of funding, unclear vision, and inadequate resources. Whitewashing the failure of startups using these three reasons isn’t going to help. To reduce the percentage of failure one needs to dive deeper into the reasons why startups fail, especially in the high-tech sector.
Traversing through ‘the road not taken’
Bengaluru is the hub for startups and traffic, of course! Right from choosing the correct transportation to factoring in the time taken to book a ride, pre-planning one’s journey before heading out is a must. Building a startup is akin to planning a journey via ‘the road not taken’ and entrepreneurs need to follow the same step while finalising their destination.
The first rule to planning the startup journey is very obvious—a business plan! Far too many startup founders think a pitch deck is a business plan, which is a very wrong notion. A business plan is a live document, which is constantly revised and not something with a pretty ring binder only to be forgotten about later.
Trudging alone, on the road not taken, is a daunting task but a partner can surely make the journey easier. For startup entrepreneurs, choosing the right co-founder is like selecting the right life partner. Co-founders with complementary skills and those who mutually agree on the business plan can make it easier to navigate through the whirlwind of challenges encountered by a startup.
The co-founders need to be clear on the goals they aim to serve. Do they wish to be a product startup or a services startup, or do they want to sail on both the boats? Product development just for the sake of innovation does not warrant the sustenance and growth of a startup.
To be successful, startups need to converse, interact, and talk to at least 50-100 customers in a particular segment to identify their needs and build a product that serves those needs and eventually sells. Asking the right questions that get a customer to open up about their requirements, allows entrepreneurs to formulate and obtain more clarity on how their product should get developed. These customers can later be approached again, once the prototype is ready, to check whether it meets their needs.
By this time, the ringing question that would come to an entrepreneur would be, ‘How does one collate all that information to understand and utilise it?’ Big manufacturers go to market research firms but startups lack the capital to afford that kind of luxury. So, they can make use of open source tools, such as a Google Dashboard, which is free. Crunching numbers, simulating data, creating a demo—it offers all.
The government has announced multiple grants, such as the NIDHI (National Initiative for Developing and Harnessing Innovations) Prayas, aimed at providing prototype funding to convert an idea into a prototype of a product that has the potential for commercialisation for aspiring innovators.
While finalising the destination and route, entrepreneurs need to gauge the time it would take for their startup to achieve its goals. Factoring lead times and the cost of raw materials is an indispensable part of this planning stage. Covid-19 and the semiconductor supply crunch have shown us that entrepreneurs need to be prepared for all supply-chain issues they may face.