When I was a kid, I used to wonder when I would be able to get ice cream without having someone bring it for me. Oh! How long the whole procedure was, from going to the shop to getting a taste of the popsicle. Isn’t that also a start-up commonly categorised as e-shopping which brought my wish come true? We all had similar wishes at one point in our lives which were fulfilled by the advancement of start-up culture in the modern world. It’s quite often that people, in order to fulfil their start-up desires, seek out entrepreneurship.
WHAT IS A START-UP?
“In order to become the one per cent, you must execute the right idea, in the right direction, at the right time.”
Fundamentally, a start-up is what this quote refers to. Start-up is often described as a young company that has just paved its way on to the development process. A start-up seed is sown based on the founder getting a unique idea. Most often the product design is to make the way easier in an already established business.
How and when did “start-up” become a common phrase in our nation? The start-up culture was set in the backdrop of Three Waves of entrepreneurial activity in India. It focused on the distinct areas- Information Technology (I.T.), consumerism and innovation. In my personal view, all three activities are interlinked, and predominant activities consist of different areas to explore.
Therefore, it is necessary to recognise that the success rate of start-ups we see today is not a day’s work but a decade of significant activity on multiple fronts.
WHERE ARE WE HEADING?
Considering the fact that capitalists have made a living by backing the right horse. The corporate giants are filled with examples of colts that turned big faces by early promises.
For starters, let me just start by defining what a unicorn is. Think about Facebook, Spotify or Alibaba?
Aren't they all a unicorn, whose meaning most of us aren't aware of?
A startup is defined as a privately owned company with a value exceeding $1 Billion. The term was coined in the year 2013.
On the world across, a report by machine intelligence platform CB insights that there are 411 unicorns as of January 2019. The largest share is quoted in China and the United States.
Despite cloudy skies on the economic front, India is a growing destination for foreign investors. As of 2019, 19 unicorns are stabled in India. India has specifically been able to gain fourth place globally for the number of unicorns.
We all, as laymen, aren’t aware of some companies that have grown over the past few years.
May it be Nykaa, Big Basket, Oyo Rooms, Swiggy or Byju’s classes, they run across different fields. from food tech to EDtech and whatnot. These are all start-ups valued at $1 Billion or more.
FOREIGN FUNDING IN INDIAN START-UP CULTURE
I’ve been reading and listening to different news articles and I came across something rather peculiar. While going through most of the big start-ups in India I noticed that most of the start-ups in India are foreign-funded. For example, take the big online food joint ‘Swiggy.’
Around the second week of April, Swiggy raised $43 million in a funding round because of the plunge in their daily orders. It revealed that the funding was led by an existing investor Tencent along with a Chinese fund to bring half of the funds.
The trend of Chinese business investment in India goes back to 2015 with the setting up of Alibaba, an e-commerce joint. Chinese tech investors have put an estimated $4 billion across different operating start-ups of India. Another interesting fact is that out of 30 unicorns, Chinese companies seem to have invested in 18 or more. These unicorns range from Flipkart, acquired by Walmart in 2018 to the upcoming such as Dream11, Delhivery and Rivigo.
It is essential to take a look at the facts above. This shows a down part on the nation’s side. Even after six decades of independence, the economic growth pattern seems to dwindle. Most of the giants are foreign-funded thereby it raises a significant question.
Why are Indian start-ups being foreign-funded?
Or to put it differently, why is it difficult for Indian investors to rise?
The structure of India's present-day economy is not just of current activity, it has its roots steeped in history. Some of the major challenges today faced by the people are poverty, rural development and building infrastructure. Thus, all these points cater to the fact that Indians lack the power of investing on a regular basis in such high amounts.
Azim Hashim Premji is a single famous Indian business tycoon, investor and philanthropist, who is the chairman of Wipro Ltd. Apart from him, there are not a lot of investors coming up for start-ups winning unicorn status.
Therefore, it clearly answers both the questions regarding the concerns of why funding goes around foreign investors.
In the long run, India would definitely want to improve its status regarding the foreign holdings but for the country’s income level to rise proportionately it is necessary to keep providing smooth conditions. COVID-19: TALE OF THE ECONOMIC CYCLE
Amidst the pandemic across the globe, businesses of all kinds, small, medium and even start-ups have been adversely affected.
To start on a positive note, in spite of start-ups across the globe facing umpteen number of hurdles to sustain itself, India has been able to generate some attention from investors and raise funds.
Giants like Big Basket, Swiggy and Zomato along with early stages like Nykaa, Shiprocket and others have done well to gather funds.
Nykaa has been able to join the club of unicorns by being valued at $1.2 billion. In May, it raised Rs. 66.64 crores from investor Steadview Capital.
But on the other side of the coin, there lies a jeopardized situation. Although the year seemed to start off well, the outbreak of the novel virus has dampened all the spirits. With business dropping at an increasing rate, markets crashing and even global businessmen have seen to reduce their investment.
As I mentioned above, China has a hold in the Indian system, it has been mandatory for Chinese investors to get a government nod. This has resulted in taking longer than usual. It will therefore drastically affect across. Conclusive data revealed that start-up funding for March 2020 dropped by over 50 per cent compared to the previous month.
In a nutshell, Covid-19 has undoubtedly affected the funding scenario. It is early enough to gauge the long-term implications of the pandemic.
In the post-Corona world, adaption will be key to surviving in the entrepreneurial and business world. With a drastic loss in jobs and revenue, more and more employees will be forced to take up entrepreneurship as a career prospect.
While this would lead to a boom in the economic growth of our nation and contribute to the spread of start-up culture, the funding situation will remain precarious for a while due to the apprehension of global investors.
Therefore, it is rightly quoted in the Financial and Economics Magazine.
"Everyone can be a dreamer in a buoyant market. The kill rate is low. But when trouble strikes, it reverts to meaning and thus a lot of things get whacked."