By Pankaj Rawat
2016 was a bit rough for the startup ecosystem in our nation. It accounted a sharp dip in the season of startup funding, thus it seconded the speculation that it isn’t all hunky dory as it looks from outside.
The latest Crisis which Snapdeal as a Unicorn in Indian Startup ecosystem went through was a classic example of the warning that Indian venture capitalists gave to the startups thriving in Internet domain.
Little did these second Generation Unicorns ponder over it and thus we saw a mass layoff among employees and different measures being taken to cut costs of the company.
The after effects were seen in Form of Snapdeal Crisis in 2017.
This crisis busted some myths about Indian Startups.
1) Stability of Unicorns is still ambiguous:- Unicorns like Snapdeal when faced with such crisis, quickly had its CEO at bay writing an emotional letter, and emphasising the dire need to eliminate the different set of works it was into. This has clearly shown that Indian startup ecosystem companies like them are not stable enough to be truly a conglomerate like Wipro and Infosys.
2) Right Economic Model: Many of the startups of the Second generation are yet jostling to find the right economic model for their company. Because if investments are still coming in, do they need to expand their business by entering into new areas and to gain sales by giving discounts? Such questions lurk over their expansion and growth prospects. Right economic model is a key to gaining stability and sustainability in Indian ecosystem which is alike in Indian startups.
3) Unicorns breeding new startups: It has been said many a times that Unicorns like Snapdeal and Flipkart are helping other startups to grow. There are many startups which had gained life because the people who founded them had worked at these companies as employees. Although, the mortality rate is quite high for such startups. So, it is a myth that all such startups work. Not all of them become Urban Ladder!
4) Excessive funding and Unrealistic growth Targets: It used to be a war among all new age Internet-based startups to raise huge amount of funds and set unrealistic goals to pour that money in futile activities. This myth about Indian startups raising rounds of funding to fuel the entire ecosystem’s growth has been busted.
The entire crisis of Snapdeal is a lesson to all startups that India is not the Silicon Valley. Here, exit is very difficult. Thus it demands that the companies should strengthen their core act first in a bid to expand their business.
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