In recent years India witnessed
sudden jump in startup led by youngsters. It excited the whole world and even
Honorable Prime Minister Mr.Modi called India as Startup India. India got the
recognition worldwide by demonstrating the cutting edge service, platform,
product and Application offering by the Startups.
The investor community got even
more excited wherein angel investor started pouring in money with high return
expectation and stopped putting money in equity market or other financial
instruments. The success of few startups attracted big PE, VC and Hedge Funds
from across the different geographies and invested billions of Dollars.
Startups started on the right
path and when money started flowing in promoters pockets then they got
distracted and started investing as angle investor in other startup to make
quick money.
In my point of view, Failure of
Startup happened due to five important misStep and those are as follows
Targeted Segment - Startups started developing the product in one
or another segment without doing the proper market validation. In India, its
very common for the user to use the product out of curiosity. Startups failed
to do the market sizing correctly and kept the single line of focus. Any target
segment gets constituted of 7C's and most of the startups dont even know those
C's.
Conceptualization - In the world of mobility, it is important that
development team should have indepth knowledge of E2E ecosystem. Startups kept
their focus on Client side supported by simple Server side configuration. Post
analyzing many failed Startups, I came to the conclusion that they just wanted
an applications so that they go market immediately. They failed to understand
that Conceptualization of any product is nothing but 4P's and they were not
aware of it.
Consumer - Indian consumers are very dynamic in nature and make
perceptions within seconds. Many startups failed to take the input from common
consumers about their concept. They never visited different location of
consumer assembly point to check their preference.
Commerce - Most of the startup thought that they will first give
the service for free then they will monetize that. In order to acquire user,
they went to online to OEM embedding route without knowing consumer preference.
That led to a situation wherein they achieved 10 to 15% retention % of user and
at the end their cost of per user acquisition went too high. As number of user
went down dramatically, startups failed to implement their business model. Many
of the Startup had business case which were imaginary one.
Financial Stability - Post receiving the funding most of the
startup started spending lavishly on office to parties and on user acquisition.
It increased their Opex and they ran out of finance which led them to situation
where they were forced to fire people which impacted their product development
In my point of view, the
remaining startup should do market research and adoption test by talking with
potential customer and accordingly refine, define their product line. If one
do's so then only they will be able to tide over the downturn otherwise they
are bound to be tossed up.
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