Do 8 out of 10 start-ups really fail? And how do I know if I am failing too?

(My response below, to the above question on Quora)

Failure has many dimensions in the context of a startup and the founder of the startup.

For example: Failure could mean that you have not been able to achieve the numbers (revenues, or customers/users). However, it can still be a fairly profitable business at a lower scale than what you had estimated. If you have raised capital from investors, they may see a venture that does not scale as a failure. The founder may not.

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Likewise, failure could mean that while the concept was good, the team was not able to execute well, or they ran out of money because they were not able to raise capital. In this case, the startup SHOULD NOT have failed, but it did not work out because of inexperience or lack of execution capabilities.

So, when people generalise that 8 out of 10 startups fail, it generally means that 8 out of 10 startups are not able to go to the scale or in the direction they assumed it would. It MAY or MAY NOT be a failure for the founders.

Also, it is important to recognize that very few startups fail because their product was bad. They usually flounder because of issues on areas like execution, processes, capital, etc. I have seen many, many founders start off without even talking to potential customers. This is usually a recipe for a disaster as your own views may or may not hold good in the market.

My belief is that while the number of unsuccessful attempts are quite high from among the ones that started off, the percentage of failures comes down significantly among those who had put good thought into their concept and business around the concept BEFORE starting off.

If your question was out of fear of failure, I would urge you to think again. Plan your venture well, understand the market and then take the leap of faith. Check the LinkedIn status of failed entrepreneurs. They either get started again (and investors like to back them) or they get good jobs (corporates like failed entrepreneurs because of the enterprising spirit and the learnings they bring with them). So, while your venture may not succeed, you are unlikely to fail if you pursue the path of entrepreneurship.

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Guest Post – Team, the most important ingredient in a startup

Ask any investor or successful entrepreneur, and they will reiterate that the most important factor in a start-up is the quality of its founding team. A team is more important than the idea or the size of the market or the technology or the business case, or indeed any other factor that investors will review to check the investment-worthiness of a venture.

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Even if  – the product is great; the technology is cutting-edge; the market is large and the company has a strong chance to be a dominant player in that large market – investors will hesitate to invest in the venture if they do not get the confidence that the founding team can deliver in the market.

What investors seek is a team that is passionate about the subject, is enthusiastic about the opportunity, has a good grasp on the dynamics of ‘business’ and not just the product/service, and who can demonstrate commitment to fight it out in the market.

While it is good to have experience in the domain, that is not a must, as that will exclude a number of bright people who either do not have work experience or are from a different domain than the concept they are pursuing. However, what is important is that even without experience in the sector, the team should have studied the sector enough to understand it very well. In fact, that is also why passion and interest in the sector is critical, because that makes it easier for a person to study the sector well.

Continue reading “Guest Post – Team, the most important ingredient in a startup”

Startup Next, the global and top pre-accelerator program comes to Delhi.

Startup Next, the global and top pre-accelerator program – backed by the likes of Techstars, Google for Entrepreneurs, Global Accelerator Network and Startup Weekend – is coming to New Delhi !

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The Startup Next program is designed for startups who plan to apply to accelerators or are pitching to investors for funding.

Startup Next is an intense mentorship program consisting of weekly sessions (one session in a week lasting three hours) for five weeks. The program has a structured curriculum and in-depth engagement with one-on-one mentoring, designed to help startups build the foundation of scalable ventures.

Continue reading “Startup Next, the global and top pre-accelerator program comes to Delhi.”

The 4 P’s of Entrepreneurship – Patience, Persistence, Perseverance, and Passion

Entrepreneurship teaches you a number of things about life, in general. It is an immensely satisfying journey, even if you do not reach your intended destination. However, the journey is often very challenging and it takes a lot of patience, persistence and perseverance to succeed. And unless you have the passion for what you are doing, finding the other 3 Ps within you becomes challenging.

Patience1I advice aspiring entrepreneurs to not get taken up by stories of instant success. Those are rare. Instead look at the 1000s of others whose ventures did not succeed. Or did not succeed as aspired.

Even those who succeed, often a lot longer than they had planned for, and it is often tougher than they had imagined. What sets the successful apart from the ones that gave up are the 3 Ps that I outlined above.

Continue reading “The 4 P’s of Entrepreneurship – Patience, Persistence, Perseverance, and Passion”

Guest Post – Why less than 1% of incubated start-ups get VC funding

Over the last 5 years or so, India has seen the emergence of a number of private and government-supported accelerators and incubators. Many of them have run a few cycles and have now fine-tuned their models and programs. Quite a few of them have very good and solid programs.

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Yet, if we were to measure the success of start-ups from all these programs in terms of them raising growth-capital, the report card is not very encouraging. If some industry numbers are to be believed, less than 1 per cent of start-ups that go through various incubation and accelerator programs in the country receive institutional funding. This number probably includes incubators in academic institutions, most of which have not been able to run meaningful programs to help entrepreneurs build fundable ventures.

Why is this number so low? Why the start-ups who join accelerator or incubator program with the hope of getting mentored for accelerating their journey towards growth are not able to get growth-capital? Continue reading “Guest Post – Why less than 1% of incubated start-ups get VC funding”

The ‘Make in India’ program will create a range of entrepreneurial opportunities

Prime Minister Narendra Modi will kick off the ‘Make in India’ campaign on the 25th of September 2014. About a 1000 global and Indian business leaders are expected to attend the function.

The government is making a huge statement, and leaders of the business world are taking serious note. This is because the government appears to not just declare intent, but give the confidence that it will support the intent with enabling policies and create an environment for a supportive eco-system to evolve.

For an industry or sector to flourish and become sustainable in any geography, an enabling eco-system is necessary. Things cannot work in isolation. In the technology hotbeds like Silicon Valley and Bengaluru, there is an eco-system of technology companies, service providers, successful entrepreneurs, mentors, accelerators & incubators, co-working spaces, legal firms, investors and potential customers.

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Likewise, for India to become a global manufacturing hub, which is the declared intent of the Narendra Modi government, it will need many supporting pieces to come together to create a conducive environment for manufacturers and customers to do business in. Continue reading “The ‘Make in India’ program will create a range of entrepreneurial opportunities”

Bootstrapping – Boon or Bane for Product Startups?

On August 14th, 2014 iSPIRT, the industry enabler that is creating a vibrant eco-system for promoting, encouraging, supporting and enabling product companies out of India, organised a very useful online discussion on the concept of bootstrapping. Titled  ‘Bootstrapping – Boon or Bane’, the discussion explored various facets of bootstrapping, including its relevance, benefits, limitations, and challenges.

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Sharad Sharma, founder of iSPIRT kicked off the conversation with a very incisive observation that the startup community, largely driven by the media, tends to celebrate and showcase startups only when they receive angel or institutional funding. How true is that!!! There are a number of very successful and modestly successful startups, many of who are deserving of the praise and showcase, but they get reported about only when they close an investment round. (I am not sure if the media is to blame entirely. I suspect companies too reach out to media only after they have received an investment round, perhaps because they believe that funding makes the ‘story saleable’ for the media.).

Continue reading “Bootstrapping – Boon or Bane for Product Startups?”