The great evolution of startup culture in India

Over time, the startup ecosystem in india has evolved, making it the third-largest country in the world. To understand the evolution, challenges and the future of startup, The Pioneer connects with a few entrepreneurs, who take us through their journey and struggles.

Tanisha Saxena

In 2022, India emerged as the third-largest startup ecosystem in the world! The startup culture has traversed several stages and evolved into what it is today.As we celebrated National Startup Day on January 16, aimed at encouraging entrepreneurship and innovation, The Pioneer interacted with a bunch of entrepreneurs making a headway.

Ganesh Balakrishnan’s venture Flatheads Shoes was one amongst those, which was on the verge of shutting down in the pandemic.It was indeed the toughest phase for it, a startup that creates all-day casual shoes for the urban workforce! Recently, the most moving episode of Shark Tank India Season 2 aired, where we heard Balakrishnan’s pitch for his startup.

Speaking on the lack of funding and the challenges he faced, Balakrishnan says, “When we launched Flatheads, the biggest challenge was trying to find product market fit. Whether the customer is willing to accept the product that we have designed and put out in the market or not. On top of it, we also had some uncontrollable challenges like within four months of launch, we ran into the pandemic where our core proposition of great shoes for work itself didn’t work because people were not wearing shoes to work or go out. So, how do you sell footwear in such a scenario was a fundamental survival challenge we faced. And then there were controllable challenges like pricing and positioning. Above all, funding dried up at the end of the financial year and it was extremely difficult.”

Funding is an essential step for any start-up to achieve its financial business goals. In 2022, the Indian startups’ total funding came crashing down to $25 Bn from $42 Bn raised in 2021. There was a 38% decline in total funding in 2022. Highlighting that the funding is the backbone of the startup ecosystem, Noor Alam, co-founder of startuppedia, a popular blog creating content on startups tells us, “One can’t scale their startups without funds.

If you have an idea, solving a problem that lakhs of people are facing with your service and product, it isn’t that tough to raise the fund. Nowadays Shark Tank India is the great platform for entrepreneurs to raise funds and market their products and services.” The startup ecosystem is a democratic and open space, probably one of the many reasons why people are interested in starting a startup. “There could be multiple reasons why people quit their jobs and start a startup like flexibility in their work, be their own boss and obviously make more money. But one of the best reasons that I personally believe is, they are curious to solve a problem and that’s what drives them to start a startup to solve people’s problems and bring a change in their lives,” adds Noor.

Prime Minister Narendra Modi has also called the present decade as the “techade” of India. “Over the last two decades, the Indian startup ecosystem has grown rapidly, and more support has become available in all dimensions.Therefore, we must celebrate a startup day, to promote the start-up culture in India and strengthen the Indian economy. Several Indian startups put us on the international radar as well. Growth has been very significant in the past few years,” asserts Kanthi Dutt, one of the youngest serial entrepreneurs from India, founder and CEO of SustainKart. Kanthi recently launched a Patisserie and Bakehouse: NAOMI too, adding that the pandemic helped start-ups activate online first businesses and grow rapidly in a short span.

A moment to celebrate that roughly half of all recognised startups in are now based in Tier II and Tier III cities. Sujata Pawar, co-founder and CEO of Avni, Feminine Hygiene and Menstrual Healthcare start-up expressed, “It was with the passion and desire to impact people’s lives that I founded Avni in April 2021 to provide toxin-free, functional menstrual care products for women based on their flow, body type, and comfort.

The notion that the value of a venture must be determined by factors of marketplace performance and business results has long passed. Start-ups that prioritize staying on top of the competition and launching new ideas to the market adhere to the doctrine of valuable innovation rather than imitation. Importantly, as the business expands, previously held values must be updated and propagated to ensure that everyone is on the same page as to where one has arrived.”

Calling the start-up ecosystem a matter of pride, Harini Ramachandran, co-founder of Antano & Harini, Legacy Accelerators speaks, “I was at the peak of my career in playback singing, having worked with the top music directors of the company and having a superb repertoire of songs I had sung. I could have very well grown further in this career, and pursued my then dream of becoming a globally successful singer. Back then, my parents were also conservative and worried that my playback singing career is not a long-term career, so they wanted me to have a backup option. And that’s where I met Antano, who was only 24 years old then, and the youngest Chief Technology Officer in the country, in one of the leading e-learning companies and he was also an internationally established tech author already at that age. I was one of his ‘experiments’ back then. He helped me with a specific capability installation which completely changed my life! I grew so much and so fast in my career in the corporate world.”

Top-of-the-league opportunities started to come her way in all aspects. Since, “I was personally so touched by this massive leap, I started to learn from Antano about his methods, techniques and wisdom and we worked together on a lot of people. Whenever we see people stuck in less-than-optimal circumstances and behaviours, we begin exploring what are the “contextual” and “enabler” capabilities an individual needs to fast-track their success and impact!”

“Due to the funding winter and macroeconomic slowdown, new start-ups have begun to reassess their business strategy, recalibrate their manpower, and are seeking ways to maximize and solidify their unit economic viability. Many venture capitalists have also notified their portfolio companies to prioritize cash preservation and consolidate operations until the funding storm passes” says Sujata Pawar.

However, she further shares that the greatest risk that new businesses will encounter in 2023 will be the failure to keep innovating. “Even the most profitable company that owns the largest market share in its sector will run into difficulty if it doesn’t run parallel to the market trends. In recent years the Indian start-up ecosystem has expanded dramatically, owing chiefly to capital investments such as seed, angel, venture capital, and private equity funds, as well as technical assistance from incubators, accelerators, and the government. For its part, the government built a supportive framework through its flagship initiative, which was put into effect in 2016.

However, the growth of the start-up ecosystem has been primarily confined to large Tier 1 cities. Small businesses outside of metro areas are not better informed about or included in programmes that offer subsidies and tax breaks.”