Top 5 Reasons Why Indian Startups Fail



Around a 1000 startups have died in the past 2 years – that amounts to about 40% startups that were set up in the same period of time.

If you ask me, this figure is truly alarming. However, come to think of it – that is how the contemporary world functions, where success and failures are the order of the day. The primary reason of most failed startups is funding, or rather the lack of it. Startups which received funding within a year of setting up business are the ones most likely to go the long way. This is pretty evident from the fact that 780 out of the 997 startups that failed since June 2014, lasted for less than 12 months.

Now, we are not going to discuss about the plight of startups anymore. Instead, l will make an earnest effort to break down the top 5 reasons why Indian startups are failing increasingly.

As an entrepreneur or startup enthusiast, you shouldn’t be perturbed with the commotion around the failure of startups, but ideally should focus your attention on the reasons for failure, and devise ways to overcome them.

1. Founders who want Instant Recognition and Gratification

There are a lot of things that goes into making a great startup, and impatience unquestionably is not one among them. When things start to head south, a significant amount of maturity is needed to handle the situation. Running away from tough circumstances or a dire need for instant recognition would do your startup no good. Time and again, a great number of startups have failed as their founders couldn’t tackle the pressure from scaling up business, implementing the newest technologies, or asking around for funding. To avert this appalling state, entrepreneurs should always have a positive bend of mind and should never look for a shortcut to success.

2. Worn Out state of Funding

Yes, funding has slowly become a comparatively easier job for startups, but that’s the state with the top 5% or lesser, as investors only chose to fund businesses, in which they see massive potential. As a result, this leaves out many startups to make it big and drive the country’s economy. Of course, there is no blaming the venture capitalists, because as a rule – they usually invest in companies with a higher proven chance of accomplishment. However, there is also no denying the fact that this outlook needs to change, for more startups to realise their full potential. Moreover, in the west, most startups begin with money borrowed from friends and family, and this puts a lot of pressure on entrepreneurs to perform. Indian startups don’t face this, which makes it easy for founders to leave businesses midway.

3. Innovation Deficiency Syndrome

This shouldn’t be news that innovation and creativity act as the fuel to ignite any startup. However, we are so engrossed to make it to the big league that we completely negate the importance of reinventing things, or coming up with something new, every now and then. Any business should keep try out with its offerings, a concept that has been mastered by tech giants Google and Facebook. This helps keep customers as well as investors enthusiastic.

4. No Concept of Target Market

Whenever startups are formed, there must be a burning need to have a specific user in mind. Identifying your ideal target market is the cornerstone to survive in the crowd of businesses emerging every day. Not having an ideal customer profile is one of the worst mistakes that startups usually make, and this acts as a hindrance in customer acquisition. Drawing the right customers to your business constitutes more than half of the job to acquire more customers. Decide what your ideal audience looks like. Thereafter, conduct some research on their interests and preferences on various mediums of interaction.

5. Lack of Presence/Support on Mobile

Trust us when we say that startups will soon lose steam if they don’t have their presence on the mobile or smartphone, and/or don’t provide active support on the medium. This has been emphasized by Google in their report – State of Mobile Internet in India (Sep, 2016), which states that there are 245 million mobile data subscribers in India, out of which 145 million are on 3G, while 5 million are using 4G. Furthermore, there have been 106 million new smartphone shipments last year, while the penetration still stands at 20%. To make matters more lucid – 2 out of every 3 smartphones shipped runs on 4G, which accounts to almost 10% of mobile users in our homeland. These facts and figures make a huge case for startups to adopt a mobile-first customer experience strategy.