A report 256 Network and Praxis Global Alliance India estimate that by 2025, HNIs will invest $30 billion in Indian start-ups. It may confuse some, who feel that this shows some untoward confidence in unproven ideas. However, if you think closely, India’s start-up industry looks more promising than many legacy businesses.
How did we get here? Let us delve deeper.
Status of the Startup Industry in India
In 2021, 16 Indian start-ups were certified as “unicorns.” This means that we have seen 16 start-ups being valued at over $1 billion within the first half of this year.
The total count now stands at 50. The 356 Network and Praxis Global Alliance India report says that by 2025, we will have more than 150 unicorns.
So why are investors keen on start-ups and not legacy businesses?
There are two reasons for this. One, the space occupied by public enterprises in the market is shrinking. Private businesses have the upper hand here, and a lot of them are now valued in billions. Hence, investors are maximizing their chances of being a part of these winning stories by backing several start-ups.
The second reason is more complex. India’s old and legacy businesses have a poor track record in innovation, and many of them are struggling to offer something relevant to the new customers.
In a competitive market, this leads to stagnation. In a globalized, well-connected world, customers can sample novel offerings from all over the world- and companies that cannot innovate will inevitably fall behind. And this is where the start-ups come in.
Where did legacy businesses go wrong
Our world is seeing new technical milestones being set every day. On top of that, new customer groups are emerging- giving rise to niches that were unheard of earlier. It is no longer enough for the new generation of customers to go for conventional products and experiences for the new generation of customers.
With the internet at their fingertips, location is now no longer a factor in disseminating information. Customers today are watching how the rest of the world lives, and there are many experiences that they are interested in.
Unfortunately, India’s legacy businesses have failed to deliver for them. The old players have tended to play it safe, and as a result, little attention has been paid to R&D under them. Instead of experimenting with disruptive offerings, they have kept tweaking the existing ones.
In this environment that discouraged change, many people with innovative ideas either buried their dreams or moved away to the USA- which became the hub for innovators.
Innovation- the Holy Grail
The failure to innovate had an indirect effect on society and the economy as well. Earlier, products used to be geared to some select customer groups. Others, who had demands that were never answered- barely registered. As a result, they had to compromise their quality of life.
And this is precisely where the start-ups stepped up.
Think of what online shopping and doorstep delivery has meant for people with disabilities, for example. It took an outlier like Flipkart to initiate change. None of the big corporations could come up with something like this- even with their vast resources.
Today, online shopping is the norm among young Indians, and Flipkart’s takeover by Walmart is regarded as one of the most lucrative deals in market history.
The Covid era saw many start-ups develop life-saving techs at much more affordable prices than what the established companies were offering. Almost every modern convenience that we look at now is the brainchild and the hard work of some upstart who thought of striking out on their own.
Is it any wonder now why investors are backing new players who are more willing to take risks and are disruptive in their thinking?
Conclusion
Start-ups are the incubators of innovation. The pandemic has starkly proven how desperately we need new technologies, products, and services. India is a powerhouse of talent, provides for affordable and skilled labor, and a lucrative market. With proper support from investors, authorities, and industries- our start-ups can change the world. It is high time we realize their potential.
