The startup industry in India typically consists of three parties:
The guy who wants to get into a startup -
At best, this person is motivated by a deep desire to implement his idea which he thinks has a lot of potential. At worst, he is doing it because he wants to just do something and start-ups are cool, and he wants to impress girls.
I am not judging the people who get into startups; all I'm saying is that they are people. And people have varied motivations. Depending on what drives him, he is likely to put a more (or less) concentrated effort on business.
The man who wants to invest his spare money -
When an ordinary rich person (the investor in our startup story) is faced by a startup asking for money, he is likely to respond in two ways:
- He could look at the startup idea and see whether it makes sense for him to invest into it. If he does, he believes in the idea itself; OR
- The rags to riches stories are in his mind, and he has a fear of missing out - and he just wants to invest in anything... he wants to be rich too! This is in part stressed by headlines such as these - Our investment in Flipkart is now worth a little less than 300 times: Subrata Mitra.
The success of a startup also depends on whether the guy financing it is cautious with his money or not.
Look at this chart I made which illustrates the start-up situation in India:
The first (green) quadrant is what we all see when we think about startups. But there exists a gray and a blue zone as well, which is quite common. For a startup bubble to burst, however, we need to be in the red zone.
So are we in the red zone?
I would not go so far to say that India is actually in the red zone. Our youngsters and entrepreneurs are really excited about their ideas, and many of them have the knack to stand up for it and go through shit to see the light of the day. This is helped in part by the following -
- The internet and e-commerce - this has actually made it possible for a crazy idea to be commercialised
- Awareness and support - the government's initiatives for startups have made it possible to take bigger risks
But then, again, we have not even talked about the black horse in the race...
The girl who introduces these two -
Meet this girl:
It is her job to connect an awesome idea with money bags.
Her job description includes - (1) Checking the background of the idea owner, to see if he has the knack to stand up for his idea at all costs; (2) To evaluate the idea on behalf of the investor and see if it makes sense to invest in this idea; (3) Help in formulating a viable business plan and then pitching it to the investor to convince him that its worth his money.
The conflict is that she earns only if the money is actually invested.
Will she stand up for what is right and ensure that only the best idea passes through? Or will she pitch for whatever is coming her way, to make a healthy commission and just forget the idea afterwards?
Ladies and gentlemen, we don't realise how much power lies in her hands... If I may say so, the success or the failure of the startup bubble's future in India depends, to a big extent, on her.
For a wonderful startup success story we need -
- Awesome idea and execution
- Cautious investor
- Sensible angel network
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