What makes your business a Startup in Nepal
Have you ever wondered why billion dollar companies like Facebook, Uber, and Flipkart are still called startups? Have you ever wondered whether to call successful Nepali companies like eSewa and SastoDeal startups? Or do you have any doubts whether to call your business a startup? Well, you are not alone. As interest in Nepal’s budding startup and entrepreneurial ecosystem grows, there is still a considerable amount of uncertainty, among entrepreneurs and intrigued onlookers alike, on how to define a Nepali Startup. However, this is not a confusion limited to Nepal.
Startups are the most innovative and fastest growing organizations in the world. It is their dynamic nature that makes them so innovative and that enables them to grow so fast. But it is the same dynamic nature of startups that has led various stakeholders of the startup ecosystem to come up with various definitions for it.
Here, we discuss some of the key definitions of startups that are accepted around the world, align them with the views of Nepali entrepreneurs to get a better understanding of how Nepali startups can be defined.
Striving for growth
The best people to define a startup are the people who have actually created one or have dedicated their lives to entrepreneurship. Perhaps the most frequently quoted person in this regard is Paul Graham, co-founder of Y-combinator-the world’s best startup accelerator. According to Graham, “A startup is a company designed to grow fast. Being newly founded does not, in itself, make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of ‘exit.’ The only essential thing is growth. Everything else we associate with startups follows from growth.”
This apparent emphasis on growth, and not the newness of a business, is also echoed by Mr. Asgar Ali, one of the co-founders at eSewa. When asked if he still considered eSewa as a startup, Ali gave a resounding “Yes!” adding, “The number of mobile phone subscribers in Nepal is at 27 million. To many people eSewa might seem a successful business, but we realize that we have only tapped into a fraction of the market. There is still far more space for growth, and we are working for it. That is why we are still a startup, because only a startup can grow this rapidly.”
Startups in the face of uncertainty
Eric Ries, veteran entrepreneur and author of the revolutionary book “The Lean Startup”, points out that the most defining characteristics of a startup is its obligation and ability to work under risk and uncertainty. He states that, “A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.” According to Ries, the best way to reduce this uncertainty, and the amount of risk associated with it, is to adopt a scientific experiment based approach called “Build-Measure-Learn”.
This experiment based approach might not be too prevalent in Nepal, but the view is backed by Santosh Pradhan, a serial entrepreneur and co-founder/CEO of Excom, a recently formed cutting edge real estate services company. He says, “Startups are companies that are nimble and flexible enough to solve real world problems. They need to be serious in their experiments to test their assumptions and solutions and need to learn as fast.”
Search for a scalable business model
Steve Blank, a highly regarded silicon valley serial entrepreneur and educator, believes that “A startup is an organization formed to search for a repeatable and scalable business model.” He believes that a startup searches for a scalable product-market fit and looks to validate it. Once the product-market fit is validated, the startup enters a transition phase where it looks to convert the business into a scalable business model. Then, the startup takes its first step towards becoming a company.
This transition of a startup into a company, through the discovery and implementation of a scalable business model, is relevant for Nepali Startups as well. Pranav Pradhan, co-founder of Green Bamboo Creations, which is one of the companies being accelerated by Rockstart Impact, resonates the idea. Pradhan says “We have already proved our idea, made it financially feasible and now it is time for us to scale. So we have now moved from the startup phase to a grow up phase. When you don’t have to prove your idea then you probably become a grow up.”
Startup as a state of mind
All the definitions to this point are in terms of what the startup is striving to achieve, i.e. growth, risk reduction or a scalable business model. But there are successful entrepreneurs who believe that the word “startup” is more than a label, and is rather a state of mind. Nick Woodman, CEO of GoPro, advises companies to “never let yourself stop being a startup.’
In similar vein, Amun Thapa, founder of Sastodeal.com, states “Startups are problem solvers. They see a problem, create solutions that add value to end customers, and thus they make money while doing so. The difference is, while a business is created to make money, startups are created to solve problems. Yes, we (Sastodeal.com) are a startup and always will be. Because we are learning and improvising each day. There is no end to this.”
Government view of a startup
While entrepreneurs and people involved in the startup community have defined startups through their personal perspectives and experiences, the government needs a clearer and more precise definition of startups for regulatory and policy formulation purposes. If you look across our border towards India, the government has made an attempt to better define startups and to develop favorable policies for them. On April 17, 2015, the Indian Government released a Gazette notification declaring a startup as an entity
- Till up to five years from the date of incorporation.
- If its turnover does not exceed 25 crores in the last five financial years.
- It is working towards innovation, development, deployment, and commercialisation of new products, processes, or services driven by technology or intellectual property.
A similar directive from the Nepali government would also help clear the murky waters of defining a startup in Nepal. This would not only help the startups themselves, but also the many stakeholders involved in the ecosystem like investors, incubators and accelerators.
These definitions simply imply existing standards and definitions of startups around the world. A concrete definition encompassing everything doesn’t exist in business. But you can gauge at your business with these questions to see if you can call your business a startup.
- Are you striving for growth?
- Are you battling extreme uncertainty?
- Are you in search for a scalable business model?
- Are you working to maintain an organic culture in your business that emphasizes innovation?
If the answer to either one of these questions is “Yes”, then congratulations! You have a startup at hand.
Disagree with these definitions? Think that I have missed an important definition of a Nepali startup? Please let me know in the comments below. I would love to read more perspectives on how to define a Nepali startup.
Originally published at startupsnepal.com.