Whither the big data on Indian startup story?
Despite being the third-largest startup nation in the world, there is no credible systemic data in India on either founders or investors. Whatever little information is available is largely restricted to funding. In the absence of this data, entrepreneurs often end up chasing the wrong target.
In most cases, funding becomes the primary milestone worth chasing.
There are many accelerators in the country which seek applications from startups to assess them across various parameters. These applications will be a great place to start. The applications tell us where they come from, their motivation, their ideas and challenges they are facing.
Where do ideas come from?
More than 62% of the teams said they came up with the idea because they thought it was ‘interesting’ or they had it themselves. This compares with 20% who mentioned that they had worked on this problem before in their previous jobs or had a better way to solve the problem. On the face of it, both are equally good sources. But the onus of market validation — ‘whether it is something that someone wants’ — is so much higher if you started out with an opinion or personal experience. Such founders would be better off spending more time on knowing more about the problem than beginning to build something because they know how to.
What is your current burn?
In the early days of a startup, too much capital can be a distraction. Frugality is always a virtue but in early stages it is a necessary one. Most of the burn goes towards building a team or gaining traction -both undesirable in the first 3–5 months. It also lulls the founders into a false sense of accomplishment. A little over 50% of the startups with burn upwards of Rs 1 lakh per month were in the pre launch stage. Further, three out of four startups in pre-launch stage had more than two team members in addition to founders.
Most important metric
Customer acquisition is the most important metrics founders track. In our sample, more than 50% of startups in the pre-launch stage cite customer acquisition as the primary metric
Where are founders from?
This is one clear bright spot in the current set of applications we received at Axilor. It is encouraging to see the share of founders with prior work experience rising.
Which sectors do the startups operate in?
This is one number we wish was different. The share of applications from sectors like healthcare lags the other tech sectors a lot less than 12% of the total. The ecommerce sector saw a slight dip from 34% in the last batch to 32%. The enterprise software and fintech sectors accounted for 52% of the applications.
According to recent US data, while only one startup in ten goes through accelerator programmes, one in three successful in getting Series-A funding is from an accelerator programme. Also, 75% of the investment dollars have gone into accelerator graduates of just four programmes: Y Combinator, Tech stars, 500 Startups, and AngelPad. There are two learnings here despite numerous programmes, only a handful of accelerators have actually made a difference; and they have made a difference to early-stage startups.
Obviously, to improve the number of startups succeeding in early stages, we will need a systemic way to impart this discipline and not leave it to serendipity. These programmes will take time to scale. Meanwhile, we can start with improving the level of evidence about Indian startups, especially in early stages.
As a startup ecosystem that is quickly getting larger, we need to move beyond anecdotes and opinions. And for that we need to measure what matters and make it widely known. This is our first step.
(article I wrote published byThe Economic Times: http://economictimes.indiatimes.com/small-biz/startups/whither-the-big-data-on-indian-startup-story/articleshow/55677917.cms)