Startups: India vs U.S.

India is rapidly becoming a leading global startup hub. Rising numbers of entrepreneurs, incubators, international and local VCs and multinational corporations are turbocharging the development of a flourishing tech scene. In fact, the number of startups in India is expected to nearly quadruple from 3,100 in 2014 to over 11,500 by 2020! Here’s a look at some of the key differences in business styles, models, and approaches.

To Fail or Not to Fail

In America, failure is usually seen as a natural stepping stone on the road to success. People may go to school to study one thing and take a job doing another, and then move around between companies and industries throughout their careers. The U.S. seems to celebrate comebacks as much as initial success. In India, failure is frowned upon at every instance. When I struggled to do well a few times in my early education, the sense I got(and sometimes still get) was that failure was the end of the road and not a bump on it. This mindset of Indians has no doubt led to the demise of many promising careers for countless entrepreneurs and perhaps may have stopped many from even daring to try it in the first place. Given that a vast majority of startups fail, Indian business culture must begin to examine its tolerance for founders’ missteps and encourage the knowledge gained from failure to be applied to future success.

Show Me the Money

In the U.S., startups can sometimes secure funding on the basis of a strong concept, often without revenue or a set business model. Companies have the opportunity to prove their value proposition and test products extensively before releasing them to market. In India, however, access to capital is limited, causing startups to focus on monetization, revenue and lean operations from the outset. Startups are usually funded only after they have a working product and a strong business model. In a nutshell, most Indian investors are only going to invest in your startup if you’ve already shown you can make money for them.

But this toxic methodology can result in many missed opportunities. The benefit many American startups have is that they are willing to sacrifice revenue in their early phases in order to focus on refining their product and gain organic user growth which is usually not the case for many Indian startups. Without that cushion of funding, it’s much tougher for Indian startups to pivot, leaving many to struggle.

Is the Customer King?

Businesses in the U.S. are renowned for creating a great customer experience, the idea being that loyalty and repeat business is cheaper than acquiring new clientele. India is also known for customer service, but in a different way: employees of outsourced call centers are often trained to implement standards prescribed by companies from other nations. When it comes to startups, Indian companies aren’t prioritizing how to delight customers and improve retention rates in the same way as their American counterparts. Some recent studies show that Indian firms risk losing significant business due to lack of adequate customer service. There’s a tremendous opportunity for both startups and established companies to build and improve customer loyalty in India by adopting practices that are now considered standard within the U.S.

Male vs Female workforce

India still lags behind in employment for women. According to a report by Genpact, women are still greatly outnumbered by men, comprising of only about 25% of the total workforce, with only around 15% of companies having women on their boards. Some say that this is largely because of the traditional and cultural norms rather than career and entrepreneurship opportunities. Just as the U.S. is making headway with gender equality, I am sure that with the expansion of incredible organizations and other online resources and support, greater female empowerment will arrive in India in no time. India will need to soon get over a few ancient traditions if it truly wants to build a world-class startup ecosystem.

Conclusion

Today is an exciting time to be an entrepreneur in India. Resources for startups are growing, internet access is exploding, and educational initiatives for the startup community are expanding exponentially! Access to networks of mentors and advisors which had been lacking is becoming much easier. As a result, many Indian entrepreneurs have begun applying U.S. models in key areas such as culture and consumer relationships in order to help their startups grow. Given the injection of international capital and knowledge support to the region, we will continue to see the stunning growth of startups in India. The more Indian and American entrepreneurs share and learn from their experiences, the better for the overall global startup culture.

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Parth Aggarwal

Parth Aggarwal

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