IBM's study 'Entrepreneurial India', predicts why Start-ups fail

IBM's study 'Entrepreneurial India', predicts why Start-ups fail

Posted by P. Charitha on May 18th 2017

According to a study titled 'Entrepreneurial India', done by the IBM Institute for Business Value (IBV) based on a survey done in collaboration with Oxford Economics, to understand the rapidly evolving India start-up ecosystem and its effects on the wider economy cite that: 
lack of innovation, 
non-availability of skilled workforce &
insufficient funding, are the main reasons for the high rate of failure.
The IBM study, 'Entrepreneurial India' is based on interviews with more than 1,300 Indian executives, including 600 start-up entrepreneurs, 100 venture capitalists, 100 government leaders, 500 leaders of established companies and 22 educational institution leaders.
Though the Indian start-up community is ranked third globally in terms of number of start-ups, has been creating new job opportunities and attracting capital investment in start-ups, more than 90 per cent of start-ups in the country fail. 
Nipun Mehrotra, Chief Digital Officer, IBM India/ South Asia  said that ,”We believe that start-ups need to focus on societal problems, including healthcare, sanitation, education, transportation, alternate energy management and others, which would help deal with the issues that India and the world face. These require investments in deep technology and products which are built to scale globally,” .
-77 per cent of venture capitalists surveyed believe that many Indian start-ups lack pioneering innovation based on new technologies or unique business models. Indian start-ups are prone to emulate already successful global ideas.
- 70 per cent of the venture capitalists believe that talent acquisition is one of the biggest challenges faced by Indian start-ups, and limited availability of necessary skills impedes growth.
-The results reveal that start-ups can exploit a range of attributes and advantages unique to India. Six in ten recognized that India’s skilled workforce as an asset for businesses. 
-More than 76 per cent of Indian executives pointed to India’s economic openness as a major business advantage, while 60 per cent identified India’s skilled workforce and 57 per cent of the executives said India’s large domestic market provides significant advantages.
-Startups are also grappling with a funding crunch, according to 65% of the venture capitalists. In the quarter ending March 2017, the volume of initial angel and seed investments more than halved to 120 compared with 245 deals in the same period in 2016. And Series A funding, traditionally secured right after seed funding to expand user bases and develop the businesses, declined 65% in deal value from a year ago.
-A lack of knowledgeable and experienced mentors and amateur founders hamper the growth of these start-ups in the nascent stages.
-Another problem is when the start-up founders think of that money as their own, as opposed to taking care of it because the capital is vested in a company or to build a certain technology, affects the organisation, and how people are treated. Source: & The Hindu Business Line


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