Entrepreneurs are maturing in their mindset. What are the yardsticks they use to benchmark their success?
Even in the fast-paced disruptive world of startups, a few things are hard to change. Gender bias, for one.
Sairee Chahal, founder of Sheroes, a community platform for women, is at times at the receiving end of it. Often it comes in the form of “innocent” remarks and “friendly suggestions”. “You started this alone?” she often gets asked, with thinly veiled scepticism.
Just the other day, an executive from the venture capital industry suggested to her: “You should have a male cofounder. It is easier.” Her sense of dismay over the incident comes through in her voice as she spoke, over the phone, to me. “It felt stupid. I am not a spring chicken. This is my second startup. I have been an entrepreneur half my working life. There is so much resistance to solo female founders,” she says.
So why did she start alone? I repeat the loaded question not because she’s a woman but because starting up alone is tough and lonely, for men and women. MakeMyTrip founder Deep Kalra recently told me that if there is one thing he would change about his entrepreneurial journey, it would be to have a cofounder.
Chahal knows well the hardships of a solo founder. But she says she had little option. “I didn’t know where to find them.” A small-town Punjabi girl from a middle-class family, she had few networks in Delhi from her growing-up days. Nor did she form deep bonds during her corporate stint — a challenge that women often face — to scan for a cofounder. “Startups are tough. It is even tougher for women entrepreneurs who have to battle many tides,” she says.
Chahal confirms what a survey of Indian entrepreneurs by Excubator, a startup incubator and consultancy firm, for ET Magazine, reveals.
India’s startups remain a man’s world. They might be flush with funds and buzzing with bright ideas and disruptive technologies, but traditional gender biases and challenges remain in play here. The online survey was done in August and received valid responses from 299 entrepreneurs. Women comprised just 14% of total respondents.
It is a good time to pause and understand Indian entrepreneurs.
Once on the fringes, starting up has become mainstream. Entrepreneurs are the new heroes of India’s middle class. After two decades of boom-bust cycles, the ecosystem is both deep and rich, with 1,400 new startups created in 2018, (from a high of 3,560 new startups in 2016, it dipped in 2018, due to the onset of a funding squeeze).
The funding landscape too has substantially matured with most global VC firms including those from the East (like China, Japan and Korea) setting up shop in India. In 2018, according to Venture Intelligence, VCs in India invested $8.5 billion in Indian startups.
Also, amid all-round pessimism in the Indian economy, startups and their founders are a beacon of hope. Amid dreary headlines of bankruptcies, credit defaults and incarcerated promoters, new entrepreneurs, their surging ambitions and funding boom offer a much-needed respite.
The survey attempts to understand Indian entrepreneurs, mostly of tech-led startups. Who are they? Where do they come from? What is their gender, demographic and psychographic profile? What drives their pursuits? What are their biggest challenges? “The survey busts a few myths and endorses some visible trends,” says Guhesh Ramanathan, founder, Excubator.
First, the macro view. Bengaluru is unquestionably India’s startup capital, with 37% of founders who responded to the survey coming from there. NCR is at the second spot — 16%. About 71% of respondents are from Tier-1 cities (Bengaluru, Mumbai and NCR). Like FreeCharge’s Kunal Shah and Myntra’s Mukesh Bansal, who have now started new ventures, 34% of survey respondents are serial entrepreneurs.
Contrary to popular perception, “they aren’t young, fresh college graduates,” says Ramanathan. The median age for starting up is high — 35 years for men and 37 for women. They are well educated, too — 39% have a bachelor’s degree and 53% have a master’s degree/diploma. About 4% have a PhD; the same as school graduates.
Their experience is fairly spread out, from 0 to 30-plus years. About 37% are solo founders but the most popular configuration is two cofounders for a company, at 47%. A vast majority has been set up over the last decade, with almost half in the last five years. About 26% of them have managed to raise funding. Raising funding seems to be their biggest challenge (59%), followed by finding and retaining talent (40%), government and regulatory issues (31%) and finding customers (30%).
Entrepreneurs are also maturing in their mindset. What are the yardsticks these entrepreneurs use to benchmark their success? For about 58% it is generating profit, while for 42% it is the number of people they employe and for 20% it is fund-raising.
Signaling Indian startups’ rising global ambitions, a high 66% say their focus is both Indian and global markets; 30% are focused only on India while a small but significant 4% are focused only on global markets.
Mature and more evolved
Seasoned startup watchers echo what the survey reveals. The first thing that Saurabh Srivastava, founder of Indian Angel Network, notices is the maturity of Indian entrepreneurs and their ideas.
“In 2010, we would get 200 startups annually and struggle to find even one or two to invest in. Last year, we vetted 10,000 and invested in 25-odd.
The quality of ideas has improved substantially,” he says. Arun Natarajan, founder, Venture Intelligence, says he sees more experienced — and hence older — entrepreneurs. “With age and experience, they have a better feel of the problems and hence go after business models that are sounder,” he says.
The biggest thing that serial entrepreneur and investor K Ganesh notices is the surging aspirations and scale of ambitions of today’s entrepreneurs. Sanjay Nath, managing partner, Blume Ventures, too, finds today’s entrepreneurs a lot bolder. “They think global from day one. They are attempting to do things at a much grander scale. Flipkart’s exit and the kind of money people made give confidence to many,” he says. Oyo and its aggressive global expansion plans are now a Harvard case study. They could become bigger than Marriott, he says.
Successful exits have spawned a growing breed of serial entrepreneurs. “They come with a lot of experience. If you are doing anything for the second or third time, it is obvious you are going to be better and faster,” says Rajan Anandan, managing director, Sequoia Capital India. Just look at the way Kunal Shah’s Cred and Udaan, founded by former Flipkart employees, are scaling up. The latter, founded in 2016, is already a unicorn (valued at more than $1 billion).
“While the number of new startups is coming down, the quality of founders is going up. We are getting more nuanced and differentiated ideas,” he says. This also has to do with the maturing of the funding ecosystem — in quality, quantity and spread. The biggest manifestation of all this, almost everyone agrees, is that Indian entrepreneurs today are thinking very hard about their ideas and the problems they are solving. They are less likely to chase the flavor of the season and have a more original and evolved approach to building their startups.
“Today’s founders have very different DNA.
Many have studied or worked overseas. They have a global view and have a very healthy global network,” says Nath. Consequently, in their mind and ambitions, they compete as equals with peers from Silicon Valley as they often think brand and build the latest tech products for global markets. A growing breed of B-to-B and SaaS (software as a service) entrepreneurs like Girish Mathrubootham of Freshworks, Ankur Kothari of Automation Anywhere and Umesh Sachdev of Uniphore are proof.
A few things haven’t changed. For example, 70% of entrepreneurs come from the top three cities. But things are likely to get better. “So far, horizontal ecommerce like Flipkat and Amazon were focused on the 50 million English-speaking urban consumers. The next wave of startups (think Meesho and Bulbul) will focus on Bharat, the 300 million consumers who may not be English-speaking but are literate and tech-savvy. This will attract a lot of entrepreneurs from smaller towns and cities,” says Ganesh.
A boost from a better ecosystem should help, too. Razorpay cofounder Shashank Kumar started in 2014 in Jaipur. Within nine months, they moved to Bengaluru where talent, funding and ecosystem were more vibrant. He sees a change, though.
“The Rajasthan government has taken a lot of initiatives to nurture the startup ecosystem there,” he says.
With Jio and the growth in digitisation, consumers in tier-2 and tier-3 cities are already becoming tech-savvy. “Over time, you will see these entrepreneurs from small towns starting to leverage technology for business, too,” says Ganesh.
Startup Landscape – An analysis of 20,000 startups that Excubator tracks in India
Gender bias in the startup world is disappointing.
It may have something to do with having few women in the investor world. Not only are there fewer women founders (14%) but they also face significant odds and must prepare better. According to the survey, female founders are older (median age 37 years as against men’s 35 years) and better qualified (74% of female founders have a master’s degree as against 56% among male founders). To understand gender bias, two other survey data points are important to note.
Funding probability of women-led startups halves (at 14%) as against those led by men (30%).
It gets worse if the startup is led by a solo founder— just 5% of startups led by solo female founder like Chahal get funded as against 31% of startups run by solo male founder.
“Women’s mobility is constrained. With the shifting focus to Bharat, I have a very strong feeling the women’s numbers will rise,” says Ganesh.
Perhaps the startup world will then manage to disrupt this age-old imbalance in the corporate world.