Indian startups adopting slower strategy to sustain business models

Promoters are aware that speed may thrill, but it may also kill their ventures.
Written by V L Srinivasan, Contributor

As the mortality rate of Indian startups has been as high as 90 percent, some of these companies are now adopting new concepts and strategies such as developing their ventures by laying a strong foundation for survival.

For these few, gone are the days of moving fast and boasting of incredible spikes in revenues, all the while ignoring the fact that they need to survive and expand their businesses in the long run.

While 2015 was been a turning point in the startup ecosystem funding in India, coupled with opening of the floodgates in getting funds after the Indian government announced a slew of measures to encourage startups early this year, these founders are keen to see their companies turn into money spinners rather than attracting more funds.

They are realising the fact that moving at breakneck speed might put them ahead in the competition initially, but it is also likely that they may end up burning out before the race is over.

The Mumbai-based startup AllSuperMart, which kick-started its operations in October 2015 in a small way, has opened 45 branches and operates 250 cities across the country at present. It intends to create an organised ecosystem for local shop vendors to sell their products and services online and has succeeded in its efforts in less than a year.

"When it comes to grocery business, it is important that one understand the consumer's behaviour," Amit Singh, founder and CEO of the startup, said. "The Indian consumer is a loyalist and it requires time to transform his/her grocery shopping habits. A steady approach helps to build a strong foundation and this results in lower cash burn rates and proven approaches to scale-up the business."

"It is necessary startups realise that fast growth is great, but sometimes slow is better."

Co-founder of the Mumbai-based tech startup BECK Technology Deep Malhotra said that companies should try to ensure success of their business model first in a smaller geography before expanding it to other cities.

"Having 100 paying customers is better than looking 10,000 free users and there is nothing sweeter than making profits before you expand," he said.

Another issue identified by Malhotra was getting funding does not equate to winning a lottery, and founders need be more frugal with the investors' money so as to gain more confidence from the community.

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