SparklyBanana
SparklyBanana

My rant about the Startup Ecosystem in India

The US is the land of dreams because of primarily 2 reasons: enough talented folks willing to take big risks and enough risk-capital providers. Both these pillars for India have issues. Let me explain.

First, there are no true risk takers in India. Founders don't look at the bigger picture and they just want to make quick bucks. So they just end up copying what's working in the US or which idea has recently gotten funding in the US. All our so-called major success-stories are copies of Amazon, Uber, Stripe, WeWork, Paypal, Airbnb, Yelp, Instacart, Khan Academy, ClassPass, Fandango, Taskrabbit, Robinhood, Binance, Poshmark & the likes.

Even if a startup takes the difficult 'path not taken' and somehows breaks the shackles and shows good growth or profitability, 10 other copies spring up. After looking at Zerodha's profits, so many similar apps jumped into the market. After looking at Dream11's growth, 10 other fantasy gaming companies jumped. If Juspay showed payment orchestrating can also be a good business model, 5 other PG companies now want to launch their own orchestrator. And now you can see copies of SpaceX, SHEIN, Revolut, etc. hitting the market. I'm 100% sure a lot of wanna-be founders are planning to start pitching for a D2C Beauty brand (after reading the Minimalist news)

The only unique businesses we have built are labour based like Quick commerce, Urban Company, Swiggy/Zomato or they could grow because the govt decided to do something about the problems: UPI helped paytm, phonepe, etc.

Even if a startup is able to provide exit by IPO it is done in a very flimsy manner: all other co-founders are kicked out just before listing, wholesale sales are spiked so they can show good numbers temporarily. Are your companies this fragile that you have to make such changes when you IPO?

The Founders also lack conviction in their idea. Rather than hiring a good leadership team, some of them hire their cousins in critical roles (lol) and look for any opportunity to funnel out investors' money. They hire an army of 0-5 year experienced folks to make sure their control never goes away. The best startups in the US grew because they hired the best talent and gave generous ESOPs and made sure everyone is part of the journey and thus maximised their success rate.

On the other hand are the investors/VCs:

Copycat startups getting funded more is a reflection of their mentality - always take the easy path. For such startups PMF is kinda proven, TAM is also clear, so why not just copy and build for local consumption and we'll proudly call it the XYZ for Bharat.

They prefer to back high-energy super-salesy founders with mediocre ideas rather than regular people going after moon-shot innovative ideas.

They force the founders to kick out their angels by Series A/B because why should you give a spot on the captable to someone who took the maximum risk (/s).

India has immense potential to create groundbreaking startups. But for that to happen, both founders and investors need to break free from their risk-averse, shortcut-driven mindset. Until then, our ecosystem will remain a reflection of global successes, with little to show in terms of original innovation.

1mo ago
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FuzzyKoala
FuzzyKoala

I had similar thoughts about the Indian startup ecosystem but soon realised that this is a pessimistic way of analysing things based only on things we get to hear/read easily.

Spend some time studying about the ground-breaking work Indian startups are doing in SaaS, Healthtech - it will amaze you.

It's very natural to have people working & investing on ideas that's already seen some success. If it can generate wealth, why not! Elon Musk is able to do ground-breaking work with SpaceX because he created that risk-taking appetite by generating wealth using the so-called 'copycat ideas' of electric vehicles.

There are multiple examples of ground-breaking work Indian entrepreneurs are doing now after achieving success with 'copycat ideas'. That's natural progression.

One can take risk only if you have created enough resilience.

GroovyPickle
GroovyPickle

Would be helpful if you could point to some startups which are doing what you said or some articles

FuzzyNarwhal
FuzzyNarwhal

While I kinda agree to your rant.

My curious question is have to tried to startup or tried and failed or running one. Have you raised funds or tried raising funds?

Because this rant is usually from someone who falls into any one of this bucket. I was also part of this rant group.

Until I decided that VC money is a farce. You can simply bootstrap an innovative technology first company where you solve a strong pain point.

Yes stupid startups with mediocre ideas are going to raise millions and millions by copying the west and are eventually going to fail.

Indian VCs are another group of miserable people. They speak all non-sense about risk capital on Twitter and go on to fund an MBA grad who is building another D2C brand or a service company disguised as a tech company.

Nothing wrong with that it is their capital, they decide to choose where to invest and where not to invest.

The only way to escape this game is to build a strong high margin, high cash flow generating technology company and boldly refusing VCs to be part of that success. That is perhaps the only bold reply.

There are numerous examples for this where founders deliberately refuse VC money. Yes it is hard, really really hard to build but if you can do it without ranting you are going to find the pot of gold.

In India doing a ₹100 crore topline with a proper technology first company will put you in the leagues of the top 0.0001%

Just build. Complaining is not going to help.

Someone who went through the same cycle and eventually escaped the game passed me this wisdom.

SquishyPancake
SquishyPancake

I won't even call Indian startups as startups. They are just normal businesses with equity capital. There is nothing innovative coming out because of the reasons you stated as well as the plight of the ecosystem. We have no M&A, almost 0. In the US if 5 companies are working on 1 problem and if 1 wins, the winner usually acquires the others if it's good. I sold my startup and it took 12 months and I didn't even make life changing money. This time I incorporated in the US and I think I may move there eventually. I wasted 8 years after my graduation in this country thinking something will happen but nope.
I don't mind people doing a business to just earn money, its fine, then do it sustainably and ethically. Here everything is an issue. From red tape to employees to ethics. Sad state of affairs.

GigglyNoodle
GigglyNoodle

Agreed to last part fully

WigglyBanana
WigglyBanana

Well captured
I still am very hopeful - but the problems are definitely apparent!

ZestySushi
ZestySushi

Stop ranting and tell me who is ready to work in deepseek-level impacting projects for the sake of 1% equity. Probably very few.

Because we Indian developers are suffering a pandemic called entitlement. They want a hefty reward before they even put in effort and take risks. 90% Indian devs will fail to understand that only by being an indispensable member in a team which happens by taking such responsibility or taking high risk, you are worthy of reward/equity.

The moment we start taking it seriously whenever any opportunity knocks on the door and stop being greedy prior to taking responsibility, the Indian developer mentality will always pull them back to menial FAANG or whatever jobs and no revenue-potential technology startup will go global.

If you defy this, tell me about yourself. How did you defy my general assumption? (Don't speak like a saint to me.)

FluffyNugget
FluffyNugget

If you think companies copying each other is Indian thing then you can't be more wrong. Ever heard of Coke and Pepsi? Or maybe Intel and Amd?

It's natural to look at successful idea and replicate it. What is wrong with that?

Do you want only one company to do something? That's basically monopoly
Honestly it might be good idea to see Indian copy of SpaceX, Tesla or other successful companies.

SqueakyDumpling
SqueakyDumpling
SAP0mo

Nicely written but as @WetTattoo09 mentioned it's about making money through those copy cat ideas and then taking on the Initiative of breaking in. Coming to another point it's a paradox where a founder tries to do something new, no one's ready to bet on him, the likes of Swish are insane copy of exisiting models are getting instant funding so why not.

SnoozyWalrus
SnoozyWalrus

Also, there is a customer market in U.S for the big risks entrepreneur takes. In india, its all about penny pinching mentality and people wanting everything for free.

An example :

Grapevine would've been a runaway hit in U.S if it now launched there due to lack of neutral platforms.

Grapevine chose to stay in India and outside of top cities nobody knows Grapevine !!!!

DancingDonut
DancingDonut

What a post. Take my grapes

SleepyTaco
SleepyTaco

Indian startup ecosystem is still at the infancy stages, but you can definitely see some bright spots. Ignoring the well known names like zoho, stock startups, zomato, swiggy,ola etc you can see umpteen startups doing innovative new things. Like rhe space startups skyroot, pixxel, the biotech startupsmany cyber security startups i personally know, and also the many saas startups from the freshdesk mafia. You just have to dig a bit deeper and see the potential

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