Sometimes, the disconnect is so vivid that we cannot help but wonder at its incongruity; we are left thinking, “Am I missing something here?”
That’s what happened when we read this report published yesterday by Tracxn, a firm that tracks investments and financials of private companies and start-ups.
1: Number of star-ups in 2019 at 5462, down 35% (YoY)
2: The lowest number of start-ups since 2011
3: The number of star-ups on the decline since 2016.\
4: Ironically, 2016 was the year when Govt launched the Startup India scheme, an initiative to catalyse and encourage innovation and entrepreneurship in India.
5: Drop in start-ups is across all sectors, right from fintech and retail to enterprise applications.
The drop in the number of new entrants is observed across sectors, ranging from fintech to retail to enterprise applications.
And then on the other hand, it pops into the mind – India is scaling new heights on the Ease of Doing Business Index. It jumped to 63rd position in the 2020 report. The country was 77th among 190 countries in the previous ranking last year, an improvement by 23 places.
In the 2019 report, India had improved its rank on six out of the 10 parameters relating to starting and doing business in a country.
So how is this possible? On one hand, we have data to show that start-ups are on a decline and then we have this report. Surely, there is some disconnect in the collection of data? Or else how does one explain this?
There are few analysts who say that start-ups have gone down because till 2015, everyone and anyone wanted to start their own company and there was a virtual flood. But as things settled down, only the fittest survived and now only those with great innovation will do well. ‘Me-too’ start-ups made up that list before 2016 and now the market wants only those start-ups which have something different to offer, a USP which no one else has.
Thus the start-up boom is something like the dotcom boom – it all rose to unseen height and then just crashed once reality hit. So for start-ups too expectations have become more realistic, with entrepreneurs preferring to validate their innovations with the market reality before going for a commercial launch. What we are witnessing now is an ebb of that euphoria. But is that good? Boston is like a living city of entrepreneurs and innovation; they should have reached the boiling point long long time ago.
Surely, the atmosphere needs to become more conducive. Well, lets hope that the Govt’s Budget of 2020, which provided various sops to the start-ups, making it easier for PE, VCs and corporate investors to invest money, things might start looking up for the start-ups. Other wise the Ease of Doing Business Index has no relevance.