Activism Entrepreneurship

What do startups really want?

There are five kinds of challenges startups face - (1) Product-market fit (2) Getting sales (3) Manging working capital (4) Technology development (5) Opposition from entrenched players

The reason I put down this list is in response to DPIIT announcing the benefits for all the 192 startups that were shortlisted in National Startup Awards. Both Navalt Solar and Electric Boats (Energy) and XShip Analytics (Industry 4.0) are on this list. Now to answer the question, we must look at what problems startups face. Let’s start with the ones that common across all startups.

Common to all startups

  • Product-market fit

A common issue with us engineers developing a product is the focus on the features and specifications of the solution instead of the benefit it provides to the customer and the value proposition it offers. This involves choosing the right technologies and developing the product that the market needs. One can either learn the hard way or from the experience of other people guided by incubators, accelerators, and startup facilitators.

  • Getting paid customers

If the startup manages to get the above step right, it leads to sales. This step is a much more challenging problem to solve. It is also an area where startups need maximum support. StartupIndia and other ecosystem players must focus their energy on this activity more than anything else. DPIIT has cancelled many tenders in the past for violation of their intended policy. However, many projects have escaped this scrutiny just because the firm in question happens to enjoy power lobbying with the ministry. An example of such an issue is how Kochi Metro and Cochin Shipyard managed to game the tender to favour a foreign supplier instead of our startup with electric propulsion technology. My attempt at reaching out to DPIIT has failed even to get an opportunity to present the case. Read more here.

  • Managing working capital

If the startup is lucky to get sales, the next problem they will encounter is working capital. Here again, the central government firms and PSUs are guilty of keeping highly skewed payment terms. These are sometimes as ridiculous as financing the entire project. It is an innovative way these PSUs ensure that the suppliers are either big firms or a foreign supplier. Read more about this here.

StartupIndia and other ecosystem players must find ways to reduce this working capital needs by better payment terms or facilitate financing similar to what Kerala government offers startups with a purchase order from the state government firms up to ten crore rupees. Unfortunately the same is not extended for Central government purchase orders. Filling this gap can solve a large part of this issue.

For technology startups

  1. Development of technology

The above issue does not apply to all startups but only limited to ones who are developing technology. Here startups need to focus their time, money and resources in something that might yield result after a long time. More startups work on frontier technology and applications when more there is financial support. A successful model is EU grants that have facilitated technology demonstration in many advanced areas of research. 

For startups that cause disruption

  1. Fighting entrenched, influential players

If a startup manages to do all the above and come with a solution that provides higher value at a lower price, then they encounter a powerful force. These are entrenched players who have a lot to lose if there is a change in status quo. Unless the ecosystem offers support to startups facing this scenario, they cannot survive. When we met such an issue during the making of ADITYA, we were lucky to get the help from Kerala govt., the startup ecosystem and public at large.


References:

  1. About Aditya and the work we do – Brut Video (https://www.brut.media/in/news/award-winning-ferry-steers-india-toward-solar-powered-future-0ef9d721-dafa-4055-9787-cc256cac7221
  2. https://sandith.in/2020/09/13/how-navalt-was-excluded-from-kochi-water-metro-project/
  3. https://sandith.in/2020/08/17/aatmanirbhar-in-theory-and-practice/
  4. Interview with Gyaniki on issues faced by startups. https://youtu.be/bb5QTwCRMew?t=409

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