D S PRASHANT and TARUN K highlights the startup ecosystem and the different aspects that a startup should focus on
Once a startup, Apple ($2,024B), Microsoft ($1752B), Amazon ($1534B), Alphabet ($1374B), Facebook ($794B), Tencent ($748B), Alibaba ($617B), and Tesla ($615B); are now market leaders and virtually monopolistic players in their respective industries.
Startup gets a chance to enter/disrupt a market usually when there is a gap in intelligence of the product or service provided by existing companies.
Zomato, Cred, Upstox, Dream 11, PharmEasy, Phone Pe are similar companies that have proven to become household names in a shorter period of time breaking all the previous trends across the globe. By 1955, the average Fortune 500 organisation age was almost 60 years. By 2017, the average Fortune 500 organisation age is less than 20 years. The average half-life of a business competency has dropped from 30 years in 1984, to 5 years in 2014, and is expected to drop further. Time taken to reach 50Mn active users is drastically reducing – 50 years for telephone, 22 years for television, 3 years for Facebook, and 19 days for Pokémon. The speed at which data and technology is impacting businesses is clearly giving a hint on the importance of tech inclusion and data reliance.
The Indian startup ecosystem is the 3rd largest startup ecosystem in the World with value creation of USD 315Bn. India’s ten most valuable unicorns are worth more than 100 billion dollars, and have 58 unicorns with an estimated value of 180Bn in value. 150+ funded startups are based out of emerging startup hubs and the Indian startup ecosystem is expected to have 150+ unicorns and is expected to generate USD 10 trillion economy by 2025.
Global Indian brands like Reliance, Tata, Mahindra, and many more are already collaborating with startups and incubation hubs, thus helping them grow exponentially in a very short period. The startup usually brings out the intelligence to take on rivalry or substitute products, and big players match the requirements and the Go-to-market, to build a working industry disruptor.
What Startups Focus on:
Social Impact is one of the prime aspects of a startup’s growth journey. Delivery fleet Zomato and Swiggy employ over 300K-500K delivery executives between them. Ola Cab generates livelihood for 1.5M drivers across 250 cities. Meesho has enabled 10 million entrepreneurs (mostly women), to create their own professional identity and grow their businesses.
Marketplace: Most of the successful startups have started from a garage setup and built their network of vendors/suppliers over a span of time. Startups help create value for big companies to small businesses in the long run. The startups initially create a value addition product/service as their business model and grow the brand into a trustable name. Once a marketplace of paying clients is built for a particular industry, they extend the opportunities to other companies, which make it a huge marketplace opportunity. Online businesses like Amazon, Flipkart, Swiggy, Zomato made it easier for other businesses to reach and sell to targeted clients.
Startup Trends in the Covidized World:
During the initial covid days, data handling e-commerce startups like Amazon, Swiggy, Zomato, Flipkart, Myntra etc., played a huge role in helping companies survive and deliver their services. Social distancing and series of lockdowns has transitioned sporting and other outdoor activities to the digital realm. As per the report by 3one4 capital, India will go from data poor to data rich nation by 2025! The entertainment industry has already started with the trend transformation, with content consumption increasing exponentially through Covid19. Report shows that Airtel-2021 data consumption per subscriber was 16.4 GB per month with 336M Subscribers and Jio-2021 data consumption per Subscriber was 13.7 GB per month with 325M subscribers.
Another industry, which has boomed during Covid times, is the e-grocery and e-commerce category. With systems in place to support verticalised brands, meet increasing quality and variety demands, newer companies are venturing into the grocery e-commerce sector since the pandemic has started. With data optimisation and clean mobility options now a reality, incumbents see value in building various products and services to onboard, support, monitor, and fulfill the supply channel. FiiRE Startups like Sabka Mandi, Custom Elements, and Network Trade Partners, already provide retail, e-commerce, and affiliate sales channels for products like FMCG, fashion, and generic products to be sold respectively, in a data driven manner.
The education sector saw huge disruption with ed-tech companies providing convenient education delivery tools and systems for supplementary education like out of school/extracurricular certification, training platforms, digital education tools, tutoring test preparation, and skill enablers. Home-bred startups like Asier, Codewell, and Webfills have built a reputation for themselves in Goa by providing ed-tech products and services like robotics for all age groups, learning management systems for institutes, and teaching coding via gamification for audience from school level respectively.
Trend with Corporate Brands during COVID:
The McKinsey report found that over 90% of respondents of the corporations believed that the pandemic would change the way they do business over the next five years, but only 21% felt they were equipped to actually deliver that change.
Strategic partnership between startups and corporations based on their interests, and mutually benefiting parameters is a great way forward to integrate kick- starting innovation, which is the need of the hour! This relationship helps primarily in validating the potential of the innovation built on a smaller scale by the startups, within a controlled environment. Secondly, it gives the mutual interest of scaling the innovation, enabling better business opportunities.
Many corporations have established their startup scouting acceleration programmes, have collaborated with incubators to identify early stage innovative ideas, and are investing and betting on them. They find it easier to collaborate outside the corporate framework as the mindset of the startup is leaner, agile and short of red-tapism which can help the turnaround time for implementing and experimenting with new ideas. Corporates have also developed skunk works at incubators with a similar outlook to broker lasting change.
Corporate Innovation and Venturing:
According to a survey on corporate innovation by the Boston Consulting Group, which drew responses from about 3000 global executives, innovation is at or near the top of the company’s agenda, 43 percent of the respondents, considering it one of their three most important strategic priorities and 23 percent considering it their top priority. While innovation is highly valued as the driver of most organisations, few organisations are able to successfully implement the innovation and be sustainable, due to uncertainty in change management.
Internal corporate venturing occurs when the new process or new business is created within the company’s organisational domain and resources. External corporate venturing involves strategic investments outside the company’s organisational domain. Joint corporate venturing is a form of external corporate venturing that involves a co-investment with another parent organisation to create a new organisation, with both parent organisations continuing to exist. Corporate venturing is one of the proven strategies for improving corporate performance, and has worked for brands like IKEA, Amazon, defence, Reliance, etc.
Ginsberg and Guth who stressed that corporate entrepreneurship encompasses two major phenomena proposed a broad definition of corporate venturing:
– New venture creation within existing organisations
– The transformation of organisations through strategic renewal
While the specific aspects of corporate entrepreneurship vary from organization to organisation, four common aspects are indicated with an equation: L = I + O + Cr + Ch, Where, (L=level of entrepreneurship, I=innovation, O=ownership, Cr=creativity, and Ch=change)
Corporate Entrepreneurship: Need of the Hour:
To start and operate a new business, even under a corporate umbrella includes considerable risks and effort to overcome the inertia of creating something new of value to the brand, consumer market, and the founders.
However, with corporations having an existing go-to-market and brand recognition, only the product worthiness has to be validated and aligned with the market. When placed under a confined environment, like a technology business incubator, chances of success are higher with corporate mentoring, financing, and go-to-market support.
