Why do 90% of startups fail in India?

India has the second-largest ecosystem for startups after the US. Economical survey of India reveals that India has around 61400 startups certified by the Department for Promotion of Industry and Internal Trade (DPIIT), out of which 14000 registered only in the financial year 2022.

The problem is that being the highest growing startup country, 90 per cent of our startups failed in the first 5 years of their inception. 

Lack of Innovation

The most common reason cited by surveys for failure is lack of innovation. Nearly 80% of venture capitalists believe that India lacks innovative business models. The majority of its business ideas are taken from other countries without any unique local insight.

India usually creates replicas of global startups like Ola for Uber, OYO for Airbnb, Flipkart for Amazon, and Paytm for PayPal. The list is quite long if you search on Google.

The lack of innovation is the reason, India does not have any meta-level startups such as Google, Facebook, and Twitter. 

Lack of Funding

The most essential part of starting a business is the lack of cost management. Even though some businesses manage to raise considerable amounts of funds, the lack of a good business model led to shutting them.

Insufficient money forces businesses to change their strategy, and the inability to follow up on funds is the biggest reason for the winding up of startups.

Product Market Fit

A product that you believe has a great value may be worthless to the people. Another reason so many startups suck is that they are giving what nobody wants.

The purpose of a startup is to solve the existing problems of the general public with innovative ideas. In the end, the customer is the king. 

The simple reason why so many startups fail is that the consumer does not need its products.

Run Out of Cash

29% of startups cited their reason for failure as running out of cash. The reason for this is poor management of funds.

Companies failed to figure out how many employees to hire and how many professionals to include in the team. Where to invest? From where to get resources? 

Running out of cash indicates the inability to obtain finance and the financial need to sustain a business. 

The problem could arise due to poor cost management or not making enough sales.

Got Outcompeted

Many startups failed to recognize the competition involved in the market for their product. They create a product and launch it in a highly competitive market without proper research.

Ignoring competition is a big issue with startups. Before footing into the market, ask yourself what you are doing that nobody else is doing. 

Absence of Leadership

A startup is run by the vision and goal of its founders and the core team members. Most companies fail because they lack strong leadership. 

The success of a startup depends on the bonding among its team members. Most Indian startups fail to build a strong bonding between the team members and the leadership. 

Bad Marketing

There is no point in creating a great product if nobody knows about it. Startups spend too much time on product development and ignore the importance of marketing.

Good marketing brings you more leads than a good product. Entrepreneurs avoid marketing to save money, consequently, they diminish their chances to grab the market. Hiring a team of experts for marketing is not an expense but an investment.

How to avoid failing?

Failing in business is unavoidable. There are chances that you do everything right, but still, your product fails to survive in the market. The outcomes are not in your hand. What is in your hand is to make adequate efforts to avoid falling at the very beginning of the game.

Know your aim

Don't do business only to earn money. Your business must solve the problem of society. You should know your goal and where you are aiming. If you don't have an aim or purpose, your efforts have no value.

Do in-depth research

Entering into the market without research is a full-proof plan to fail. Figure out what customer wants and how your product is helping them. What are the likes and dislikes of your target audience? Know your competitors and how you could do things better than them. Analyze everything and make a plan.

Love your work

Maybe you are motivated today, and this motivation will fade away tomorrow. What's then?

Don't start a startup just out of motivation that will end either today or tomorrow. You must have a passion for your work, and you are ready to do it for your entire life because that's what you want and love to do.

Don't dare to quit

Definitely, a time will come when you feel that it's not going to work. No matter how great business you have, it will face downtime. Such time will create doubt about your potential, and you want to end all this shit.

Conclusion

90% of startups fail. You may fail on one project, but that does not mean you are a failure. There are plenty of examples where a failure stood up again and made a highly successful venture. 

Startups are no doubt full of risk, but with significant risk comes great potential. The point is not whether you are the richest person in the world or not, but to do something that will make a positive impact on the world is significant.

Risk is certain, and so does the reward, not immediately but definitely.