Is the Startup Environment Becoming Stagnant?

SnailThis column is by Aakanksha Aggarwal, Founder, Craft Driven Market Research

A few days back, I went to an event organized for startups. There was an overwhelming response from new ventures. It was all crowded. Many new faces could be seen over there. Not only startups, but VCs and investors could be seen there showing great enthusiasm. However, the talk of the town was, it is not going to be the same next year. Surprised I was! I was thinking, are people going to stop working on new technologies, or youth will refrain from investing their time in solving world’s problems.

I have listened to the stories that no more people are interested in starting a new venture and even if they are, they are not successful to make it work for more than 3 years. Several startups in the past 3 years, became national players and then closed down their operations. Many startups received several rounds of funding but could not succeed in standing up against the competition and eventually closed down. I have myself met several people who started their ventures and then shut them down since they were not able to run operations for long. Some got financial crunch, others got capability crunch.

However, if we contemplate, then the movement of startups is not new. It has been in existence since ages. All the big companies with an idea were once startups. Only now they have turned into conglomerates and multi-national companies. Some of the studies have mentioned that in 2015 there were more than 500 startups opened up as compared to 400 in 2014. If the trend goes on like this, then very soon there will be more than 1000 startups opening up every year. Even if half of them fail, we still will be having 500 startups which will be tackling daily life challenges of several people, and bringing up solutions to them.

Furthermore, we cannot deny the fact that investors are still putting their money into startups. They are still confident of these new ideas generated by the young people of the country. If we consider the number of fundings that took place in the first six months of 2016, it is 516. However, in the same six months of 2015, the number was only 379. It is a clear increase of 36.14%.

Shown Above: Number of deals that happened month on month in 2015

Shown Above: Number of deals that happened month on month in 2015

Also, if we consider only the year of 2015, the trend shows that the the number of funding kept increasing with the months in 2015 and it increased further in 2016 by crossing century mark in the first month (104 fundings) of the year. If we consider only the year of 2015, there is an increase of 62% in the number of fundings from January to December. With this much increase, it can never be stated that start-up environment is going to recede anytime in near future.

There are various new age startups in the country which are going strong in their respective industries, such as Uber and Ola have taken the ride; in education and career counselling, CareerGuide, in furniture, there are Pepperfry and Urban ladder. All these startups started from the scratch and have now built up a platform that can successfully contribute to the start-up environment of the country. Even though, these startups have grown to a recommendable place, yet there are challenges that are being faced by all the startups. In all the segments, there are 10-12 startups opening up every year. Many new startups are vigorously venturing into the market and they are giving a good competition to all the existing ones.

To all those who think that with the increasing number of shut downs, there will be lesser number of companies starting up, your assumptions are wrong. The start-up boom is not easily going to take a back seat. Although, there will be consolidations in the market among the start-ups yet the growth will continue.

Disclaimer: This is a guest post. The statements, opinions and data contained in these publications are solely those of the individual authors and contributors and not of iamwire and the editor(s).

Image Credit: Ripple

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