Over the past few years, the Indian start-up ecosystem has enjoyed great support from both the government as well as private players. Favourable policies are being drafted in order to bolster the growth of the country’s burgeoning start-up industry, with massive fundraising deals have made headlines as billions of dollars have been injected into Indian start-ups. However, with the number of emerging businesses growing at an exponential rate and everyone wanting a slice of the entrepreneurial pie, the scenario is changing rapidly. Investors are slowly but surely becoming wary of investing in every seemingly innovative idea that comes their way.
Raising funds is a major concern for emerging start-ups, as capital is required at every stage of growth. Even after the business model has been chalked out, funds are needed to turn the product or service into a tangible reality. With start-ups now facing numerous hurdles in securing investment, an extraordinary idea is no longer enough to guarantee an investor’s involvement. Moreover, business challenges are not limited to the early phase of a start-up’s growth; nurturing the venture and subsequently increasing its market share requires even more capital expenditure. According to the Internet and Mobile Association of India (IAMAI) survey, raising funds and revenue-expenditure mismatch are major trials that small start-ups face in present times.
In an industry as competitive and crowded as the Indian entrepreneurial sector, it is becoming more and more challenging to produce an idea that has a potential for high growth while also being unique and original. Working out channels of customer acquisition and having a scalable model based on sound unit economics therefore, becomes crucial for acquiring investments. Whilst some investors give more weightage to the strength of the team behind the product, others concentrate on the potential for expansion and scale. Traction, revenue numbers and market sentiments are also areas which start-up founders have to focus on in order to increase the likelihood of securing investments.
Founders also need to ensure that their idea is a real solution which leverages the latest developments in technology to provide convenience to the target audience. Once an investor is assured of the scope and viability of a start-up model, he or she can help it grow and make it sustainable. Securing funding from an industry expert also allows start-up founders to receive mentorship, guidance and, most importantly, access to entrepreneurial networks which unlock greater business opportunity for emerging ventures. However, all of this can only happen once a new endeavour is promising enough and seems to be driven by a team with a deep understanding of market dynamics and economics of competition. An effective plan should cover all aspects of business, including sales, accounting, marketing, operations, legal repercussions and branding strategies.
To conclude, with the number of Indian start-ups vying for a share of the market growing every day, convincing investors of the strength of one’s business idea is a major challenge. It is extremely important for the proposal placed before investors to be both extraordinary as well as sustainable. Commitment towards growing one’s business and passionately believing in one’s own idea are required to make the cut and stand out amongst thousands of identical proposals. By ensuring that they communicate their vision to prospective investors clearly and accurately, entrepreneurs can increase the probability of securing an investment for their ventures.
Author is Mr. Jatin Goel, Founder, The Vault