“They come to be a part of history, to build the technology that will reshape how people will live and work five or 10 years from now. They come for the excitement, just to be a part of it. They come because they are competitive by instinct and can't stand to see others succeed more than they. They come to make enough money so they will never have to think about money again.”
Po Bronson wrote these lines in his engaging montage of Silicon Valley life in The Nudist on the Late Shift. A description that also explains the euphoria around start-ups and their founders, from policymakers to mediawallahs. It is the landscape where the sun of opportunities always shines, where meteoric rise of companies and heady success stories of never-before-known heroes fill us with hope that there is another India where growth and development is not eclipsed by hate. It is, perhaps, the only place where so much can be achieved by perseverance, initiative and a good idea, where the last name is inconsequential for success. The start-up valley is not yet tainted by nepotism.
Suddenly the ballads have turned into elegies. Acres and acres of digital space is now being dedicated to analysing what soured a sector that threw up 42 billion-dollar businesses last year. Now, we talk profitability and sustainability of business models before celebrating teenage college dropouts who are disrupting our grocery shopping. 2021’s eruption of unicorns had to slow, corrections were needed and we predicted it in September last year.
But, does this mean a resetting of the Indian start-up ecosystem?
NO, and I state this in bold. Caution has set in, and naturally so, as the set global order goes into a tizzy. It is leaving deep fissures on public markets, which, in turn, is impacting valuation of later-stage start-ups making lucrative exits hard for investors. The result is a fund flow problem, but it is yet to impact fundraising by top investors. And, this money still needs to be deployed, albeit with caution.
With Xi Jinping yet to make up his mind about how much more he will punish the Chinese tech industry, India has emerged as the sweet spot. Even without the China angle, our usual narrative about demographics, exponential digital adoption and, as of the last quarter, the highest growth rate among major economies makes India a compelling destination. Look closely at investor fundraising data or into the excel sheets of Tiger Global, Softbank, etc. It has India written all over it. And, good news is that this time, it is not hot money seeking refuge, though it has its perils for a sector fed on fables of valuation over profitability.
But, this might not be the best time to focus on the elegies. Dear start-ups, read them with caution!
Dear writers, spare a thought for young minds at the helm of start-ups trying to steer their companies through crises they have never seen before. Pivots, revenue churn, minimum viable products and speed to market are terms we study, but they live through them, using each of it in unnaturally short timelines to make a success of their start-ups. Most of them do not have family legacies to seek solace in. They are alone with “nothing itchier than an unchallenged mind”.
Now is a good time for policymakers to help that mind and the stalwarts of the ecosystem, both founders and investors, to extend their wisdom. If the start-up sector has to emerge as a solution to job creation and innovation, then it must be nurtured to create inter-generational companies.
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