Paradigm Shift For Startups: From Chasing Unicorns To Sustainable Growth
When the two Indian startups, Oyo Rooms and Grofers, last yearmade up to The New York Times list of Unicorn Start up -a term coined for start-ups that were valued at $1 billion or more by their investors, it fueled the ambitions and aspirations of fellow entrepreneurs. The list by CB Insights, a research firm that tracks venture capital and start-ups determined that they might be on a path toward a $1 billion value. The research firm used an algorithm which analyzed factors that included amount of financing raised, employee turnover and social media mentions.The $1 billion valuation can to be on paper only. With time, we had startups chasing the Unicorn dreams, an endeavor that did more harm than good.
Once, the Unicorn start up was a myth but today backed by investor they are growing everywhere and some are leading the way in disruptive innovation. While the first movers in India have etched their names in the Unicorn Startups segment, but the growth from hereon seems to be bit challenging. We have already seen soaring funding and dip in the same from the time the list appeared in NYT.
The Flipkart's devaluation was a blow to investor community and the way various startups have burnt cash, strategic investors, VCs and other funders are now cautious. Although there has never been a dearth for money, the investors of today are more inclined towards proportioning the funds that go into a venture. The move is intended to analyze the potential and separate the winners from the ones lagging behind in the race to the Unicorn club. The shift in the behavior patterns of investors would invariably result in proportioning and downsizing the investments resulting in lay-offs.
However, this does not mean all is not dim for the startup scenario in India, especially for the emerging talent. While investors are drawing caps on the money that goes out for the established players, they are still open to putting bets on the emerging ventures. Since new startups typically require minimal investment and are more focused at proving their mantle, it becomes a safer and more viable option for the investors.
Given the existing scenario, startups that may demonstrate their sustainable growth, would eventually emerge victorious. Here's sharing a few secret ingredients that are paramount for a startup's sustainable growth:
1. Have a clear unique selling proposition
What is the ultimate value the customer will draw from your startup? In order to achieve longevity and growth, you must know what sets your venture apart from the rest. This becomes more relevant in case you are starting an e-commerce, especially the one in the field of fashion, apparel, food aggregation and travel. These streams are done to death already and your idea better be unique. Else, you are online strangulating your startup, while creating further opportunities for the established players.
2. Capitalize on Your Strengths
If you are getting the unfair advantage, why not utilize it. A part of growth strategy and beating competition is not about getting over your weaknesses, but sharpening and honing your strengths. Understand what makes you unique and play on your strengths. And as you strengthen your hold on the market, go on increasing the repertoire of your strengths and eliminating the weaknesses.
3. Get the right talent on-board
In order to grow, you are going to need people and you need right skillsets and attitude by your side. Instead of viewing workforce as a task, look at it as an investment. Look for people who have proven their genius in the work that they have done so far. While the skill sets can be learnt and acquired, the ideal candidate must possess people's skills. The moment the employees are able to become the brand ambassadors in their regular walks of life, is when you would know that your startup is headed towards success, and the Unicorn club, of course.
3. Start with the revenue model and then kep on defining and redefining your revenue streams
People are driven by the western model where they were able to monetize later but from the Indian context,it's importantfor a startup to have revenue model from day 1. You may have a disruptive idea but if it lacks a constant ad stable revenue stream it won't work. Failing to figure out a revenue stream is, without a doubt, futile and lethal for the business. Besides, it is also important that you continue to redefine your existing revenue streams, perhaps add another channel moving forward. The ability to foresee which revenue stream will contribute significantly towards the longevity of the business, shall be crucial in your long and successful run.
4. Raising round of funding should not be the end goal
We have seen today that start ups are initiating business with getting funding for their venture as a main goal and this has become a norm. Rather this mindset needs to change and start up needs to build businesses that are based on solid idea and have a potential to change the way we work and live. The best businesses are built with the least amount of money and great idea and not vice versa.
5. Customer traction is the key, you need to keep measuring it
One needs to be aware that getting new customers by offering deep discount and cash back as a strategy won't work in a long run, as eventually it would be whether you are able to sustain your customers beyond the initial freebies. The main game begins then, so getting customer hooked to the discount only to take them off later is a not a strategy which may work in the long run.
As an old adage goes, pursue excellence and success would follow, my prime takeaway for fellow entrepreneurs or aspirants would be to continue building a product that solves real world problem. Chasing after unicorn dreams isn't all that great as it is cracked up to be. You would already know the narratives of various erstwhile startups which started with an aim to solve a real problem, and today have metamorphsized into multi-billion profitable businesses. Isn't that the dream worth chasing after?