“An entrepreneur is someone who jumps off a cliff and builds a plane on the way down” – Reid Hoffman, Co-founder of LinkedIn
Just last week, over a laid-back coffee chat, I caught up with a CEO who had first walked into my office as a newbie fresh out of college. Now, he’s excited about taking his AI startup public. His journey from a fresh graduate to an IPO-bound CEO encapsulates the broader evolution of India’s startup ecosystem. This year alone, big names like Swiggy and Ola Electric are hitting the stock market, highlighting the remarkable growth from the early 2000s to today’s vibrant tech scene.
The current wave of IPOs reflects a broadening investor base and a deepening trust in India’s homegrown startups. The country is looking at over 1,00,000 registered startups and counting, with 111 unicorns as of October 2023.
That’s no small feat. It shows how far we’ve come from those initial steps, turning a service-driven economy into a melting pot of innovation and entrepreneurship. As some of these startups prepare to go public, the importance of understanding this evolution is crucial.
Why Now?
Why am I bringing this up now? Well, with all the upcoming IPOs and the economic shake-ups we’ve been seeing – from funding crunches to job cuts – it’s crucial to remember the grit and creativity that got us here.
In 2000, Yahoo’s initiative to establish its Development Centre in India kickstarted the transformation of Bangalore. This move was soon followed by Amazon in 2004, focusing on its “A9” search engine team. They brought practices and terminologies that symbolised a cultural shift in our tech industry. Terms like ‘2 Pizza Team Leader’, ‘Bar raiser’, and ‘hackathons’ began to define a new work ethic. Bangalore’s transformation from an IT city to the Silicon Valley of India encapsulated a vision of growth and persistence.
The 2008 Lehman Brothers collapse was another pivotal moment, marking the start of Indian Startup 1.0. This period saw visionaries like Sachin Bansal and Binny Bansal leaving Amazon to start Flipkart, Mukesh Bansal launching Myntra, and Bhavish Aggarwal founding Ola. It was not just about launching businesses but about reimagining industries through technology. The initial funding successes, like Flipkart’s from Accel, signalled a robust investor confidence that has matured into the Startup 2.0 phase, now culminating in readiness for IPOs.
Domestic Capital Rises
The Indian startup ecosystem is experiencing a pivotal shift. Traditionally reliant on foreign investments for growth, we’re now seeing a surge in domestic capital, thanks to recent IPOs. In the first half of 2023, Indian startups raised approximately $6.2 billion in domestic capital, a significant increase compared to previous years. This change is crucial – it makes us less vulnerable to economic shifts in the US or Europe, where issues previously impacted us directly.
Additionally, India’s growing middle class and expanding population are proving to be a fertile market for these startups. Currently numbering around 350 million people, the middle class is projected to grow to 500 million by 2025. This demographic is driving demand for innovative products and services, with consumer spending expected to reach $6 trillion by 2030. This internal market growth means that startups can thrive by catering to local needs and reducing dependency on external markets.
Today, with economic uncertainty and a tight funding environment, it’s more important than ever to stick to those core lessons about cash flow, diversification, and keeping your best people close. These principles aren’t just survival tactics but the building blocks for sustained growth and innovation.
Reflecting On The Journey
Wrapping up our coffee chat, it was clear: the journey from those initial hires in giant MNCs to today’s fearless founders has been nothing short of revolutionary. Over the past two decades, I have bootstrapped Careernet, growing with this journey.
Bootstrapping, while challenging, taught us invaluable lessons about prudent financial management and strategic planning. These lessons are particularly relevant as many startups today, even those on the brink of IPOs, must navigate a landscape reshaped by funding winters and market realities.
- Focus on Cash Flow Management: Managing cash flow is critical in uncertain times. Prioritise essential expenses and cut down on non-essential costs.
- Diversify Revenue Streams: Explore new revenue channels or pivot to more viable business models to ensure a steady income.
- Strengthen Investor Relations: Maintain clear and regular communication with investors to build and retain trust.
- Invest in Core Talent: Keep your most valuable employees as they drive innovation and growth.
- Embrace Digital Transformation: Use technology to enhance operational efficiency and reduce costs.
It’s clear that the seeds planted decades ago have now flourished. Those fresh graduates who once walked the halls of global giants are today’s visionary founders, shaping a new India. Here’s to more innovation, more resilience, and, yes, more unicorns.
(Anshuman Das, an IIT Delhi graduate and co-founder of Careernet, has spent over two decades identifying, grooming, and matching top digital talent with India’s most iconic startups)
Disclaimer: These are the personal opinions of the author
