Scaling up start-ups

Over the past five years or so India has witnessed over 7,500 tech start-ups at various stages of evolution with over 1,000 new additions in 2018. New start-ups with solutions around artificial intelligence, machine learning, IoT, blockchain, data analytics, augmented reality and other new technologies have emerged in recent times. There has also been an upsurge in B2B start-ups over the past two years and this is expected to grow further.

What could be some of the challenges for start-ups from India in 2019? What are the decisions they need to make to achieve scale?

Competitive pressures will be higher in the coming year wherein no new innovation will remain so for too long. While some may have a competitive advantage for a period of time, it will boil down to their innovation pipeline, ability to execute and a focus on priorities. There are some emerging trends and approaches that can potentially work for the start-up community in 2019.

Ability of the advisory board to focus on execution is key to success of early stage start-ups . In the past we had advisors who could be mentors or be a sounding board or simply lend a credible name.

The focus now has shifted to execution. For instance, the advisor on product development works closely with the product team to define the roadmap and assist in execution of the same through research, customer interactions, and pilot projects.

Domestice vs global

The other major dilemma is ‘scaling in India versus going global’. Often founders are influenced by investors who are more focussed on gross margins that are certainly more attractive in global markets. But the key questions would be: Are they ready for global expansion? Is their product and organisation mature enough to engage in global markets? Are they committed to 24x7 customer support? It may, therefore, be prudent to scale in India and achieve market dominance before venturing overseas.

Getting early stage funding is critical for start-ups to build their product, get key employees on board and acquire their initial set of customers. The ability of founders to engage with ‘investors who bring value beyond funding’ is crucial. Can these investors facilitate the vision, accelerate customer acquisition, open up new market opportunities? Many investors may not have the bandwidth to deliver value beyond funding.

The other crucial trend emerging is ‘strategic partnerships’ to drive adoption, product development and market penetration.

Start-ups are forging strategic alliances with corporate entities that can accelerate adoption, build credibility to their offering and provide product development inputs on an ongoing basis. Very often it is one of their advisors who takes ownership of this initiative. This step is often underestimated by founders but will have a significant impact as they seek to scale up.

Finally, start-ups that are primarily built for the global market are taking a different approach. It makes immense sense to be based in a market where the opportunity exists.

Founders are relocating their HQ or operating out of an accelerator in that market. They are taking an international view on talent, profile of investors, and ‘go to market’ strategy.

Taking a strategic approach to scaling their business is important if they have to build a competitive gap and forge ahead.

The writer is Founder, T-Ventures.

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