India has a booming startup ecosystem with path breaking solutions and satisfying unique customer needs. The country hosts startups and unicorns with a total valuation of 350 billion dollars contributing a large chunk to the Indian economy. But according to a recent study, 90% of startups fail in India within the first five years of their inception.
Tech companies lead the failure rate with approximately 63% with reasons being high investment rates, intense competition and constantly evolving technologies. This captures the essence of the journey of a startup, a roller coaster ride with twists and turns but eventually a journey of discovery and learnings. Early 2000s has seen a tremendous rise in the number of startups while only few with sustainable models.
Major reasons for this failure:
In the IBM study, some major reasons for this failure emerged to be the lack of pioneering innovation in startups. Venture capitalists believe that Indian startups are prone to imitation which is beneficial for a short period of time but have no solid expansion or sustainable models. Therefore, even though the number of startups is on the rise, only 4% become unicorns which is lower than global standards.
Additionally, other reasons that emerged in this study are funding roadblocks, failure to hire right people, insufficient guidance, unethical business practices, and inexperienced leadership. It is critical for startups to have a strong and mindful leadership to sail through the challenges of the market. Interestingly, second time founders have a higher success rate.
Growth opportunity for SaaS solutions:
Now that we have mentioned the reasons for failure, it is time to focus on the solutions in cutting these roadblocks. These statistics present an opportunity for SaaS companies to step in and provide solutions to help startups navigate the current challenges. Considering the ever growing number of mobile and internet users in India, mobile first strategy has numerous benefits specifically for the untapped SMB market.
Mobile first SaaS designs ensure high user engagement with accessibility and better user engagement. It allows the users to access the software quickly and on the go. This design also prioritizes the most important features and content, making it easy for the users to navigate through the software.
Along with this, SaaS companies should take a customized go to market strategy to understand the needs and pain-points of the consumer to achieve a high success rate for SMBs. By offering unique solutions that are customized for SMBs, SaaS companies can unlock the growth opportunities, so far untapped. For instance, at Admitad partner network (a Mitgo Group company), we are currently focused on collaborating with SMBs with our new SaaS offerings.
Conclusion:
The IBM study exposes a concerning reality while also presenting a possibility for innovative SaaS solutions to make a significant impact. SaaS companies can significantly lower the failure rates and strengthen the Indian startup ecosystem by concentrating on the SMB segment and implementing a mobile-first strategy.
This strategy not only helps individual startups to flourish but also adds to the vibrancy and dynamism of India’s startup ecosystem. Startups and SaaS companies can spur economic expansion, generate new employment opportunities, and establish India as a front-runner in the global startup scene by working together and innovating. With the ability to provide cost-effective, scalable and user-friendly solutions, SaaS companies are well positioned to turn the tide.