India’s start-up boom caught the world’s attention for the country listed about 100 companies in the unicorn category in a year. For the uninitiated, a unicorn is a company with a valuation of more than $1 billion. In fact, it is difficult to find a domain where Indians are not present with their successful start-up stories.
But are these unicorns sustaining their position as unicorns? Paytm Mall, for example, was valued at $3 billion in 2020 but today its valuation is only $13 million, dropped by 99.3 %. There are some unicorns that have merged into bigger companies to survive. Some are blowing away investors’ money in branding and hiring but seem lost when it comes to their business model.
There have been huge layoffs across start-up industries. The bubble is bursting.
It is reminiscent of the dot com bubble bursting in the early 2000s and while the situation doesn’t merit panic, it does require us to sit back and examine how we have landed in this space. Extended Ukraine-Russia, disruption in the supply chain, Covid-19 are contributing to inflation, spoiling market sentiments. It cannot be denied that funding has dried up for many of these start-ups and valuations too are low at the moment, and those who depend on these companies for livelihood are the worst hit followed by customers and investors.
This sudden decline in fortunes brings the spotlight on learning from the mistakes of these companies across the board. For starters, the current grim scenario reflects the obsession with valuation and making it the primary feature of defining the success of a start-up.
Compared to other domains, the two industries that play a key role not just in the economic development of a nation but also in ensuring the overall human development of the population are education and healthcare. So start-ups in these two fields have to be people-oriented, sustainable, and with the potential to bring about a change. A sustainable start-up is one that is born to meet the need, have a robust business plan and growth model.
In a situation where more companies are in dire need of funds and the competition becomes intense, only those with sound financial records as well as a solid business model will retain the edge. Small start-ups may not feel the heat as much as large businesses would. Venture capitalists are unlikely to empty their pockets with generosity as in the past.
While the share of individual investors in total turnover at the NSE increased drastically in the past few years, touching a whopping 44.7 per cent in April-October 2021, most of them continue to be wary of investing in start-ups.
One important takeaway is to have a strong, sustainable base by having a solid ethical core within one’s company that can help it weather all storms. Surely, ups and downs are a part of life and business. But it is the authenticity and the veracity of one’s product or services that matter to the customer and it is this goodwill that radiates back to the investors and founders. Certainly, profit and revenue are critical markers of success but to chase them blindly without investing in the core of what one offers by creating a backbone premised on ethical dealings and operation is detrimental in the long-run.
When a start-up acquires unicorn status, it is a moment of pride for the entire nation. But this unicorn status should not just be a fleeting milestone; the momentum must be sustained and that is only possible if innovative, sustainable, scalable and ethical solutions form the basis of your operations.
In the past few years, the healthcare domain has contributed several unicorns to the country. For most health start-ups, the motivation is based on the fact that all solutions to healthcare problems in the country cannot come from the government alone. It is high time that private enterprises and citizens come together to find easy, low-cost and innovative solutions to some of the basic healthcare problems. For instance, the government is already doing a stellar job with respect to building a solid primary healthcare system. But health is such a complex and wide-area that a one-odd solution alone will not be sufficient to create or sustain a holistic edifice.
Thus, several start-ups in this area have taken it upon themselves to create solutions that can be judged by their sustainability, scalability and replicability. The solutions need not be grand or complex in their structure but must certainly make life easy for a large chunk of the general population.
Bidhan Chowdhury, Founder of UAE-based Medi Q Healthcare Group and TaCa Healthcare (India), is a serial entrepreneur known for his cost-effective healthcare solutions in South East Asia.
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