India is one country which has talent in abundance but somewhere down the line, the country still lags behind various other countries because it fails to provide a platform to them to showcase their talent. The same goes for entrepreneurship in India. The country in the recent past has seen a fervor for entrepreneurship like it has never seen before. Startups are being born with each passing hour and investors are ready to back them with millions and billions of dollars.
Companies like Mu Sigma and Flipkart, who were startups in the past, are now locking horns with some of the biggest companies in the world. More and more youngsters are choosing to start their own thing rather than doing a 9 to 5 desk job. The scenario looks quite hunky dory from outside but all is not that well from inside. Though entrepreneurship is experiencing its best phase in India today, there are severe dangers which are lurking towards it and one of them is money. The concern here is not about the scarcity of money but, about its quality and ability to deliver good returns. Money is considered as the lifeline of a company and its constant flow is necessary for a startup to grow and flourish.
According to the global trend, investors wait for a period of about seven years before expecting a return from an investment in a startup. The startup ecosystem started flourishing in India around 2007 and in 2014, we have almost completed a cycle and the investors have now started expecting returns from their investments but nothing this sort seems to be happening. Though entrepreneurship and startups are flourishing and new money is backing them with all energy and enthusiasm but the old investors are having a hard time as they have not harvested any gains on their investments yet.
According to data acquired from iSpirt, in the last three years, about $3 billion have been invested in the Indian startups by the seed and venture capital firms and the payback in the same period has been just over $1 billion. These figures demonstrate the magnitude of problem that the Indian entrepreneurship is going to face in the near future. The languishing of public equity markets can be considered as one of the reasons for this problem.
Many big companies are still skeptical of investing in India. They are ready to pay good money to startups in other corners of the world but not in India. People looking to earn quick money don’t consider Indian startups as a good option. For example, on an average, if an early stage venture is sold for about $150 million in the US, it will only be able to fetch around $11 million in India.
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