On the one hand, the country quickly added unicorns, while on the other, it pooled a lot of them. As the pandemic ravaged, 13 start-ups created in 2020 went bankrupt between March 2020 and May 2021.
According to research firm Tracxn, companies starting with SOLOSOS for Designing Mafia and SGB Global Tech came from across the country, while Uttar Pradesh topped the rankings with five companies, followed by Tamil Nadu with two companies.
“The failure of some start-ups is not primarily because their business models are not viable, but rather a combination of other factors, the most crucial of which is their inability to lift the next round of funding. timely. . Start-ups generally tend to develop their businesses at a rapid pace, seeking to take a leading position, in their respective fields as early as possible, ”said banker and investor Rajiv Dadlani. Activity area.
“While they accelerate growth quickly, they tend to burn more cash and therefore depend on constant fundraising – like Series A, B, C and D,” said Dadlani, who had invested in more than 50 companies.
Company liquidation transactions during those 14 months were much lower compared to fiscal 2020 (April 1, 2019 to March 31, 2020), when 284 companies were consolidated in India. Among these, 278 startups were created from 2010.
“One of the most important reasons is the lack of agility of start-ups to transform in these Covid-19 times and meet customer expectations, with the lack of adequate talent and skills for execution because they never paid top dollar. In addition, there were also leadership conflicts which led to many failures, despite the fact that these companies were successful in raising funds, ”said Dhianu Das, co-founder of Agility Venture Partners.
“In some cases, too, the founders lacked focus and focus,” said Das, an investor in 40 start-ups.
Fourteen startups, including Moglix, Urban Company, ChargeBee, and Gupshup, among others, have joined the unicorn club in this calendar year, the latest being Zeta, a banking tech startup co-founded by billionaire and serial entrepreneur Bhavin Turakhia.