According to recent reports, most startups fail worldwide due to lack of R&D. With the Narendra Modi government stressing on startups, Indian Chamber of Commerce (ICC) organised a day long “Start-o-Vation summit on Startups and Innovation 2016” to address this issue.
During the event, former CEO of Airtel and Aircel, Chandan Ghosh, said “within 3 years 92% of the start-ups failed. 74% of the failed startups failed because of permature scaling.”
According to Ghosh, 42 per cent startups failed in the last three years due to no market need for the product. He explained, “Even Apple has failed to grasp the importance of real market need. It tends to kill shelf life of products by introducing new models of iPhones rapidly.”
Here are 10 points stated by Chandan Ghosh that resulted in failure of most startups:
1. 29% ran out of cash
2. 23% did not pick the right team: A lot of entrepreneurs do not select their team wisely or else the team and his/her thought processes do not click. Entrepreneurs must be able to understand, is there anyone who believes in the idea of the company but disagrees with your ways?
3. 19% were out-competed
4. 17% lack of proper business model
5. 14 per cent poor marketing
6. 14% ignore customers. “Question to ask is, is your product based out of lack of knowledge to the potential customer? If yes, then beware they will be educated soon,” Ghosh said.
7. 13% lose focus
8. 42% failed due to no market need of product. “Question to ask is, is your product based out of lack of knowledge to the potential customer? If yes, then beware, they will be educated soon,” Ghosh explained.
9. 74% of the failed startups failed because of premature scaling.
10. Founders overestimate the value of IP: There are mainly three standard methodologies to value IP – the cost, the income and the market-based methods. Startups tend to overestimate the value of IP and hence add on to the challenge of IP valuation for themselves.
For success of a startup, Ghosh advises entrepreneurs to set achievable targets and grow at their own pace.
“I started Manana Innovations with one team member and now gradually we’ve expanded. Chandan Ghosh, who is the founder of startup telecom services company Manana Innovations, said it is aiming to increase its revenue to $40 million per month by July 2017 on account of the fast growing industry.
Currently, the company’s revenue is about $1.5 million per month, he revealed.