Indian startups emulate global ideas. That's killing 90% of them: IBM study

They face funding roadblocks both at entry and exit stages, reports Tech in Asia

Over 90 percent of Indian startups fail within the first five years. No surprise there as that is the global average as well. The surprise lies in the most common reason for failure of startups in India: lack of innovation, according to an IBM (NYSE: IBM) study.

“Many Indian startups lack pioneering innovation based on new technologies or unique business models. Indian startups are prone to emulate already successful global ideas,” global ideas,” say 77 percent of venture capitalists surveyed under the study.

Here are its key findings:

•Over 90 per cent of Indian startups fail within the first five years.

•Topmost reason why startups fail in India is because of lack of innovation.

•The top business advantages enjoyed by Indian startups are the country’s economic openness, skilled workforce, and its large domestic market.

•Around 35 per cent of startups are being set up in tier two and tier three cities of India.

•A proposed reduction in corporate tax from 30 per cent to 25 per cent is likely to boost startup activity.

Top roadblocks for Indian startups

The IBM study found several roadblocks hampering the growth of Indian startups and eventually killing around 90 per cent of them. The top ones are:

•Lack of innovation

•Talent acquisition: 70 per cent of the venture capitalists interviewed for the study cited limited availability of skilled workforce as one of the biggest challenges impeding the growth of Indian startups, and. An earlier study found 80 per cent of engineering graduates in India unemployable. 48 per cent of employers in India find it tough to hire the right talent, the study found.

•Funding crunch: “Indian startups face funding roadblocks both at entry and exit stages while successful global startup ecosystems are well supported by active investor communities,” say 65 per cent of venture capitalists surveyed under the IBM study. 
 

The article was published on Tech In Asia. You can read the full article here