Unfortunately, we cannot predict which business would succeed and which would fail. Ventures that are started without much fanfare, in modest surroundings, would see a steady flow of customers, while those launched in prime areas with lots of advertisements could soon wind up. The same applies to startups and the reality is slowly biting startup ventures as well as those who backed it, expecting all startups to succeed and make money.
Startups in Kochi, India and Silicon Valley have crashed. Companies which had invested crores as 'seed funding' in nondescript startups are now wondering how to get back their money. Even those who started the firm, are slowly starting to wind it all up and find jobs in other firms.
Attracted by the boom of startups, the Indian government had started a scheme called, 'Startup India, Stand up India.' To provide more coverage under the scheme, all new firms, which were under three years in business, could be part of the scheme. They were even given preferential treatment much to the chagrin of business owners who had run for years from pillar to post to put their business on track.
In Kerala, there are about 500 startups; 350 registered and about 200 unregistered. There are others that are unaccounted for. Of these, about 30 have received seed funding. They have also taken a loan from Kerala Financial Corporation as well. Now everything is left to providence.
Only IT, BPO and electronics-based firms are considered as startups in Kerala. This means, your firm is not considered as a startup if it is a beauty parlour. There is not age restrictions to start a startup and once it is started, it is eligible for seed funding and sometimes seed funding came in crores. Many of those who got easy money, often spent it on non-business needs, such as buying SUVs!
Most of the failed startups dealt in e-commerce. Foreign investors had invested big money on e-commerce, but as someone predicted wisely, many e-commerce ventures fell in heaps, and continue to fall. Many startups in the food industry also failed because the apps were made on the assumption that none would cook food at home and would order food through apps. Around the world, out of 100 companies that are launched, only about 10 ever become a success. Another 10 or 15 might exist making small profits. The remaining would all go bust. If you are still in doubt, borrow some money and start a venture; experience will teach you well.
Tail piece: Vijay Mallya was unfortunate that air carriers do not come under the category of startups. Else, he could have borrowed a few crores and then go bust; no bank would come after him and investors would have lived with his failure, without a grudge.