What’s Holding Back Start-ups in India from Business Scale Up?

What’s Holding Back Start-ups in India from Business Scale Up?-feature image
December 14, 2022 5 Min read

After a gruelling cultural shift and several government schemes such as skill India and Digital India, the country has earned the tag of being the entrepreneurship hub and has attracted handsome investments from across the globe. Afterall, who can forget Walmart’s humongous investment into Flipkart?

But as this peak success plateaus, concerning issues are coming to the forefront highlighting that all is not well with India’s entrepreneurial wonderland. These can be because of the funds running dry, too much dependence on manual processes while procrastinating about technology adoption.

We attempt to paint a clearer picture and trace the actual reasons holding back Indian startups from performing up to their potential. 

Is the lack of funds holding back Indian startups?

IPO refers to initial public offering. It is the method through which private entities can make their shares available for public offering and raise money from private investors.

Indian startups have always been reluctant to go down this road as it involves a lot of paperwork and the market sentiment in India has not been that inspiring, especially during the time of covid19 pandemic.

However, in 2019, India’s first startup IPO began its operations to make budding entrepreneurs to be confident while taking the IPO route and prevent VCs from micromanaging their business. This is undoubtedly a good sign for small businesses and bootstrapped companies trying to make it big with alternative sources of funding.

Other Reasons Preventing Indian Startups from Scaling Fast

Indian startup ecosystem has been seeing slow growth rate in 2020, as compared to 2019. As per a report, funding for Indian startups saw an overall decline of more than 30% in the first half of 2020.

The more visible reasons for these are the coronavirus pandemic and blocking of Chinese funds by the government. We try to dig a few inches deep and provide you with some other contributing reasons which have put a halt to small business scale up in the country:

  • Not Looking Out for New Markets

Even though India has a large population, most startups to this day are set up to serve the already served urban population.

Startup Scale Up

The rural and tier-lll population, a market filled with great opportunities, have not been utilised by most companies. In such a scenario, the basics of supply and demand come into play: too many companies running after too few customers, which ultimately lead to fund crunch for all the involved players.

  • Lack of the focus on customer service

Golden rule of any business is that the customer is always right. However Indian startups have been blamed for leaving the customer out in the cold far too frequently now.

Part of this problem can be attributed to proper customer management systems not being in place. The other part can be attributed to insufficient training of customer care executives to handle grievances.

This problem is more common in small and newly set up businesses and can be solved by using robust customer service software such as Freshdesk. Customer management systems signifies how technology adoption can change the fate of Indian start-ups.

Further, with the integration of a simple live chat feature on their website, new businesses can take a significant step towards resolving customer queries instantly for the business scale up.

Suggested read: How Software Has Changed the Modern Business Landscape

  • Avoiding the Path to Technology Adoption

Indian startups are often found struggling with the higher CAC (cost to acquire a customer), poor customer lifecycle management and inefficient methodologies to tap into market opportunities.

Business Strategy

It’s time for the Indian startups to be more tech empowered and use the best tools to understand their intended customer base and identify new opportunities to generate revenue.

Some of the quick and cost-effective ways for startups to embrace technology for their business scale up are:

  1. Using the live chat feature like Freshchat on their website to turn first time web visitors into viable business leads.
  2. Equipping their service reps with the best customer management solutions.
  3. Empowering their sales and marketing teams to bank upon customer sentiments and preferences.
  • Not offering the unique user experience

UX and UI are two of the top factors which can make or break a new business. Customers want a unique experience every time they visit a website, and this decides whether you can convert them into repeat buyers or not.

This can be provided easily by using technologies to upgrade the look and feel of their website and adopt quick measures to track the response of website visitors to different web pages.

Technologies like Freshsales can help segregate your website visitors and analyse their preferences to make the most of early opportunities.

  • Lack of steady growth

Starting your own company is always tough but what’s more tough it to achieve a steady growth for the company. Although many Indian start-ups showed tremendous potential in the past, but they failed to capitalise on it as they didn’t have a definite growth strategy in place.

If a startup has a healthy business model and appropriate talent, then it should always look for growth, either through expansion in new areas or delving into different sectors. This is the only way they can secure more funding and become successful.

In Conclusion

India is the land of great ideas and has contributed significantly to the global market. However, in the current scenario, above mentioned factors and the pandemic are preventing Indian startup companies from reaching their full potential. Hopefully, with the objective of serving customers better through in the right set of technologies and intervention by all stakeholders can help Indian entrepreneur ecosystem to achieve its full glory.

Written by Mayank Dixit

Mayank Dixit is a talented content writer with an enriching educational background with Bachelor's degree in Engineering and a Master's degree in Mass Communication. With this combination of technical and creative skills, Mayank is well-equipped to produce engaging content that is informative too. He is passionate about business... Read more

Still Have a Question in Mind?

Get answered by real users or software experts

Talk To Tech Expert