Even though the start-ups have emerged as a successful initiative amidst a slowdown, the funding structure in this ecosystem is more fragile than popularly believed. Comment (200 Words)
Refer - Business Standard
Enrich the answer from other sources, if the question demands.
IAS Parliament 4 years
KEY POINTS
· Consider the “Indian Tech Start-up Ecosystem”, the latest report from the National Association of Software and Services Companies (Nasscom).
· It is heartening to know that India has the potential to create more than 100 unicorns (a start-up parlance to describe companies with a valuation of $1 billion and above) in the next five years.
· The report, “Fintech and Startups Fuelling India’s $5-trillion Economy”, highlights the role of start-ups in giving a growth impetus to the broader economy.
· It noted that despite the overall slowdown, there was no dearth of funding in the start-up economy.
Funding pattern
· It also brought out the difference in funding between traditional businesses and start-ups.
· Traditional businesses relied on banks for funding their capex, and that the growth plans are stuck with liquidity drying up.
· In contrast, capital (mainly by venture capital and highly valued tech firms) has continued to flow into the start-up world.
· Growth without profitability may not be a sustainable model in the long run, as the start-up universe has witnessed time and again.
· International investors backing start-ups typically target high valuations of the businesses they fund, so that they can exit profitably.
· That, in turn, is made possible by offering deep discounts, whether on a shopping site or a food-delivery platform. This explains high growth among start-ups with little focus on profitability.
· Indian start-ups run the risk of killing the spirit of entrepreneurship, while giving in to the valuation game of investors.
· Many Indian start-ups have fallen by the wayside, and a large number of founders have had to step down because of a business model targeting notional numbers rather than profitability.
· It is important for the survival of the ecosystem that more and more start-ups become profitable. This will also help attract more investment and make the start-up ecosystem a real driver of economic growth.
Shantanu tiwari 4 years
P
IAS Parliament 4 years
Good attempt. Initiatives is not needed. Keep Writing.
Shivangi 4 years
Please review.
IAS Parliament 4 years
Try to write demerits as a separate sub-heading. Keep Writing.
DHARU 4 years
Kindly review!!
IAS Parliament 4 years
Try to cut short the introduction part and focus more on funding pattern. Keep Writing.
Pocomaster 4 years
Review ASAP! Thank You!
IAS Parliament 4 years
Good attempt. Keep Writing.
