The hot story about Ritesh and co-founder split notwithstanding, there is a new scary trend on still-nascent Indian startup scene – if it is sexy enough it will go far! This is one of the many effects of exposing young college minds with stories of riches captured by their seniors without tempering them with the true reality of building a startup.
Just three years back, in Jan 2012, mobile internet had not reached the massive audience it does today. The biggest consumer internet products, apart from rapidly expanding e-commerce market, were only media properties like those of Times of India and a nascent Firstpost. There were a few others like Zomato and OlaCabs catering to a niche audience. Even Flipkart had raised only $181 Million till then. That Ola would go on to raise a massive $200+ Million round (and that Flipkart itself would do a Billion dollar round) in 2014 was unimaginable then.
In 2014, the number of funding deals shot through the roof. ET reported some 288 seed-stage deals. While the funding challenge maybe getting solved, but building a startup remains as difficult. Even assuming they go for an IPO this year, the time to IPO for Flipkart would be 8 long years. Like every other startup, they have also gone through the curve of ridicule-oblivion-denial-emergence-winner over these years. And by no account they had it easy.
Startup journey in India is one paved not just with potholes but deadly trenches and many near-death experiences. Most successful entrepreneurs would think twice before going through it again. More than anything else, this experience is extremely tumultuous and humbling. To think of an inexperienced (sometimes still-in-college), flashy and over-confident (arrogant?) team getting funded upwards of $500k for a still-to-be-launched product is scary.
Inspired by the quick buck raised-and-made by the Whatsapp, Snapchat, Uber and Instagram founders and fed on the media hype about their recent-alumni, a whole crop of IIT students are dreaming of starting up a consumer internet (consumer mobile, actually!) company, mostly for the wrong reasons. These ‘Zuck-wannabes‘* have become beneficiaries of a near seed-bubble in India led by some Indian VCs hoping to secure future deal-flow. It is curious to see how this ‘2-step Series A’ strategy rivals ‘blind-and-counter’ of a proficient teen-patti player!
Raising funding is widely considered a validation milestone today. With a high access to investor-mentors I suspect many of these teams are gaming to fit into a story investors like. Sadly, there is little regard to solving a customer pain point or creating a long-lasting enterprise. I just hope some semblance of risk management comes into play and safety-valves the industry in 2015.
(* – Thanks to Vishal Chandra for creating this phrase!)