Surge of Startups and their

successes/failures

Abhishek Kumar Lal

Kumar Prerak

Neha Pote
Start-up
 A start-up is a venture that is initiated by its founders around an idea or a problem with a
potential for significant business opportunity and impact.

 Became very popular during dot-com bubble

 Often a company poised for rapid growth

 Must be able to reach many people, and make money from them

 Often based on technology

 High risk, high reward

Evaluating a Start-up Potential
The Surge
 The rise of start-ups in India didn’t happen overnight, but slowly, over a gradual period.

 However, if one were to pin down the exact year the start-up revolution took shape in India,
it would be 2008.

 The number of start-ups in India has grown to 50,000 from 7000 in a decade.

 The KPMG report highlights that Bengaluru is the hub of start-ups in the country as 25
percent of nearly 50,000 start-ups belong to the city, while second and third in the line are
India’s national (Delhi) and financial (Mumbai) capital with 21 percent and 14 percent start-
ups, respectively.

7000 50,000
2008
2018
Number of Start-ups
Start-up City Index
Factors attributing to the Surge
Macro-Level
 Explosion of Internet
 Higher literacy rates
 Greater exposure to outside working has fuelled sector-based innovation

Micro Level
 Low cost of doing business.
 Close proximity between vendors and consumers.
 With 7 million graduates passing out every year, the preference to work with new start-ups
over long-established MNCs has increased as the size of the domestic market has grown
enormously.
Domains witnessing Start-up surge
Startups which made it BIG!
Startups which couldn’t made it BIG!
Paytm Case Study - Successful Start up
• The prodigy of India’s leading ecommerce website development company One97 communication,
Paytm was launched in August 2010 by Vijay Shekhar Sharma.

• Two words that come to almost every Indian’s mind while Shopping, Post demonetization, are “Paytm
karo.”

• In just a span of 8 years, Paytm has over 250 million registered users and counting.

• Initially, this online wallet cum e-commerce website was used to make payments for limited utilities like
mobile and DTH recharge and shopping bills.

• Customers now can recharge their metro card, pay bills for utilities like electricity and water, transfer
funds to other bank accounts, book flight/train/bus tickets, make hotel reservations, etc.

• Major investors in Paytm include Alipay, Alibaba groups, SAIF partners, Silicon Valley Bank, and Sapphire
venture.
Paytm Case Study – KEY POINTS
• Paytm is a Reserve Bank of India (RBI)-approved e-wallet, i.e., the user’s money is secured
under the Escrow account with a nationalized bank.
• The security feature and easy user interface make Paytm the most favored digital
payment platform in India.
• Paytm uses Verisign-certified SSL (Secure Sockets Layer) 128-bit encryption technology.
This ensures that the online information of the user, i.e., the password and other financial
details, is safe, thus providing greater protection to users.
• This online payment system is not only secure but also robust. It can handle around
5000 transactions per second.
• Users can simply pay by either scanning a QR code of the shop or by entering the mobile
number of the recipient.
• The combination of secure transactions and high capacity has made Paytm one of the
most favored payment applications.
 Paytm Case Study - Successful Start up
• The popularity of Paytm was boosted by the government’s decision of demonetization.
• Demonetization forced people to switch to either plastic money or a digital
payment method.
• Recent surveys show that Paytm has surpassed similar payment applications such
as Mobikwik, Freecharge, and other ecommerce app developers in terms of both the
number of users and the revenue generated.
Zebpay Case Study – KEY POINTS

• India's largest app-enabled cryptocurrency exchange and wallet provider.

§ Founded by Sandeep Goenka, Saurabh Agarwal, Mahin Gupta in 2015.

§ Cryptocurrency is basically digital money and uses cryptography to secure its transactions.

§ It acts as virtual currency stored in a ‘digital wallet’ app on a smartphone or computer.

§ Enabled users to buy and sell Bitcoin, Bitcoin Cash, Ripple, Ethereum, and Litecoin, or to
purchase airtime and gift cards.

§ The app fed on the maiden days of ‘nouveau’ interest which Indian investors showed in
cryptocurrencies because of the unprecedented ascent of Bitcoin prices.

§ Achieved a milestone of 2000,000 app downloads with an annual turnover of Rs 500 crore
in less than two years in India

§ At its peak in late 2017, the exchange was adding between 300,000 and 400,000 users
every month and it crossed Rs 100 crore turnover within 10 months of operation in India.
Zebpay Case Study – The Downfall

• The slowdown began in December 2017 due to the warning against crypto banking by RBI.

§ It decided to down its shutters in the aftermath of the circular issued by the RBI on 6 April
2018, restricting banks and regulated payments companies from extending any services to
crypto exchanges and wallets.

§ RBI gave three months to banks to stop offering services to individuals and businesses
dealing in virtual currencies.

§ RBI and the government claimed that virtual currencies have no intrinsic value, which leaves
the investors at risk and hence they were made illegal in India.

§ Consequently, price exchanges of cryptocurrencies on Zebpay plummeted.

§ On September 28, 2018 announced its closure.

§ In a statement, it said, “At this point, we are unable to find a reasonable way to conduct the
cryptocurrency exchange business due to lack of crypto regulations in India .”
Why Do Startups Fail?

● Inability to raise enough initial funding/ VC funding

● Failing to identify the correct market need
● Wrong timing of the release of product
● Inefficient business model
● Poor management of people and resources available
● Not backed by adequate marketing efforts
● Legal challenges
● Not able to successfully monetize the idea
● Bad debts
● Beaten out by competitors
Conclusion

• In 2019, India ranked third in global start-up index according to Economic survey.

§ The number of start-ups have witnessed a seven-fold increase in the past decade.

§ The government plays an important role in creating an ecosystem that is conducive for the
growth of start-ups by making policies to remove hurdles for the start-ups.

§ It is important to continue the creation of an ecosystem for private investment to enable the
virtuous cycle of investment, demand, exports, growth and job.

§ Implementing various initiatives designed to promote an environment of innovation and

entrepreneurship, coupled with right infrastructure, mentoring, financial aid as well as
simplification of regulatory framework to ease compliance are key factors in the development
of start-ups.

§ If a start-up, no matter where it’s based, wants to succeed, it must let its employees express
themselves freely because more than the idea, it is the culture of a workplace that decides
whether a start-up succeeds.
THANK YOU