Talking about the ongoing challenges in the Indian start-up ecosystem, Amit Gupta, director of practice growth at Factoryal, says start-ups should use the current challenges to redefine their business models, focus on core competencies, and manage resources to adapt to feedback and setbacks.
As a consultant in the start-up ecosystem, what is your role and how is it different from that of a venture capitalist?
As a consultant, my role extends beyond just capital investment. I engage deeply with start-ups to develop robust business models, refine their market entry strategies, and optimise operational efficiencies. Unlike VCs, whose primary focus often remains on financial metrics and potential exit strategies, my approach involves a hands-on partnership to build sustainable business practices and foster innovation. This includes mentoring founders, providing access to industry networks, and sometimes even acting as an interim executive.
How many start-ups have you helped so far?
To date, I have provided consultancy services to around 100 start-ups across various sectors including technology, healthcare and consumer goods. These engagements vary from brief strategic interventions to multi-year partnerships.
Why, in your view, did a significant number of start-up founders falter at the onset of the funding winter?
The recent funding winter exposed vulnerabilities in business models that were previously masked by abundant capital. Many start-ups operated under the assumption that high growth metrics alone were sufficient for success, often under the encouragement of venture capitalists seeking quick returns.
When the funding slowed, the absence of sustainable revenue models or robust operational structures led to significant challenges. It is not entirely fair to blame venture capitalists or the maturity of Indian founders alone; rather, it is a confluence of high-growth expectations and the harsh reality of an economic downturn, requiring a more prudent approach to growth and expenditure.
Is there a specific trait among founders that you value as a consultant who mediates between VCs and founders?
Resilience stands out as a paramount trait. Founders must navigate unpredictable challenges while maintaining their vision. The ability to adapt to feedback and setbacks, pivoting when necessary but also staying true to their core objectives is something I deeply respect. This resilience, combined with a clear communication style, makes it easier to bridge conversations with VCs, ensuring that both parties align on strategic goals and expectations.
There seems to be a noticeable contrast in opportunities for first-time entrepreneurs and those with multiple ventures under their belt. Do you believe this reflects a characteristic of Indian society, or is this phenomenon true globally?
The phenomenon is indeed global. Experienced entrepreneurs often have a proven track record, which reduces perceived risk for investors. They likely have deeper networks and a better understanding of the business landscape. In contrast, first-time founders must prove their capabilities and often struggle to gain the same trust and resources. This disparity is not unique to Indian society. It is a typical venture capital tendency worldwide, though in India, familial and societal networks can play a significant additional role.
How long will the crisis in the Indian start-up ecosystem last?
Predicting the exact duration of the crisis is challenging, given the global economic uncertainties. However, historical patterns suggest that markets do rebound, often stronger. Start-ups that use this period to refine their business models are likely to emerge more robust. The ecosystem’s recovery might begin in the next 12 to 18 months, assuming stabilisation in global economic conditions and continued adaptability among start-ups. Resilience and innovation are key drivers that will determine the pace and strength of this recovery. This could also be the new normal and we may never return to FOMO-induced investing.
