If Indian start-ups are to really compete with their counterparts in the developed economies, they need more seamless access to markets abroad, easier entry to customer base and a route to capital and mentorship
India has a robust and vibrant start-up base of over 40,000 companies that is growing at a steady pace. A digital revolution powered by smartphones, a sizeable middle class with growing disposable incomes and a consequent rise in consumerism are some factors that have propelled this growth. This is not a recent occurrence but rather the latest development in an evolutionary curve that can be traced back to four decades. The late 1980s saw the birth of IT companies, some of whom went on to become giants on the global economic map after the IT revolution. It laid down the success road for dot-com startups like the ticketing website BookMyShow as well as a number of industry portals. India is home to 26 unicorns and a rise in their number helps bring in more investment.
Now, the bad news. Despite the developments and influx of investment, close to 90 per cent of start-ups fail within the first year. One of the primary reasons behind this is their insistence on catering to a local audience. An innovative eco-system that enables start-ups think beyond local shores and devise strategies that can cater to wider markets is the need of the hour.
Scout for new markets
Finding customers is an expensive process for start-ups if they do not have brand recognition. It is important that they develop business strategies with an eye on the future instead of focussing solely on short-term results. If they want to stay relevant in the global markets cape, they need to develop a business plan with an eye for other global markets, targetting countries with high mobile and broadband penetration, stable political climate, favorable socio-economics, easy tax and regulatory requirements
Some start-ups having firm foothold in the country have started making international footprint with success. Oyo hotels and homes, one of the most famous home-grown hospitality chains, started its global expansion by foraying into Nepal and Malaysia. It then spread to China, which has a booming tourism industry with a strong influx of international tourists, and has successfully established thousands of hotels spread across 28 provinces. It is now eyeing Indonesia, Europe and the UK.
Zomato is another desi startup that initiated its presence in the international market starting with Dubai in 2012. It now has operations in 10,000 cities across 24 countries. The cab aggregator, Ola, the ticketing platform, Cleartrip, and the craft beer brand, Bira 91, are a few other companies that have successfully expanded their operational base.
The right packaging
If a company offers a specialised product, it needs to think about how to sell its product across markets. Products have a standard lifecycle — they start slow, accelerate, reach a peak, slow back down and then diminish/disappear. Unless they come up with a re-targetted and refurbished second gen product and start exploring secondary markets, they will lose out on the edge. Finding a secondary market is not as difficult as is thought. For instance, Kellogg’s has perfected the art of catering identical products to noticeably different markets. Although a lot of its cereal products taste similar, packaging is smart enough to set it apart.
Opportunities for Indian players in the global market
Travel providers: They need to focus on key emerging markets with a high volume of first-time travelers. Airline firms should use their own channels to attract customers and build brand image. Big data can be mined to create detailed purchase records of travelers. This will help companies design targetted product offerings and marketing campaigns. Technology should be leveraged to provide in-flight amenities like WiFi, movies et al. Finally, travel agents should be incentivised to drive international sales.
Consumer brands: Asia-Pacific has one of the fastest growing markets for apparel and retail sales. Divisions should focus on this region. As for established markets, online channels play a key role in boosting sales figures. Maintaining a strong online brand image is the key to driving positive recommendations.
Real estate developers: Players from this sector should focus on providing end-to-end solutions and increase the wallet share from expats. They can offer value-added services like furniture, interior design and relocation assistance. Firms should organise and advertise property launch events in regions with a high volume of NRI diaspora. They can tie up with foreign marketing agencies to reach out to potential international customers and build an online brand image that projects them as a trustworthy source of information.
SaaS: According to a KPMG survey, over 43 per cent of small business owners use mobile devices as their primary platform. SaaS players should focus on delivering customised products for small business owners. The product should have the ability to function both online and offline if emerging markets have to be targetted as data is still expensive in those areas. A strong online marketing strategy, coupled with direct client contact via an in-house sales team, is more effective than field sales.
What does the start-up eco-system need?
India needs to invest more in R&D and establish a working collaboration with different countries. This will help solidify the links between multinationals, local companies and academic institutions. Innovations need to focus on societal problems such as healthcare, education, transportation, sanitation, clean energy and other such pressing issues that most of the countries across the world face.
Mindset change: We need to create an environment where entrepreneurship is supported by the policy ecosystem. Often, due to paucity of adequate funding and mature mentorship, start-ups struggle to expand or even break even. They survive by adopting short-cut techniques, colloquially referred to as the desi jugaad. However, if start-ups are to really compete with their counterparts in the developed economies, they need more seamless access to markets abroad, easier access to customer base and easier access to capital and mentorship.
Start-up cells in embassies: The Government can help boost start-ups’ capacities by establishing dedicated start-up cells within embassies of different countries or in collaboration with the embassies of different countries in India. This could be a designated Trade Cell, which is funded by the Government and has the sole mandate of helping start-ups and SMEs to gain a foothold in markets abroad.
(The writer is president, international operations, of a leading agri firm)