indian startups starts and closure research

http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012

India Tech Startup Starts and Closure

Microsoft Accelerator Researchhttp://www.microsoft.com/india/acelerator

[email protected]


Key notes about this research

1. The Microsoft Accelerator database tracks over 6214 entities and 3948 technology product companies in India

2. We have face-face interactions with founders of 65% of the companies to verify starts and closures besides secondary data

3. Closure data is based on f2f interactions alone

Entities are not registered private companies, but LLC or partnerships


2010 & 2011 had most new tech product company starts, but 2012 is poised to trend

lower


Bangalore has over 41% new starts followed by NCR and Chennai, Hyderabad has seen steepest

declines over 5 years


eCommerce starts made up 1/3rd of all new companies, followed by B2B web


Bangalore has most closures, both in number and % of companies started


More than half of the 190 closures* in 2011 were companies between 6 months to 1 year of

formation

Closure rate of Indian companies has been ~26% of companies that close within 1 year


Besides inability to raise funds, most were unable to get customers to pay money quickly


61% of first time failed entrepreneurs are heading back to work at a big company

Failure has such a big stigma in India, that most join a larger company . Many also do it so they can pay off their loans


Most entities are not shutdown, but are being kept for side projects


Takeaways for Entrepreneurs

1. Work on getting as many customers to pre-pay some of your revenue as an advance

2. Raise capital for 24 months rather than the 18 month norm of valley startups

3. If you are going to bootstrap, have funds for 18 months, not 6 months, which is the valley norm

indian startups starts and closure research

Technology