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Are startups a better bet?

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Sensex off late is going in a range bound manner. It is neither optimistic nor pessimistic. Just like investors, sensex is also confused. To add to the confusion is the recent developments in corporate India or as it is mostly called India Inc.

Corporate governance suddenly became the spotlight - thanks to the Satyam scandal. Wipro and Megasoft were banned from World Bank for providing improper benefits to the bank employees. Though miniscule in comparison with the global fraud happening, investors confidence is shattered. Or should I say confused. I think more than the confidence being shattered, investors are confused.

Investors no longer know what to expect from India Inc. Reliance the darling of investors so far is not the darling anymore. Investors are unable to decide which is their new darling. Following the Satyam scandal they simply don’t know when their darling will turn into a devil.

Vishal Gondal has a post on pluggd.in about the axis of evil. I hope most of our readers have read it. If not go ahead and read it. He mentions how TCS, Wipro and Infosys are giving 20% hikes every year and how the salaries are inflated over the period. It made hiring for startups extremely difficult as the outbots as Vishal would like to call them are not willing to be entrepreneurial and come work for startups.

Now, life has come a full circle. It took a recession to help everybody realize what they have done. Most of the companies are either not giving hikes, firing employees, cutting salaries are doing a combination of the things. There might not be news floating around but grapevine says that it is happening in a more wide spread manner than you imagined.

We already know this but, how does this help startups?

It helps startups in funding and hiring. Investors will be willing to fund 5 or 10 startups for the same cost of investing in one of them big companies. The beauty of investing in startups is they get what they want. In times like these cash is king and no body knows it better than the startup founders. Investors know full well that the risks are higher is startups but the risks are higher in the listed companies as well. So why not maximize the profits on your own terms.

Intel capital has allocated $23 million  to invest in One97, IndiaMart and Global talent track.  Hyderabad based Reasoning Global eApplications Ltd has raised $1million from HNI’s in UK. CashUrDrive which promotes advertising on a car is close to getting 2.5 crore in funding. All these happened in the past 3 months. Should that be a trend?

Coming to hiring, startups and SME’s are going to hire from the management institutes. The summer internships are an example for the new found love for startups at the management institutes. The number of startups to be invited to the regular placements might be limited but I expect the number to be increased substantially.

It is unfortunate that it took a global recession, failing of investment banks and a bust at India Inc to find good Indian startups. It is fortunate that the talent and the investments are finally finding Indian startups attractive.

Suggested reading : 7 reasons to work for a startup.

With this information what do you think about Indian startups?

PS: I almost forgot about the Tata-NEN contest and the participation it had seen. Around 580 startups got the exposure because of Tata-NEN. 30 Companies are short-listed already and we are waiting for the final list of 5.

  1. Nitin Sawant says

    i’m looking for funding for our new software firm..

    how i’ll get it in mumbai,

    is taking funding from someone is like taking lone?

    i’m newbie

  2. Rizwan says

    hmmmm…nice….there have been a lot of articles written on this in the past couple of months, but this one has the trak.in touch to it :D

  3. Ayushman Dash says

    I completely agree that this is indeed the right time for startups. I have been tracking the startup arena from the past 8 months. The only thing that I can say is that the activities in startup arena are hotting up. More and more people are going for startups. But most of them are bootstrapped and haven’t gone for VC funding. 90% startups in India are self funded.

    startupvilla.blogspot.com

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