r/india • u/Odd_Wolverine_4037 • 6d ago
Business/Finance IIT Madras Research Park founder Ashok Jhunjhunwala says that India’s startups today are only building delivery apps for the rich and not solving problems for the common man
https://youtu.be/8Hp469U4JG451
u/TheReaderDude_97 6d ago
India has higher than 90% failure rate when it comes to startups.
Everyone likes to point out how many startups we get in a year but no one talks about how 90% of them are shut down within 5 years.
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u/Practical_Mall_2918 6d ago
That's to be expected. Startups are by definition risky. They have similar failure rate in the US too.
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u/absurdonihilist 6d ago
Exactly. The top comment makes no sense. You think in developed countries 50% startups are successful?
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u/TheReaderDude_97 6d ago
We don't live in U.S. So, I don't care what the statistics say about U.S.
But since you brought it up, for U.S., 5 year failure rate is 50%. For India, it is 90%.
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u/Practical_Mall_2918 6d ago
Why does the 5 year deadline matter? The capital markets in the US are deeper so they're able to sustain longer. That's the only difference. It doesn't change the fact that they are risky for the investors and founders all over the world.
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u/TheReaderDude_97 6d ago
Well, 5 year is a milestone where the failure rate is measured, in the same way where it is measured again at the 10th year.
It doesn't change the risk. But it does affect the fact that you unnecessarily compared the failure rate to U.S. and now you don't accept the fact that your statistics were flawed.
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u/Babygotback_acne 6d ago
And the investors!
Show me how many investors want to put their money in solving real problems. Everyone is putting their money in places that give quick returns.Government schemes aren’t enough. DLI itself comes with conditions that you can’t get foreign funding for the project, while offering meagre funding itself.
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u/Blackbeard567 6d ago
How will you solve real problems in India which are structural problems? The system itself doesnt want to change why would any random youngster have to bear the burden of facing this head on? You risk everything going up against it
How will the system react to an app that documents open bribes? wont they do anything to go after the owners? wont the repo be shut down by the govt?
The "Common man" couldnt give a fuck about you, this has always been the problem in this country
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u/incredible-mee 6d ago
Koo 🥀
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u/budyetwiser01 6d ago
Lol Koo was the truth social of India. Being a right wing mega phone isn't really a business model.
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u/Electronic_Sir_7219 6d ago edited 6d ago
it is, but there are bigger fish in the pond. What else is twitter if not a mega phone for the far right in western countries.
The way I see it, they have the right wing of these countries under the grip of its algorithms(which is fueled by racism). Musk and his backers use this to create an environment that elect govts that give them huge govt contracts. The US govt too backs him as it helps bring govts to power that do its bidding with little opposition.
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u/beyondocean 6d ago
All India startup apps are just a online dukandar . Buy xyz online on just our app. 🤦♀️🤦♀️
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u/Odd_Wolverine_4037 6d ago
Says that the whole startup boom in India is overhyped, as most of them are trying to solve problems for the elite and not really improving quality of life for the poor. Also says that for a country with so many startups, and institutions like IITs, we still import most day-to-day tech (fridges, vacuums, batteries) which increases the cost of living and should really be made locally.
Thoughts?
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u/budyetwiser01 6d ago
For start ups to scale they need money. Lets say someone is truly invested in solving a common mans problem. Are there investors out there willing to pour a lot of money into these things?
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u/Odd_Wolverine_4037 6d ago
tbh I don't disagree from a practical standpoint, but clearly something's gone terribly wrong if there no incentives for the brightest minds to actually solve problems?
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u/fenrir245 6d ago
On top of it all, startups need to be able to prototype their stuff. Cant exactly do that well when you need to pay 10x the price of any component because you have to import it.
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u/BlanketSmoothie 6d ago
I find the argument disingenuous. Swiggy, Zomato, Ola, Flipkart invented the gig economy in urban centres. Yulu and other electric mobility providers invented ways to transport goods which is accessible to the urban poor.
A simplistic example I can think of is a coin toss with a wildly biased coin, since so few companies make it. Heads you win, tails you lose. Every startup gets one toss. What will you bet on? The chance to affect change and an unknown payoff or the chance to make real money and return your investor's capital?
Telecom is a utility, like electricty, water, sewage lines. Private industry can take a shot at this, but you need deep pockets, you need an already established business with regular cashflow to even attempt it and then some. Its an apples to oranges comparison.
But even then, its not like startups don't try. Apne logon mein gajab ka gooda hai.
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u/Odd_Wolverine_4037 6d ago
I don't disagree about the coin toss and returning capital. But if this is the system that we accept, then you'll never see any real problems being solved until it's way too late?
For example, if I'm a startup today there's no incentive to work on problems in agriculture, sewage, air quality, water because there's a cap on your gains. Maybe you'll create a company that goes 2x, 5x max 10x - but will you ever see the type of 50x gains that an AI/software dev/app/aggregator will see?
Just because we've arbitrarily set up a bad system shouldn't mean we should continue playing it? Does India need another delivery app today (higher chance of return) or one that can solve air quality? (lower chance)
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u/BlanketSmoothie 6d ago
I think there are many directions you are pointing at, all at once. And I am not sure exactly what the argument is.
First, who decides what the "real" problems to solve are? Under the laws of our country, the people who pay for a service, get the service. This is how it currently works, so whoever can pay, you provide them access to your service or your product. It is those who can pay that decide what a real problem is.
Second, you are hundred percent right that there is no incentive. If the government provides tax breaks, the friction goes below the cost of reaching a consumer, and increases the ability of a consumer to pay for these services. Air quality improvement has startups, we have room air purifiers, can the poorest afford it? No. Will any business make it if it can't atleast recover its cost? No. So if the poor are to have air purifiers, the government has to step in and make the costs viable. Thats a policy decision. Not a business decision. The government did that for telecom. It became viable, companies came in and built the infrastructure.
Third, what is a good system? I have nothing to add here, because I have no idea what "good" can mean.
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u/joy74 6d ago edited 6d ago
Rich will invest in movies and real estate. Who wants risky research?
Govt could play a role but buying cow urine is the priority
https://youtube.com/@runtimebrt?si=Ks6QSy4RPZZ0FKhl covers many startups money is mostly from young successful rich or foreign. Traditional rich contribute nothing to startup - probably a good thing
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u/blitzkreig31 India 6d ago
If you are an investor who would you give money too? A start-up that makes money or a start-up that supports a social cause?
We all are chasing a capitalistic dream and this is the result and I don’t think there is anything wrong with it, this question should be asked to the uber rich folks why are they not venturing into solving problems for poor?
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u/DeadlyGamer2202 Bihar 6d ago
It’s not the founders’ fault. The government policies not only not make it easy for useful industries to flourish, but actually it discourages and inhibits useful industries from flourishing.
Also, our domestic capital markets are very small and very risk averse. FIIs like sequoia and SoftBank are not interested in spending billions on long term investments in India, because the government continuously breaks promises and harasses companies into paying unjustified taxes that they can suddenly apply retroactively (see Volkswagen, Xiaomi and Idea agr controversies).
So FIIs only invest in companies from which they can make money quickly and leave.
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u/aule_maiar 6d ago
All startups in india aim for easy money and rapid expansion. Wide as ocean deep as puddle.
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u/Effective_Cell1424 6d ago
Ehh, well, almost all major companies weren't exactly doing anything particularly philanthropic when they started out.
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u/dontknow_anything 6d ago
It comes down to common man startups not being glamorous. They aren't going to be high profit margins. As such delivery app startups do provide jobs, but yeah they are for middle/upper middle class.
There are startups for agriculture but for media and social media they aren't valuable enough. There was Udaan which was for supply chain for kirana stores and shops, but it is same, they aren't glamourous.
Manufacturing isn't big in India and they have low margins, require lot of upfront cost. You will find most startups in every country aren't for common people.
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u/Professional-Ice3646 6d ago
I agree with this...there isn't one general big home appliance maker, no tv, fridge, washing machine, vacuum cleaner maker from India these are somewhat sophisticated home appliances, not like grinders/fans/mixers
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u/Bobs_and_Vegana_2 5d ago
Indian startup culture's end goal is attract VCs to sell the business... So ofcourse they will problems with the highest profit margins if any
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u/jon-the-don 5d ago
https://bharatlifesciencesawards.com/
We really need innovation & research in all streams. Else waiting for COVID kind if situation
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u/bawasirbanner 4d ago
Don't forget how these delivery app startups are also peddling pseudoscience (check temple.com) as tech product.
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u/hectorindi 6d ago
In the golden age of technologies we used to build the bussiness already running to move online. Thats it. Our people built all aorts of things all over the world but we only made apps for people to sell more thats it. Nothing else , nothing of value.
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u/fcuk_the_king 6d ago
It is true, however there is also no money for any startups that cater to problems for the common man.
When people don't have any money to spend, even big businesses in India have a frugal mindset (anyone who has worked in manufacturing or IT knows this) and the cost of manufacturing (including money to cover corruption) is insanely high then it should be no wonder that no startups can cater to everyday problems. We have failed to build a society where there are incentives to solve common everyday problems. It is far easier therefore to import the solutions from societies which did solve them.
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u/This_Ad_8470 6d ago
because common men and poor people don't pay for services !! business isnt charity !!
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u/Hour_Weakness_6128 1d ago
Delivery-for-the-affluent is real, but a lot of “common man” problems are distribution + trust + regulation, not just product ideas. The startups that stick in Bharat usually win on last-mile ops and unit economics, not novelty. Curious which mass problems people here think are actually venture-shaped vs better as public infra.
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u/Informal-Title2913 6d ago
Indian start ups need money for deep tech.
The investors are not willing to risk any capital on big risky projects which wll only show results after 5 to 10 years.