Considering that India is the third-largest startup ecosystem in the world, India has to face many challenges to address various business challenges. Here we list the top-9 challenges faced by startups in India are:
- 1) Health of the Entrepreneurial Ecosystem
Considering the startup ecosystem is immature, it is common to see new entrepreneurs joining their early stage startups without much experience. Most of the startups who graduatd would have already taken their ideas to the market. So, the real challenge for the startups would be how to market their products and services. The entrepreneurial ecosystem in India is currently unorganised. A lack of better communication channels and a centralised office space among many startups would prove to be a deterrent for growth.
- 2) Lack of Online and Digital Infrastructure
While the web is now prevalent, the internet penetration in the country still needs greater penetration into the Tier 2, Tier 3, and smaller towns, making the entry of entrepreneurs in the field of e-commerce very challenging.
- 3) India’s Private Internet Services
The ability of companies to raise capital and start their business comes down substantially when internet companies get penalised in certain markets. An example of this can be seen with the government ban on messaging app WhatsApp in January this year. The government imposed a fine of ₹100 crore on WhatsApp for not curbing the circulation of fake messages.
- 4) Lack of Cash in the Foundation of the Business
Starting a business requires resources. And in a country like India where hardly any business succeeds, the challenge would be to find the money to build up your company and the processes to scale up. If you are unable to find the right investors, you are expected to source money from your own bank account and/or take loans to build up your business.
- 5) Poor Regulatory Oversight
This is something that all Indian Startup entrepreneurs should be cognisant of, and not only startups. Several startups have set up operations in India without submitting all the paperwork in time or finding out all the administrative procedures. The regulations are so stringent and complicated that most entrepreneurs are not aware of them.
Startup Challenges 2021 and beyond
- 6) Cross-Border Fears
Indian startups face the brunt of uncertainty due to cross-border taxation. According to Venn and Venn Consulting LLP, India is the most expensive market for startups to operate in due to complex compliance rules, taxation, and high labour costs. This is changing and the reforms are evolving helping startups to take risks.
- 7) Awareness in the Classroom
Websites such as, Technovation and Stemettes, among others, provide virtual schools with special focus on STEM. These new age startups are attracting young minds into entrepreneurship.
- 8) Inability to Find Customers
Research studies in the last few years have indicated that traditional methods of advertising are losing their popularity with the rise of digital marketing. Online advertising is considered to be an easier way to target customers, especially now when many of the people in India have adopted digital platforms for the first time. Unfortunately, most of the businesses are still not well aware of online marketing channels.
- 9) Lack of Solutions in the Business
More often than not, entrepreneurs tend to approach solving their problem by adding another product to the end of the problem. This problem stems from lack of understanding of the core problem being addressed. There are several existing startups who can offer solutions to problems faced by startups such as: Tool to manage multiple products
