October - 2014 - issue > CXO View Point

Getting Bigger, Faster

By Suraj Sudhi, Lead, SAP Startup Recruitment APJ, SAP Labs India
Monday, November 24, 2014
By Suraj Sudhi,  Lead, SAP Startup Recruitment APJ, SAP Labs India
SAP SE (NYSE: SAP) is an European multinational software corporation engaged in making enterprise software to manage business operations and customer relations. Headquartered in Walldorf, the company has a current market cap of $64.1 billion.

India is playing the major role of a dynamic destination for entrepreneurship in the present startup boom. Thousands of professionals are taking the entrepreneurial plunge to pursue their dreams after witnessing the success stories that have emerged around them; highlighting that India has the skills and innovation potential to continue with its tag as the Silicon Valley of Asia. However, the challenges faced by these young, innovative startups in their journey towards becoming a mature and stable organization are numerous.

During the initial period, startups struggle to prove their idea, their business model and their credibility with their target customers in the face of very little funding and mentorship. Once they cross this hurdle, they struggle with problems of scale, namely acquiring more customers, maintaining a healthy working capital in the face of long sales cycles, growing the organization and making investments on technology, infrastructure and others to scale along with the business. The challenges are so steep that according to Statistic Brain, 25 percent of startups will fail within the first year. This rate goes up over time, with 71 Percent failing by their 10th year.

However, true to the spirit of innovation, the startup ecosystem has evolved to address the challenges faced by early-stage startups in order to ensure that innovations move from concept to market. The advent of incubators and accelerators has been one of the models that has responded to these challenges which presents a solution through the introduction of mentorship and experience to startups in their nascent stage. The result is a clear cut refinement of product and business strategy which increases the chances of success of the startup in a crowded and competitive industry. Venture capitalists have also stepped up to support startups which is proven by the fact that technology and tech-enabled companies in India have raised over Rs.4052 crore ($675 million) from venture capitalists and other investors in the second quarter of 2014 which is a 35 percent growth over the previous quarter.

Another recent model is the strategic partnerships between startups and larger corporates. The availability of capital (financial and technological) is a major roadblock to the success of a startup which can be overcome through the partnership with a large corporation which provides for resources and technology. Apart from infrastructure, the partnership also provides for the aspect of credibility startups require in the market in order to increase their visibility.

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