Startup Street: An Accelerator’s Advice To Founders—Don’t Go Chasing The Money
Is funding what defines the success of a startup? Ashish Bhatia of India Accelerator disagrees.
One of India’s fastest-growing seed-stage startup accelerators has only a single piece of advice for young entrepreneurs—look beyond funding.
“The biggest challenge is an undue focus on funding. The mindset that it is only the money that defines the success of a startup is a dangerous one,” Ashish Bhatia, founder of India Accelerator, told BloombergQuint in an interview. “Funding news routinely makes it to the front pages of newspapers and magazines. It makes rockstars out of these entrepreneurs. The media has confused successful founders with well-funded ones.”
India’s startup ecosystem has been flushed with funds over the last six years. Yet, as a report by IBM Institute and Oxford Economics points, about 90% of Indian startups fail within five years of inception. And the country has no shortage of startup success stories turning sour in the past decade.
One such instance is Just Buy Live, an e-distributor platform for retailers to procure goods, which was launched in 2015. Within two years, the startup went on to raise $120 million. By 2018, it shut down burdened by negative cash flows. Other defunct startups like Stayzilla, PepperTap and DocTalk had also once raised multi-million funding.
For Bhatia, funding is just one aspect that a founder needs to think about. But for a startup to succeed there are many other factors that tend to get ignored. “As they say, it takes a village to raise a child. It is the same for startups.”
Funding is a means to an end, not an end in itself. Look at other critical factors. Get the right mentors, get into a good accelerator programme. Talk to experienced founders. This is lacking in Indian context.Ashish Bhatia, Founder, India Accelerator
Since its inception in 2017, India Accelerator has mentored over 70 early startups including the likes of now established Galaxy Card, Cab Bazaar and Lawyered. Two-thirds of its portfolio has gone on to raise subsequent funding.
The Gurugram-based accelerator selects startups twice a year for a four-month programme to help them get market-ready. It has structured its model very closely to U.S.-based Techstars. Since the Covid-19 pandemic started, however, the accelerator has started accepting applications on a rolling basis.
“The pandemic has been an opportunity in disguise for us where we as an accelerator also pivoted to a virtual programme, helping us to cater to a lot more startups without any geographic limitations,” he said. “The volume of startups applying to us has increased significantly. Covid has also made them realise that they need all the support they can get if they have to improve their odds of success.”
But the startups under its mentorship were not immune to the pandemic either. Bhatia said while some of their startups, particularly in the health and education space, suddenly saw a spurt in activity, others struggled to keep afloat.
“The striking thing is that none of our startups shut shop during these trying times. They pivoted, they re-engineered, they scaled down in some cases, but have managed to stay alive,” he said.
As an accelerator, Bhatia said, their job was to ensure that the startups under their mentorship did not let the crisis go to waste. And it meant different things for different startups.
“For the ones on the right side of the equation, like health-tech and edtech, the focus was to enhance value propositions through partnerships, get funding through our network of angels and ride the wave,” he said. “For the ones who were hit by the storm, it meant fighting to live another day. The advice was to use this time to speak to their customers, go back to drawing board and brainstorm, cut down any unnecessary costs and improve the offering.”
Bhatia is more bullish for 2021. The accelerator hopes to mentor 100 startups—more than it has ever done—during the year. It has aggressive geographic expansion plans too. The accelerator is planning to launch a programme in Singapore and expand its footprint in Africa. “We are in talks with a couple of governments to help build the entrepreneurial ecosystem at a national level for them.”
India Accelerator has also launched seven sector-specific verticals to focus on areas like artificial intelligence, cybersecurity, agriculture and health. Still, Bhatia asserts that they remain sector-agnostic while selecting startups to mentor.
“We steer clear of the ‘flavour of the season’ and the buzzwords and run domain agnostic cohorts,” he said. “And the early stage at which we come, the majority of the metrics of a startup will anyway change, except the founders. So, it is the founders we eventually bet on when we accept any startup to our programme.”