Challenges Faced By Start-up Companies

INDEX

Title Page No
Chapter No .

1 INTRODUCTION
• What is Start up 6
• Start up financing cycle 10
• Characteristics for a great startup 15
• Challenges faced by startups 20
• Overview and challenges faced by FLIPKART 33
• Benefits to startups by government 37

2 Research methodology
• Research problem 38
• Objectives of the study 38
• Scope of the study 38
• Hypothesis 39
• Data collection 41
• Research limitations 43

3 REVIEW OF LITERATURE 45

4 Analysis and Interpretations 56

• Findings 66

5 Conclusion & Suggestions 69-76

6 Bibliography 77

7 Annexure 78-81

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EXECUTIVE SUMMARY

India is a country of many great legends that were famous all over the world because
of their work ,sharp mind & high skills. Youths in India are very talented, highly skilled
& full of innovative ideas. But they don’t get opportunity due to lack of solid support
& proper guidance in right direction. In this way , BJP government launched “START
UP INDIA STAND UP INDIA” scheme on 16th January 2016 to help the youth of India
to go in right direction using their new & innovative ideas. This scheme was launched
to motivate & promote new comers towards business & grow their career as well as
economy of the country.

This programme was a big start to enable Start-ups through financial support so that
they can use their innovative ideas in the right direction. There were tremendous
opportunities for Start ups entrepreneurs in India. The Key areas are like Textile, Media,
Health, Sector, Event, Planner, Tourism, Automobile etc. So , there were various
opportunities where entrepreneurs can start their Start-Ups.

But along with opportunities there are some challenges also that the Start ups
entrepreneurs have to face like Infrastructure, Deficit in India, Risk Factor and Right
Talent Acquisition etc. Despite all these advantages the start up entrepreneurs faced
many disadvantages also. Also of these challenges faced, The Government as well as
Start up entrepreneurs should have had work together to face these challenges & make
this programme effective.

This study focuses on these Start ups and the challenges which are faced by the Start
up and the Start up entrepreneurs. The objectives of a start up are to be ones own boss
and to create employment to others. A successful start-up cannot start business with
just passion and an idea.

A high level of leadership skills with clear understanding of market, excellent

communication skills, maturity to see things in the right perspective along with the
ability to take calculated risks are required on the part of the
entrepreneur(Aggarwal,2017). Lack of awareness, multiple clearences, unorganised
market, poor infrastructure in Tier 2/3 cities, lack of mentoring, stringent exit policies,

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corruption/red tape, technological risks, regulatory obstacles and lack of reforms

keeping pace with the fast evolving market changes are some of the challenges faced
by start up companies as stated by Rashmi Guptey, Principal(Legal) of Lightbox India
Advisors Private limited.

So in this study there are elements of start up companies and how they face various
challenges in forming up these start up companies. This study also records the various
reactions of various people what they think about these start up companies and how are
the challenges faced by these start up companies.

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OBJECTIVES OF THE STUDY

Objective of the study implies the purpose for conducting the research. The main
objective of this study is to study the start up companies and their entrepreneurs and
how the challenges are faced to form these start up companies and to understand the
opinion of people on these start-ups. This study is also carried out to know the opinion
of various people by carrying out surveys that what they think about these start ups and
what day to day or forming challenges are faced by these start up companies and to also
compare the challenges faced by start up with an established company.

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ABSTRACT

The objectives of a start up are to be one’s own boss and to create employment to others
which warrants lot of endurance and sacrifice. Large population with high percentage of
middle income group, educated youth with technical background, IT domination, high
internet and mobile penetration are some of the drivers that have thrown opportunities for
spreading startup revolution in India. The ‘Make-in-India’ initiatives and other government
schemes have also given a boost to start-ups with many individuals entering the fray.
Starting a venture is a well planned and disciplined exercise with due consideration of both
internal and external factors that may impact the sustainability of the venture. The idea
behind the venture, market size, revenue and profit targets are some of the important factors
that need to be clearly defined before embarking on the journey. Time, team work and
tenacity are important elements which determine entrepreneurial success. Infrastructure,
government regulations and availability of finance at various stages of growth could be
some of the challenges of start-ups . In-fact, history is replete with examples of start-ups
which began with big fanfare but ended as damp squibs within a short span of time due to
various reasons. The paper discusses few issues and challenges that an Indian startup has to
face and the opportunities that the country can provide in the current ecosystem. Key words:
Entrepreneur, Employment, Finance, Make-in-India, Startup.

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Chapter : 01

INTRODUCTION

Start up companies can come in all forms and sizes. A critical task in setting up a business is

to conduct research in order to validate, assess and develop the ideas or business concepts in

addition to opportunities to establish further and deeper understanding on the ideas or business

concepts as well as their commercial potential. Business models for startups are generally

found via a bottom-up or top-down approach. A company may cease to be a startup as it passes

various milestones, such as becoming publicly traded in an IPO, or ceasing to exist as an

independent entity via a merger or acquisition. Companies may also fail and cease to operate

altogether.

Investors are generally most attracted to those new companies distinguished by their

risk/reward profile and scalability. That is, they have lower bootstrapping costs, higher risk,

and higher potential return on investment. Successful startups are typically more scalable than

an established business, in the sense that they can potentially grow rapidly with limited

investment of capital, labour or land.

While Silicon Valley is known for entrepreneurs and start-up visionaries, other regions like
Sao Paulo, Brazil and Bangalore (India) have turned into successful start-up hubs over the past
decade. Other regions that are working towards becoming start-up centres include Dublin,
Shenzhen, Sweden, Vietnam, Zurich among others.
In recent years, the Indian start-up ecosystem has succeeded in crafting a niche in the global
market. Funding, consolidation programs, evolving technology and flourishing domestic
market are the key driving factors behind this success. The number of startups in 2014 was
3100, and is projected to increase to 11500 by 2020. CityLab startup ranking also showed
Bangalore as 19th within the world’s startup ecosystem that went up to 15th by 2015. In terms
of funding, it ranks 6th.
‘Nasscom 10,000 Start-ups Report’ revealed that India is the 4th largest base for startups, after
U.S. and China. Majority of startups are brainchild of successful professionals who have held
/lead many MNCs and Indian Tech Companies. Some of the successful names ruling the market
in India today are Flipkart, Housing.com, Redbus, Paytm, AdPushup, InMobi and Ola.
To encourage the scenario in India, Reserve Bank of India has decided to ease regulations to

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enable startups to raise foreign funds.

Startups are emerging in their own right, driving economic growth, creating jobs and positively
impacting the economy. It is not only changing the business landscape, but also the way we
work today.

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What is a start up company?

A company that is in the first stage of its operations is called a start up company. These

companies are often initially bank rolled by their entrepreneurial founders as they attempt to

capitalize on developing a product or service for which they believe there is a demand. Due to

limited revenue or high costs, most of these small-scale operations are not sustainable in the

long term without additional funding from venture capitalists.

In the late 1990s, the most common type of Startup Company was a dotcom. Venture capital

was extremely easy to obtain during that time due to frenzy among investors to speculate on

the emergence of these new types of businesses. Unfortunately, most of these Internet startups

eventually went bust due to major oversights in their underlying business plans, such as a lack

of sustainable revenue.

However, there were a handful of internet startups that did survive when the dotcom bubble

burst. Internet booksellers Amazon.com and Internet auction portal eBay are examples of such

companies.

A startup company or startup is a company or temporary organization designed to search for a

repeatable and scalable business model. These companies, generally newly created, are in a

phase of development and research for markets. The term became popular internationally

during the dot-com bubble when a great number of dot-com companies were founded.

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Lately, the term startup has been associated mostly with technological ventures designed for

high-growth. Paul Graham, founder of one of the top startup accelerators in the world, defines

a startup as: "A startup is a company designed to grow fast. Being newly founded does not in

itself make a company a startup. Nor is it necessary for a startup to work on technology, or take

venture funding, or have some sort of "exit." The only essential thing is growth. Everything

else we associate with startups follows from growth."

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Evolution of a startup company

Startup companies can come in all forms, but the phrase “Startup Company” is often associated

with high growth, technology oriented companies. Investors are generally most attracted to

those new companies distinguished by their risk/reward profile and scalability.

That is, they have lower bootstrapping(lower interest costs, positive cash flows, less money

borrowed) costs, higher risk, and higher potential return on investment. Successful startups are

typically more scalable than an established business, in the sense that they can potentially grow

rapidly with limited investment of capital, labor or land.

Startup Financing Cycle :

Startups encounter several unique options for funding. Venture capital firms and angel

investors (An angel investor or angel (also known as a business angel or informal investor)

is an affluent individual who provides capital for a business start-up, usually in exchange for

convertible debt or ownership equity.) may help startup companies begin operations,

exchanging cash for an equity stake. In practice though, the founders themselves initially fund

many startups. Factoring is another option, though not unique to start ups. Some new funding

opportunities are also developing in crowd funding.

A critical task in setting up a business is to conduct research in order to validate, assess and

develop the ideas or business concepts in addition to opportunities to establish further and

deeper understanding on the ideas or business concepts as well as their commercial potential.If

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a company's value is based on its technology, it is often equally important for the business

owners to obtain intellectual property protection for their idea. The newsmagazine The

Economist estimated that up to 75% of the value of US public companies is now based on

their intellectual property (up from 40% in 1980). Often, 100% of a small startup

company's value is based on its intellectual property. As such, it is important for

technology-oriented start up companies to develop a sound strategy for protecting their

intellectual capital as early as possible.

Startup companies, particularly those associated with new technology, sometimes produce

huge returns to their creators and investors – a recent example of such was Google, whose

creators are now billionaires through their share ownership. However, the failure rate of

startup companies is very high.While there are startup businesses created in all types of

businesses, and all over the world, some locations and business sectors are particularly

associated with startup companies. The Internet bubble of the late 1990s was associated with

huge numbers of Internet startup companies, some selling the technology to provide internet

access, others using the internet to provide services. Most of this startup activity was located

in Silicon Valley, an area of northern California renowned for the high level of startup company

activity:

The spark that set off the explosive boom of “Silicon startups” in Stanford Industrial Park was

a personal dispute in 1957 between employees of Shockley Semiconductor and the company’s

namesake and founder, Nobel laureate and co-inventor of the transistor William Shockley...

(His employees) formed Fairchild Semiconductor immediately following their departure...

After several years, Fairchild gained its footing, becoming a formidable presence in this sector.

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Its founders began to leave to start companies based on their own, latest ideas and were

followed on this path by their own former leading employees... The process gained momentum

and what had once began in a Stanford’s research park became a veritable startup avalanche...

Thus, over the course of just 20 years, a mere eight of Shockley’s former employees gave forth

65 new enterprises, which then went on to do the same.A company may cease to be a startup

as it passes various milestones, such as becoming profitable, or becoming publicly traded in an

IPO, or ceasing to exist as an independent entity via a merger or acquisition. Companies may

also fail and cease to operate altogether. Recently the patent assets of these failed startup

companies are being purchased by what are derogatorily known as "Patent trolls" who then

take the patents from the companies and assert those patents against companies that might be

infringing the technology covered by the patent.

Co-Founders:

Co-Founders are people involved in the cultivation of startup companies. Anyone can be a Co-

Founder, and an existing company can also be a Co-Founder, but frequently Co-Founders are

entrepreneurs, hackers, venture capitalists, web developers, web designers and others involved

in the ground level of a new, often high tech, venture.

There is no formal, legal definition of what makes somebody a Co-Founder. The right to call

oneself a Co-Founder can be established through an agreement with one's fellow Co-Founders

or with permission of the board of directors, investors or shareholders of a startup company.

When there is no definitive agreement, disputes about who the Co-Founders were can arise.

One well-known example of a dispute over who can be called a Co-Founder can be observed

in the story of a lawsuit against Elon Musk by a Co-Founder of Tesla Motors in which it was

alleged that he did not have the right to consider himself a Co-Founder merely because he

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provided a large amount of capital and was instrumental in saving the company from

bankruptcy.

Finding a co-founder may be a complicated issue. Agreeing on the terms and conditions of

partnerships, exit strategies and compensations from the beginning, improves the

understanding of what is expected of each party. Due to the rise of tech startups, Technical co-

founders (programmers) are specially sought after. Some co-founder dating sites are now

available online to fill this gap.

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Internal startups:

Large or well-established companies often try to promote innovation by setting up "internal

startups", new business divisions that operate at arm's length from the rest of the company.

Examples include Target Corporation (which began as an internal startup of the Dayton's

department store chain) and three degrees, a product developed by an internal startup of

Microsoft.

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Key Characteristics that define a great start up culture.

1. No politics:

In great start-up cultures, everybody is giving everybody else credit. Ideas are judged on the

merits, not on who came up with them. People feel comfortable that they will get their due. In

not-so-great start-up cultures, everyone wants to make sure everybody else knows what he or

she did, even if he or she didn’t do it.

2. It’s not a job, it’s a mission:

Red fin’s CEO Glenn Kelman likes to talk about how invigorating it can be once you realize

that you don’t have to be doing what you are doing. Great start-up cultures are comprised of

people who could be doing a hundred other things, but actually choose to work themselves silly

over the particular product or service their company is building. These cultures are often

centered around the belief that the company is working on something important.

3.Equity-driven:

Great start-up cultures create a sense that everyone on board is building something significant,

an enterprise that will be valuable long-term. Employees want a piece of that future. Less

optimal cultures are focused almost entirely on short-term cash incentives. That’s not to say

that short-term cash incentives are always bad; in fact, in many cases, they can be helpful in

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driving toward short-term goals. But when employees are focused solely on cash and not the

least bit interested in equity, that’s a sign that they may have lost faith in the business.

4. Perfect alignment:

Great start-up cultures are well-aligned. The strategy makes sense and is aligned with the

vision. People are doing what they are good at and in the right roles. Every employee, from

the CEO to the office manager, is on the same page. McKinsey, the well-known consulting

firm, developed a good framework for assessing alignment.

5. Good Communications:

Even in Bad Times. Transparent communication is a hallmark of a great start-up culture. No

one is confused about the vision and where the company is headed. Communication is open

and free flowing. Hard issues are addressed directly, not ignored. Every start-up goes through

ups and downs. The tendency is to not want to share bad news. It’s not as much fun. In great

start-up cultures, communication to all stakeholders actually increases during the down times.

6. Strong leadership:

The leader of a start-up should the “cultural soul” of his or her company. A good leader takes

that responsibility seriously and leads by example. I love this quote by former Secretary of

State and Army General George Marshall about the importance of leading by example and

maintaining a positive attitude. “Gentleman, enlisted men may be entitled to morale problems,

but officers are not. I expect all officers in this department to take care of their own morale. No

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one is taking care of my morale.”

7. Mutual respect:

In not-so-great start-up cultures, the business guys think the technical folks are more interested

in cool technology than in building what the market wants. The technical side of the house

thinks the business side isn’t smart enough (or technical enough) to understand what the market

wants. The architects look down on the devs who look down on QA. The sales team thinks

marketing isn’t doing its job in generating leads. Everyone thinks the sales team is overpaid

and should be selling more. In great start-up cultures, everyone shares a mutual respect for

what each party brings to the table and celebrates wins from wherever they come. Heated but

healthy debate leads to decisions that are accepted, even if not everybody agrees with them.

8. Customer-obsessed:

Great start-up cultures are manically focused on defining who the customer is, what the

customer wants/needs, and what the customer will value enough to pay for now. It starts well

before a single line of code is written. These cultures value talking to as many potential

customers as possible before a product is conceived. They make customer feedback a key part

of the process once the product or service is delivered. Great start-up cultures are rarely

surprised by customer issues because they are proactive and process-oriented about

understanding everything they can about their customers.

9. High energy level:

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One can literally feel it when you walk into a great start-up culture. The room has

energy. There’s a buzz. Doors are open. Whiteboards are filled with hieroglyphics. People

are getting stuff done. Meetings are short and to the point. You might trip over a dog.

10. Fun Element:

Start-ups should be fun. In great start-up cultures, everyone reinforces that fun is happening,

even if it isn’t at that particular time. Employees tell their friends how much fun they are

having. Whining is unacceptable.

11. Integrity:

Great start-up cultures do not cut corners. They maintain the highest integrity in the way they

treat customers, handle employee issues, write code, and go about their daily business. They

have integrity when it is easy and, more importantly, when it is hard. This kind of integrity

should not be confused with lacking toughness. Integrity in this sense means having a team

with enough confidence in what it is building, and then delivering to customers, that cheating

in any form, or even just going halfway, is unacceptable.

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Challenges faced

Mistakes that kill start-ups :

In a sense there's just one mistake that kills startups: not making something users want. If you

make something users want, you'll probably be fine, whatever else you do or don't do. And if

you don't make something users want, then you're dead, whatever else you do or don't do. So

really this is a list of 18 things that cause startups not to make something users want. Nearly all

failure funnels through that.

1. Single Founder
:


Have you ever noticed how few successful startups just one person founded? Even companies

you think of as having one founder, like Oracle, usually turn out to have more. It seems

unlikely this is a coincidence. What's wrong with having one founder? To start with, it's a vote

of no confidence. It probably means the founder couldn't talk any of his friends into starting

the company with him. That's pretty alarming, because his friends are the ones who know him

best. But even if the founder's friends were all wrong and the company is a good bet, he's still

at a disadvantage. Starting a startup is too hard for one person. Even if you could do all the

work yourself, you need colleagues to brainstorm with, to talk you out of stupid decisions, and

to cheer you up when things go wrong. The last one might be the most important. The low

points in a startup are so low that few could bear them alone. When you have multiple founders,

esprit de corps binds them together in a way that seems to violate conservation laws. Each

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thinks, "I can't let my friends down." This is one of the most powerful forces in human nature,

and it's missing when there's just one founder.



2. Bad Location :



Startups prosper in some places and not others. Silicon Valley dominates, then Boston, then

Seattle, Austin, Denver, and New York. After that there's not much. Even in New York the

number of startups per capita is probably a 20th of what it is in Silicon Valley. In towns like

Houston and Chicago and Detroit it's too small to measure. Why is the falloff so sharp?

Probably for the same reason it is in other industries. What's the sixth largest fashion center in

the US? Which is the sixth largest centre for oil, or finance, or publishing? Whatever they are

they're probably so far from the top that it would be misleading even to call them centre. It's an

interesting question why cities becomestartup hubs, but the reason startups prosper in them is

probably the same as it is for any industry: that's where the experts are. Standards are higher;

people are more sympathetic to what you're doing; the kind of people you want to hire want to

live there; supporting industries are there; the people you run into in chance meetings are in the

same business. Who knows exactly how these factors combine to boost startups in Silicon

Valley and squish them in Detroit, but it's clear they do from the number of startups per capita

in each.

3. Derivative Idea :



Many of the applications we get are imitations of some existing company. That's one source of

ideas, but not the best. If you look at the origins of successful startups, few were started in

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imitation of some other startup. Where did they get their ideas? Usually from some specific,

unsolved problem the founders identified.

Our startup made software for making online

stores. When we started it, there wasn't any; the few sites you could order from were hand-

made at great expense by web consultants. We knew that if online shopping ever took off, these

sites would have to be generated by software, so we wrote some. Pretty straight forward.

It

seems like the best problems to solve are ones that affect you personally. Apple happened

because Steve Wozniak wanted a computer, Google because Larry and Sergey couldn't find

stuff online, Hotmail because Sameer Bhatia and Jack Smith couldn't exchange email at

work.

So instead of copying the Facebook, with some variation that the Facebook rightly

ignored, look for ideas from the other direction. Instead of starting from companies and

working back to the problems they solved, look for problems and imagine the company that

might solve them. [2] What do people complain about? What do you wish there was?



4. Hiring Bad Programmers :



 This is not a serious problem for them. They might accidentally hire someone bad, but it's

not going to kill the company. In a pinch they can do whatever's required themselves.

But

when I think about what killed most of the startups in the e-commerce business back in the 90s,

it was bad programmers. Business guys who thought the way startups worked was that you had

some clever idea and then hired programmers to implement it started a lot of those companies.

That's actually much harder than it sounds—almost impossibly hard in fact—because business

guys can't tell which are the good programmers. They don't even get a shot at the best ones,

because no one really good wants a job implementing the vision of a business guy.

In practice

what happens is that the business guys choose people they think are good programmers (it says

here on his resume that he's a Microsoft Certified Developer) but who aren't. Then they're

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mystified to find that their startup lumbers along like a World War II bomber while their

competitors scream past like jet fighters. This kind of startup is in the same position as a big

company, but without the advantages.

So how do you pick good programmers if you're not a

programmer? I don't think there's an answer. I was about to say you'd have to find a good

programmer to help you hire people. But if you can't recognize good programmers, how would

you even do that?



5.Choosing the Wrong Platform :



A related problem (since it tends to be done by bad programmers) is choosing the wrong

platform. For example, I think a lot of startups during the Bubble killed themselves by deciding

to build server-based applications on Windows. Hotmail was still running on FreeBSD for

years after Microsoft bought it, presumably because Windows couldn't handle the load. If

Hotmail's founders had chosen to use Windows, they would have been swamped.

PayPal

only just dodged this bullet. After they merged with X.com, the new CEO wanted to switch to

Windows—even after PayPal cofounder Max Levchin showed that their software scaled only

1% as well on Windows as Unix. Fortunately for PayPal they switched CEOs

instead.

Platform is a vague word. It could mean an operating system, or a programming

language, or a "framework" built on top of a programming language. It implies something that

both supports and limits, like the foundation of a house.

The scary thing about platforms is

that there are always some that seem to outsiders to be fine, responsible choices and yet, like

Windows in the 90s, will destroy you if you choose them. Java applets were probably the most

spectacular example. This was supposed to be the new way of delivering applications.

Presumably it killed just about 100% of the startups who believed that.

How do you pick the

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right platforms? The usual way is to hire good programmers and let them choose. But there is

a trick you could use if you're not a programmer: visit a top computer science department and

see what they use in research projects.



6. Slowness in Launching :



Companies of all sizes have a hard time getting software done. It's intrinsic to the medium;

software is always 85% done. It takes an effort of will to push through this and get something

released to users. [3]

Startups make all kinds of excuses for delaying their launch. Most are

equivalent to the ones people use for procrastinating in everyday life. There's something that

needs to happen first. Maybe. But if the software were 100% finished and ready to launch at

the push of a button, would they still be waiting?

One reason to launch quickly is that it forces

you to actually finish some quantum of work. Nothing is truly finished till it's released; you

can see that from the rush of work that's always involved in releasing anything, no matter how

finished you thought it was. The other reason you need to launch is that it's only by bouncing

your idea off users that you fully understand it.

Several distinct problems manifest themselves

as delays in launching: working too slowly; not truly understanding the problem; fear of having

to deal with users; fear of being judged; working on too many different things; excessive

perfectionism. Fortunately you can combat all of them by the simple expedient of forcing

yourself to launch something fairly quickly.

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7. Launching Too Early :



Launching too slowly has probably killed a hundred times more startups than launching too

fast, but it is possible to launch too fast. The danger here is that you ruin your reputation. You

launch something, the early adopters try it out, and if it's no good they may never come

back.

So what's the minimum you need to launch? We suggest startups think about what they

plan to do, identify a core that's both (a) useful on its own and (b) something that can be

incrementally expanded into the whole project, and then get that done as soon as

possible.

This is the same approach I (and many other programmers) use for writing software.

Think about the overall goal, then start by writing the smallest subset of it that does anything

useful. If it's a subset, you'll have to write it anyway, so in the worst case you won't be wasting

your time. But more likely you'll find that implementing a working subset is both good for

morale and helps you see more clearly what the rest should do.

The early adopters you need

to impress are fairly tolerant. They don't expect a newly launched product to do everything; it

just has to do something.



8. Having No Specific User in Mind :



You can't build things users like without understanding them. I mentioned earlier that the most

successful startups seem to have begun by trying to solve a problem their founders had. Perhaps

there's a rule here: perhaps you create wealth in proportion to how well you understand the

problem you're solving, and the problems you understand best are your own. That's just a

theory. What's not a theory is the converse: if you're trying to solve problems you don't

understand, you're hosed.
 And yet a surprising number of founders seem willing to assume

that someone, they're not sure exactly who, will want what they're building. Do the founders

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want it? No, they're not the target market. Who is? Teenagers. People interested in local events

(that one is a perennial tarpit). Or "business" users. What business users? Gas stations? Movie

studios? Defense contractors?

You can of course build something for users other than

yourself. We did. But you should realize you're stepping into dangerous territory. You're flying

on instruments, in effect, so you should (a) consciously shift gears, instead of assuming you

can rely on your intuitions as you ordinarily would, and (b) look at the instruments.

In this

case the instruments are the users. When designing for other people you have to be empirical.

You can no longer guess what will work; you have to find users and measure their responses.

So if you're going to make something for teenagers or "business" users or some other group

that doesn't include you, you have to be able to talk some specific ones into using what you're

making. If you can't, you're on the wrong track.


9. Raising Too Little Money :



Most successful startups take funding at some point. Like having more than one founder, it

seems a good bet statistically. How much should you take, though?

Startup funding is

measured in time. Every startup that isn't profitable (meaning nearly all of them, initially) has

a certain amount of time left before the money runs out and they have to stop. This is sometimes

referred to as runway, as in "How much runway do you have left?" It's a good metaphor because

it reminds you that when the money runs out you're going to be airborne or dead.

Too little

money means not enough to get airborne. What airborne means depends on the

situation.Usually you have to advance to a visibly higher level: if all you have is an idea, a

working prototype; if you have a prototype, launching; if you're launched, significant growth.

It depends on investors, because until you're profitable that's who you have to convince.

So

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if you take money from investors, you have to take enough to get to the next step, whatever

that is. Fortunately you have some control over both how much you spend and what the next

step is. We advise startups to set both low, initially: spend practically nothing, and make your

initial goal simply to build a solid prototype. This gives you maximum flexibility.



10. Spending Too Much :



It's hard to distinguish spending too much from raising too little. If you run out of money, you

could say either was the cause. The only way to decide which to call it is by comparison with

other startups. If you raised five million and ran out of money, you probably spent too

much.

Burning through too much money is not as common as it used to be. Founders seem

to have learned that lesson. Plus it keeps getting cheaper to start a startup. So as of this writing

few startups spend too much. None of the ones we've funded have. (And not just because we

make small investments; many have gone on to raise further rounds.)

The classic way to burn

through cash is by hiring a lot of people. This bites you twice: in addition to increasing your

costs, it slows you down—so money that's getting consumed faster has to last longer. Most

hackers understand why that happens; Fred Brooks explained it in The Mythical Man-Month.



We have three general suggestions about hiring: (a) don't do it if you can avoid it, pay people

with equity rather than salary, not just to save money, but because you want the kind of people

who are committed enough to prefer that, and (c) only hire people who are either going to write

code or go out and get users, because those are the only things you need at first.


11.Poor Investor Management :



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As a founder, you have to manage your investors. You shouldn't ignore them, because they

may have useful insights. But neither should you let them run the company. That's supposed to

be your job. If investors had sufficient vision to run the companies they fund, why didn't they

start them?

Pissing off investors by ignoring them is probably less dangerous than caving in

to them. In our startup, we erred on the ignoring side. A lot of our energy got drained away in

disputes with investors instead of going into the product. But this was less costly than giving

in, which would probably have destroyed the company. If the founders know what they're

doing, it's better to have half their attention focused on the product than the full attention of

investors who don't.

How hard you have to work on managing investors usually depends on

how much money you've taken. When you raise VC-scale money, the investors get a great deal

of control. If they have a board majority, they're literally your bosses. In the more common

case, where founders and investors are equally represented and the deciding vote is cast by

neutral outside directors, all the investors have to do is convince the outside directors and they

control the company.

If things go well, this shouldn't matter. So long as you seem to be

advancing rapidly, most investors will leave you alone. But things don't always go smoothly in

startups. Investors have made trouble even for the most successful companies. One of the most

famous examples is Apple, whose board made a nearly fatal blunder in firing Steve Jobs.

Apparently even Google got a lot of grief from their investors early on.



12. Fights Between Founders :


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Fights between founders are surprisingly common. About 20% of the startups we've funded

have had a founder leave. It happens so often that we've reversed our attitude to vesting. We

still don't require it, but now we advise founders to vest so there will be an orderly way for

people to quit.

A founder leaving doesn't necessarily kill a startup, though. Plenty of

successful startups have had that happen. [11] Fortunately it's usually the least committed

founder who leaves. If there are three founders and one who was lukewarm leaves, big deal. If

you have two and one leaves, or a guy with critical technical skills leaves, that's more of a

problem. But even that is survivable. Blogger got down to one person, and they bounced

back.

Most of the disputes I've seen between founders could have been avoided if they'd been

more careful about who they started a company with. Most disputes are not due to the situation

but the people. Which means they're inevitable. And most founders who've been burned by

such disputes probably had misgivings, which they suppressed, when they started the company.

Don't suppress misgivings. It's much easier to fix problems before the company is started than

after. So don't include your housemate in your startup because he'd feel left out otherwise. Don't

start a company with someone you dislike because they have some skill you need and you

worry you won't find anyone else. The people are the most important ingredient in a startup, so

don't compromise there.



13. A Half-Hearted Effort :



The failed startups you hear most about are the spectactular flameouts. Those are actually the

elite of failures. The most common type is not the one that makes spectacular mistakes, but the

one that doesn't do much of anything—the one we never even hear about, because it was some

project a couple guys started on the side while working on their day jobs, but which never got

anywhere and was gradually abandoned.

Statistically, if you want to avoid failure, it would

seem like the most important thing is to quit your day job. Most founders of failed startups

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don't quit their day jobs, and most founders of successful ones do. If startup failure were a

disease, the CDC would be issuing bulletins warning people to avoid day jobs.

Does that

mean you should quit your day job? Not necessarily. I'm guessing here, but I'd guess that many

of these would-be founders may not have the kind of determination it takes to start a company,

and that in the back of their minds, they know it. The reason they don't invest more time in

their startup is that they know it's a bad investment. The biggest mistake you can make is not

to try hard enough. To the extent there's a secret to success, it's not to be in denial about that.



14.Not Wanting to Get Your Hands Dirty :

Nearly all programmers would rather spend their time writing code and have someone else

handle the messy business of extracting money from it. And not just the lazy ones. Larry and

Sergey apparently felt this way too at first. After developing their new search algorithm, the

first thing they tried was to get some other company to buy it.

Start a company? Yech. Most

hackers would rather just have ideas. But as Larry and Sergey found, there's not much of a

market for ideas. No one trusts an idea till you embody it in a product and use that to grow a

user base. Then they'll pay big time.

Maybe this will change, but I doubt it will change much.

There's nothing like users for convincing acquirers. It's not just that the risk is decreased. The

acquirers are human, and they have a hard time paying a bunch of young guys millions of

dollars just for being clever. When the idea is embodied in a company with a lot of users, they

can tell themselves they're buying the users rather than the cleverness, and this is easier for

them to swallow. [9]

If you're going to attract users, you'll probably have to get up from your

computer and go find some. It's unpleasant work, but if you can make yourself do it you have

a much greater chance of succeeding. In the first batch of startups we funded, in the summer

of 2005, most of the founders spent all their time building their applications.

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15. Marginal niche

Many of the applications we get are imitations of some existing company. That's one source of

ideas, but not the best. If you look at the origins of successful startups, few were started in

imitation of some other startup. Where did they get their ideas? Usually from some specific,

unsolved problem the founders identified.

Our startup made software for making online

stores. When we started it, there wasn't any; the few sites you could order from were hand-

made at great expense by web consultants. We knew that if online shopping ever took off, these

sites would have to be generated by software, so we wrote some. Pretty straight forward.

It

seems like the best problems to solve are ones that affect you personally. Apple happened

because Steve Wozniak wanted a computer, Google because Larry and Sergey couldn't find

stuff online, Hotmail because Sameer Bhatia and Jack Smith couldn't exchange email at

work.

So instead of copying the Facebook, with some variation that the Facebook rightly

ignored, look for ideas from the other direction. Instead of starting from companies and

working back to the problems they solved, look for problems and imagine the company that

might solve them. [2] What do people complain about? What do you wish there was?



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Overview of flipkart

Flipkart was founded in 2007 by Sachin Bansal and Binny Bansal , both alumni of the Indian

institute of technology in delhi . They worked for amazon.com and left to create their new

company incorporated in October 2007 as Flipkart online services pvt ltd. The first product

they sold was the book , “leaving Microsoft to change the world” to a customer in Hyderabad.

Flipkart now employees more than 33000 people. Flipkart allows payment methods such as

cash on delivery , debit and credit cards , net banking , e-gift vouchers and card swipe during

delivery.

But in end 2018, both owners quit and now it is solely owned by WALMART.

FOUNDERS OF FLIPKART-SACHIN BANSAL AND BINNY BANSAL

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CHALLANGES FACED BY FLIPKART

The eCommerce industry in India is growing at a remarkable pace due to high penetration of
internet and sophisticated electronic devices. However, the recent growth rate
of eCommerce in India is far lagging behind than other developed countries. There are many
big problems and challenged on the way of an online merchant. Factors like safety and security
of online money transaction being the biggest problem along with others, have curb the smooth
expansion of the online industry in the country.

Although, major portion of e-business sectors have affected by the below mentioned
challenges but still there are few online giants like Makemytrip.com, flipkart.com,
Snapdeal.com who have overcome the challenges and represents the perfect growth trends of
eCommerce in India.

• Poor Knowledge and Awareness: When it comes to ratio of internet consumers, scenario
is not so admirable one. Majority of Indian rural population are unaware of internet and it
uses. Surprisingly, most of internet savvies or urban population are also suffering from poor
knowledge on online business and its functionalities. Very few are aware of the online
corruption and fraud and thus darkness still exists. A reliable survey reveals that 50% of
Indian online users are unaware of the solution of online security.

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• Online Transaction: Most of Indian customers do not possess plastic money, credit card,
debit card and net banking system, which is one of the prime reasons to curtail the growth of
ecommerce. Nevertheless, in recent years, some of the nationalized banks have started to
issue debit cards to all its account holders. This is undoubtedly a positive sign for Indian
online entrepreneurs.

• Cash On Delivery:Cash on Delivery (COD) has evolved out of less penetration of credit
card in India. Most of Indian E-commerce companies are offering COD as one of mode of
payment for the buyers. 30%-50% of buyers are also taking advantage of this mode of
payment while making purchase of any product and service over internet. COD has been
introduced to counter the payment security issues of online transaction, but this mode has
been proving to be loss and expensive to the companies. It is seen that majority of the
customers denied to make the payment at the time of delivery of the product. Hence,
companies tend to lose the sale along with product transit fees. In order to curb the problem
of COD, online companies should take some judicial steps; otherwise basic logic behind the
ecommerce business will be at risk.

• Online Security : In case of start up and small business, Business owners are ignoring the
importance of authentic software due to budget constraints. They are even failing to take the
initial steps to secure and protect their online business through installation of authentic
protection services like antivirus and firewall protection, which indeed a crucial step for
successful online business players.In India, maximum number of business entrepreneurs used
unauthorized software in their server, which usually does not come with upgraded online
security. Such pirated software leaves room for virus, malwares and Trojan attacks and it is
highly risky task to make online transactions in the systems, which may disclose or leak
sensitive details of credit cards and online banking of the users. These kinds of droopiness
should be banned in Indian ecommerce sectors. Affiliation to SSL certificate should be
imposed as a mandatory action for every owner.

• Logistics and Shipment Services: In India, logistics and courier services required lots of
improvement. While, perfect and strong logistics service is one of the key reasons behind the
success of any online company, India is lagging far behind in this sector as most of the town
and small villages are still not covered under serviceable area of many of the courier and
logistic companies. Ecommerce is hampered in a big way owing to the limited services
offered by the courier service companies.

• Tax Structure: Tax rate system of Indian market is another factor for lesser growth rate of
eCommerce in India in comparison to other developed countries like USA and UK. In those
countries, tax rate is uniform for all sectors whereas tax structure of India varies from sector
to sector. This factor creates accounting problems for the Indian online business companies.

• Fear factor: Fear of making online payment is a universal psychological factor of Indian
customers. With the spread of knowledge on online transactions and its reliability, some
percentages of customers have overlooked this fear and they are fearlessly engaging
themselves in online shopping. But still, majority of customers are not aware of online
transactions and its security. They often reluctant to disclose their credit card and bank details
and preferred to stay away from online world of shopping.

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• ‘Touch and Feel’ factors: Indian customers are more comfortable in buying products
physically. They tend to choose the product by touching the product directly. Thereby, Indian
buyers are more inclined to do ticketing and booking online in Travel sectors, books and
electronics. Companies dealing with products like apparel, handicrafts, jewelry have to face
challenges to sell their products as the buyers want to see and touch before they buy these
stuffs.

Relief to startup problem by govt initiative

On 16th of jan2016 , PRIME MINISTER MR.NARENDRA MODI announced a bunch of

schemes to promote startup ecosystem in india. The event was called “STARTUP

INDIA,STANDUP INDIA” . It has immense importance because for starters ,it was the first

of its kind dialogue between India’s startup community and the government

Startupindia is a flagship initiative of the government of india, intended to build a strong

ecosystem for nurturing innovative and start-ups in the country

This will drive sustainable economic growth and generate large scale employment

opportunities. The government through this initiavties aims to empower start-ups to grow

through innovation and design

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Benefits provided under the Start-up scheme implemented and led

by the Indian PM,NARENDRA MODI

• Compliance regime based on self – certification

• Start up Indian hub

• Rollout on mobile application and portal

• Legal support and fast tracking patent examination at lower cost

• Relaxed norms of public procurement for start ups

• Faster exits for start-ups

• Providing funding support through a “fund of funds” with a corpus of INR 100 crore

• Credit guarantee fund for start-ups

• Tax ememption on capital gains

• Allowing start-ups to quit if they fail to get into the market

• Tax emeption to start-ups for 3 years

• Tax exemption on investment above fair market value

• Organising startup fests for showcasing innovations and providing a collaboration

platform.

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Chapter : 02

RESEARCH METHODOLOGY

RESEARCH PROBLEM :-

A research problem in general,refers to some difficulty which a researcher experiences in the

contex of ethier a theoretical or practical situation and wants to obtain a solution for the

same.Problem states that there are various obstacles faced by an individual at the time of

starting a company.Problems may vary from individual to individual.

OBJECTIVE OF STUDY :-

• To study the challenges faced by a start up company

• To compare the challenges of a start up company and an established company

SCOPE OF STUDY :-

This study has been an attempt at examining the variousgeographical , financial, and various

other factor that create problems for start-up companies in Mumbai city. In future research

researcher can use big sample size and they can go to different cities in the country.

• To study the challenges faced by a start up company

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• To compare the challenges of a start up company and an established company

For the intensions to complete this research project in concentrated and comprehensive manner,

the scope was restricted to South Mumbai.

Hypothesis :-

A hypothesis is a specific statement of prediction. It describes in concrete (rather than

theoretical) terms what you expect will happen in your study. Not all studies have hypotheses.

Sometimes a study is designed to be exploratory (see inductive research). There is no formal

hypothesis, and perhaps the purpose of the study is to explore some area more thoroughly in

order to develop some specific hypothesis or prediction that can be tested in future research. A

single study may have one or many hypotheses.

Actually, whenever one talks about a hypothesis, one is really thinking simultaneously about

two hypotheses. Let's say that you predict that there will be a relationship between two

variables in your study. The way we would formally set up the hypothesis test is to formulate

two hypothesis statements, one that describes your prediction and one that describes all the

other possible outcomes with respect to the hypothesized relationship. Your prediction is that

variable A and variable B will be related (you don't care whether it's a positive or negative

relationship). Then the only other possible outcome would be that variable A and variable B

are not related. Usually, we call the hypothesis that you support (your prediction) the alternative

hypothesis, and we call the hypothesis that describes the remaining possible outcomes the null

hypothesis. Sometimes we use a notation like HA or H1 to represent the alternative hypothesis

or your prediction, and HO or H0 to represent the null case. You have to be careful here, though.

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In some studies, your prediction might very well be that there will be no difference or change.

In this case, you are essentially trying to find support for the null hypothesis and you are

opposed to the alternative.

If your prediction specifies a direction, and the null therefore is the no difference prediction

and the prediction of the opposite direction, we call this a one-tailed hypothesis. For instance,

let's imagine that you are investigating the effects of a new employee-training program and that

you believe one of the outcomes will be that there will be less employee absenteeism. Your

two hypotheses might be stated something like this:

The null hypothesis for this study is:

HO: Finance is not the major problem for start up company

Which is tested against the alternative hypothesis:

H1: Finance is a major problem for start up company

Similarly for this study,

Null Hypothesis: There is no difference between the challenges faced by start up

companies and those faced by an established company.

(Here a start up is a company, which is less than 5 years old, and an established company

being more than 5 years old)

Alternative Hypothesis: The challenges faced by start up companies are greater than

those faced by established companies.

This study proves the alternative hypothesis to be true

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Data Collection

Primary Data :-

A questionnaire was developed to measure the various problems faced by start up companies

South Mumbai. The questionnaire consisted of questions concerning the level of influence on

individual and demographic information of respondents. Some of these questions were multiple

choice question and some questions were in nominal scale where the respondents had to answer

(Yes or No).Lastly, the questionnaire also consisted questions to solicit demographic

information of the respondents such as gender, age and occupation. Questionnaire was hand

carried and personally explained to respondents. The respondents were asked to fill

questionnaire completely.

Secondary Data :-

Detailed review of literature from secondary sources would provide the base for identifying the

domain, selection, designing and inclusion of various measuring variables in the questionnaire

for the study. We have also used various tools of secondary data, which include below

operations-

• Books

• Internet

• Articles

• Magazines/Progress Reports

• newspapers

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Sampling method:

Random sample method

A random sample method is one chosen by a method involving an unpredictable component.

Random sampling can also refer to taking a number of independent observations from the same

probability distribution, without involving any real population. The sample usually is not a

representative of the population from which it was drawn –this random variation in the results

is known as sampling error

Sample size :

In order to carry out a research or study it is extremely difficult to generate primary data from

a considerate amount of start-up companies. In the limitations, the sample size was thought

proper to cover a very small percentage of start-up companies in various lines of business.

Hence sample sizes of 5 companies will be taken.

Research type:

Survey research done by asking questions prepared by researchers and has been asked to 20

people

Research instrument:

Questionnaire (Closed and Open ended questions) 100 random people.

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Testing of Hypothesis:

Entire testing was done using diagrammatic representation of data collected.

Research limitation :-

The outcome of this research shows comprehensively integrated framework for us to

understand the vibrant relationships among demographic factors and consumer decision-

making. However, with further efforts these factors can be examined in a better manner with

additional samples before generalization can be made.

• The research was conducted in a very limited or specific area namely, south Mumbai

area of Mumbai city, Maharashtra, India, which is moreover an upper class crowd

hence it has led to reflecting a similar trend in the responses. The results of the same,

if conducted in other part of the country or the city of India may vary. It is because

country like India is geographically, economically, socially, and culturally very

different.

• The sample size is very small (N=5) in order to analyze or observe consumer decision

making there are various minute factors that bring about a difference. In order to capture

the trends of the consumer a much bigger sample space was required. The small size is

also error prone.

• Various apprehensions that are based upon information gathered from the internet can

be incorrect.

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• Time acted as a major constraint since it was a block from capturing the college of

Mumbai city.

• Respondent may be biased and some respondents were reluctant to give the information

& were not eager to give more time to answer the questions properly.

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Chapter : 03

REVIEW OF LITERATURE

6 start-up mistakes to avoid (Times of India)

Chandralekha Mukerji & Amit Kumar | Mar 3, 2014

Starting your own business venture is a tempting thought. You can be your own boss instead

of being hectored around. Yet, being your own boss is no easy task. To begin with, one of the

biggest challenges that new entrepreneurs face is to convert the idea into a profitable business

model. Have you done sufficient research? Should you approach a venture capitalist or a bank

to fund your business? How much time should you give to your business to start churning

profits? Is it a time to start a business or wait till you gain the required experience?

Experts say that the first year of a venture is the most crucial. It can make or break the business.

You make one mistake and it will run over the business. We look at some of the common

mistakes that fresh entrepreneurs make in their first year of starting a business. Find out how

you can avoid doing so.

Not doing adequate research

There is no dearth of ideas and types of ventures that you can pursue. However, the tough part

is testing the hypothesis—converting your idea into a viable business model, which is not

possible unless you have done sufficient market research. Whether you decide to do it formally

or informally, you will need data on the size of the potential customer base, competition and

external business environment, to be able to clearly define your revenue channels.

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Moving ahead on flawed assumptions

Even thorough research can't guarantee success . There could still be a few bugs in your

business model, often in the initial financial projections and the whole business math around

it. For Rutvik Doshi, former CEO of Taggle.com, a group buying site, it was a combination of

incorrect estimates of the marketing expenses, sale projections and a gross underestimation of

the competition. The money required to spend on acquiring a consumer was 10 times more

than that he realised from a sale. "The quantum of business we were generating was not

sufficient to cover the marketing cost. However, instead of objectively analysing the situation,

we were continuously trying to find fault with our team, sales team and employees, putting

pressure on them to fix problems and bring more business. Later, we found that it was more a

systemic problem. We had blind faith in the growth projections and that brought us down,"

says Doshi, who himself is a venture capitalist now at Inventus Capital Partners.

Scaling up too early

After the business has been launched, the entrepreneur starts looking for growth. Even if you

are able to generate a lot of consumer interest , you ultimately have to scale up the business to

make it grow. When you test a prototype or launch a product in a small market, the results are

based on a limited experience. However, this changes dramatically when you actually begin

operations or reach out to a wider market. In hindsight, Doshi realises that their decision to go

pan-India was premature and a reason that led to its failure

Not keeping tabs on expenses

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Keeping the overhead costs low is essential for a start-up . Whether it is on furnishing the office

or buying machinery, you have to be as frugal as you can be. If you are smart like Pritam Hans,

you can find a cheaper option that is actually better.

Underestimating manpower needs

The golden rule of entrepreneurship is not to waste time on something that can be done by

someone in a faster, better and, perhaps, cheaper manner. To run the business, you need a team

that can take care of various peripheral aspects and leave you with the core functions

Not maintaining a financial buffer

Many people hesitate to start a venture because they are the sole breadwinners for their families

and the loss of a regular monthly income can pose problems. A working spouse can ease the

pressure. Ask Bhaskar Chattopadhyay, who started Art Square in November 2012 with a seed

capital of 3 lakh.

Startup India has been promised an initial capital of 10K crore over a period of four years from

the government. This seed capital is capable of attracting tenfold investment by 2022. Credit

guarantee for startup lending is another booster. Startup plan unfolded on January 16, 2016 in

front of domestic and international entrepreneurs. Internet-based businesses from food to

fashion, health to education, and travel to payment platforms- all have taken Centre stage

recently. Industry expectation from the Government is reciprocal. Few industry leaders who

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are championing Startup India want high bandwidth, tax breaks on budget smartphones

supporting vernacular languages, simpler KYC norms, and improved access to electricity and

credits. They are interacting with policy makers to weed out regulations which act as a brake

to investments. Crisp documentation is a pipedream for the young, technology savvy, smart

entrepreneur. The developed countries have worked hard to make startup operations simple. It

is this backdrop which makes policy making challenging and interesting enough for the

government of the day. The Prime Minister unveiled a 19-point agenda to take forward the

startup culture. The action plan included tax sops, ease-of-doing business, innovation to help

entrepreneurs to startup and grow their business(Forbes India, Startup India, January 18, 2016)

Charumathi (1997) examined emerging challenges and prospects of women entrepreneurs in

India keeping in view the increasing infrastructure, education level and awareness regarding

upcoming opportunities among women. Author investigated into entrepreneurship qualities to

find strength, weakness and threats by studying 50 women entrepreneurs of Tamil Nadu. It was

concluded that women were still not able to handle risks in a calculated manner and enterprise

held second priority, first was home. Women considered business as an opportunity to get

themselves recognized as equal in society. Challenges faced by women entrepreneurs were

behavioural barriers, gender role ideology, delimiting the outside movement, access to credit

and technology, and outside support from Government and other agencies. Future need for

upgrading, socio-economic conditions, raising educational level, unbiased social attitudes,

framing industrial development programmes and implementation of less restrictive practices

for systematic development of women entrepreneurship was suggested. Author concluded that

Gujarat is one of the best states regarding entrepreneurial practices and development

Ganesan, Kaur and Maheshwari (2002) studied the problems faced by women entrepreneurs

and highlighted the future prospects and challenges relating them. The author further studied

the role that training and development programmes can play in promotion of women

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entrepreneurs. Middle aged women were found to be more motivated in comparison to young

women. More problems 15 were faced at external front and male dominated areas. Stereotyped

image of gender roles was the main cause of obstacles. Trained women entrepreneurs could

handle problem easily in comparison to un-trained women entrepreneurs thus emphasizing the

benefits of training and development programmes. Marketing, financing and networking issues

continued to remain as problems. Need for focused training, up gradation of managements,

marketing and networking skills through use of proper developmental model was suggested.

Bhagmar and Verma B.L (2006) in their study on “Spirit of entrepreneurship: The Only Way

to Success”, revealed that the non-quantifiable secret of successful entrepreneurs is the ability

to unlesh the imagination and to conceive an over-arching vision. The opportunities are there,

waiting to be discovered. But as is true of the wilderness, not too many dare to treat the

unexplored ground.

Keshav Kumar (Volume3, Issue 4, April 2015, International Journal of Advanced

Research in Computer Science and Management Studies) ,in the paper titled ‘Indian Online

Startups: Can they Stand up Against The World’ “emphasised upon the fact that the rise in the

number of startups has been bumpy over the last decade, because of lack of support of

government, market and blinded vision of the business aspect. However, before entering any

of these segments, it was found important for the startup to have a realistic business plan along

with customer validation.” Vanni Vyas in her blog, 27th September 2016 emphasised upon

‘deficit?’ Growing passion deficit in an organisation could be a threat to an organisation's

productivity, talent retention, and the bottom line. Let's read to understand how HR

professionals could identify this growing concern and what could be done to kindle passion

amongst employees.

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Aldrich and Von Glinow (1992, Administrative Science Quarterly September), examined

the effect prior founder experience might have on human resource policies in SMEs. It was

found that significant deviations from traditional HR policies may break the idea of fairness in

the mind of the employee, and the founder may take up such endeavours, based on their earlier

business experience, without recognizing its impact in the startup.

Bakerand Aldrich (1994, A General Theory of Entrepreneurship: The Individual-

opportunity Nexus) observed the hiring practices of startup entrepreneurs. It was observed

that they tend to hire at the top and bottom of the firm, without much consideration on the

middle of the organization, and that recruitments appear to be whimsical.

Barber et al.(1999,International Handbook of Entrepreneurship and HRM) compared the

recruitment practices of small and large firms, mentioned some of the practices that differ

significantly between the two. The study notes that employees have definite size preferences

in the organisations they apply to and that this forms part of the employee’s selection criteria.

The study suggested treating small and large firm labour markets as almost peculiar entities.

Cardon and Tolchinsky (International Handbook of Entrepreneurship and HR)

commented on various staffing methods and their impact on the start- 102 ups. They offer the

view that the mix of direct hire, PEO and contingent labour, based hires must be diversified in

the firms depending on the required flexibility, speed, HR commitment, mental model, and

control over the dynamics of that firm.

Agarwal V.K (1975) in his study on “Initiative, Enterprise and Economic Choices in

India” revealed that the entrepreneurship entitles the ability to identify the resources and

perceive their economic potential and shows a willingness to utilise these resources and to

invest in their development, deferring immediate rewards in favour of future investment.

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Sharma R.A (1980) in his study on “Entrepreneurial Change in Indian Industry” revealed

that entrepreneur as one who through new combinations of means of production introduces

new goals, new methods of production, new markets and a new source of supply of

manufactured goods and carries out effective organization of any industry.

Nandapurkar G.G (1982) in his study on “Small Farmers – A Study on their

Entrepreneurial Behaviour”, revealed that entrepreneurship is essentially a function. It is

creativity and behaviour manifestation of a person in regard to shifting resources from areas of

low productivity to higher productivity. Its traits are willingness to take risk, high economic

and achievement motivation, self- 11 confidence, problem solving disposition, adequate

knowledge and skill, ability to face situations and good managerial ability.

Uddin (1989) conducted a study on “Factors affecting Entrepreneurial growth;

Entrepreneurship Development in India” found that the developing countries women

entrepreneurs face considerable repercussions within their families and social relationships

because of the role transformation from that of the traditional homemaker to a business person.

To cope with these psychological stresses women require great confidence and mental resolve.

Researchers do believe that these psychological traits like need for achievement, power, and

affiliation are those that can be developed.

Pillai and Anna (1990) conducted a study on “The Entrepreneurial Spirit among Women

-A study of Kerala”, found that the entrepreneurs depend on financial support from the State

and that familial assistance was used only as a secondary source of help. Yet, women had cited

family support and encouragement as the highest facilitating factors for them to do business.

The study further found that women in Kerala were “not coming forward to take industrial

ventures which demand initiative and dynamism”.

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Balasubramanya (1995), Vepa (1997), Thangamuthu and Murugesan (2005) conducted a

study on “Reservation policy for small scale industry; Has it delivered the Good?”. The

findings revealed that irrespective of size, raw material is the major bottleneck. The study

further found that transportation difficulty and competition are the major problems for

entrepreneurs.

Rani (1996) in her study entitled “Women Entrepreneurs” revealed that an entrepreneur

is very different from a non-entrepreneur in social and psychological disposition.

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Challenges in biotech startup

Aravind Durai ,Bin Li ,Sunil Metkar ,Monica Pelayo ,Natasha Phillips

Biotechnology refers to the large and growing array of scientific tools that use living cells

and their molecules to make biological products for many different industries. Human

and animal health care, agriculture, forestry, environment, and specialty chemicals are

among the industries that have benefited most from biotechnology. The economic

promise of biotechnology is extraordinary. At present a $60 billion sector worldwide, it is

estimated to become a market of at least $120 billion annually within 10 years. Although

this is a high-growth sector, moving a promising research discovery to market is a

complex, costly and challenging undertaking.

In this paper we have identified and addressed challenges that are unique to a

biotechnology startup. The approach used to compile the information included a

combination of interviews with Chicago-based bio-entrepreneurs and research using

industry journals, business databases and newspaper articles.

The challenges of starting a biotechnology company in the US include raising capital,

building strategic partnerships, recruiting, motivating and retaining top scientific talent

and compliance with regulatory bodies. Running a biotechnology company entails

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challenges in manufacturing, sales and marketing, reimbursement and several other

managerial challenges. The goal of this paper is to serve as a high-level guide to an

entrepreneur planning to venture into the biotechnology sector

CONCLUSION

Despite the many challenges described above, the biotech industry is one of the most

exciting and challenging industries in which to undertake a startup venture. Hopefully

the insights from the case studies and the analyses can be used to effectively address

some of the managerial challenges one would encounter in a biotech startup. LeAnne

Tourtellotte stated, “All startup companies, biotech or other, face a list of 10-15

managerial challenges at all times and have limited resources to solve these issues.

The current situation of each firm will determine which issues are most urgent and

significant, and hopefully a good management team will execute the best course of

action.” Peter Johnson, Executive Director of Corporate Strategic Planning, Eli Lilly

and Company, echoed this sentiment when he stated, “All strategy is situational.”

Successful bio-entrepreneurs with a solid product who can effectively identify and

prioritize the key managerial challenges and subsequently develop a strategy to

address these challenges stand a good chance for success. Biotech startups do face

several challenges that no other industry startups face, but also face incredible and

unique promise if they succeed: the chance for the next breakthrough life-saver that will

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improve the lives of generations to come.

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Chapter no.4

ANALYSIS AND INTERPRETATION:

The following analysis was done to obtain the findings in accordance with our objectives
determined during the course of study. The main aim was to find out what is the main
challenges faced by various startup companies in south Mumbai

The questionnaire was filled by 100 respondents. Out of 100, 22 are females and 78 are males.
The age of the respondents are different. Most of them are youngster who have started up a
new company or a business.

So here are the questions along with answers .

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Q.2. Do you have your own start-up or you wish to set up your own business in future?

a. Yes

b. No

c. Maybe

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Q3. 3) What factors enable people to start-up their own business/company?

a. Dislike towards Job Environment

b. No Family Business

c. Interest of starting something on their own

d. Other

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Q.4 What factors are needed to set up a successful start-up?

a. Be Persistent

b. Know Your Customer

c. Hire Right Employees

d. Communicate Constantly

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Q5.Do you think women face more challenges/barriers than men while starting a business?

a. Yes

b. No

c. Maybe

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Q.6. What do you think is the biggest challenge faced by start-up companies?

a. Financial Resources

b. Revenue Generation

c. Creating Awareness In Markets

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Q.7. 7) What are the possible risks that are associated with start-up companies?

a. Product Risk

b. Competitor Risk

c. Market Risk

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Q8)8) What has been the impact of GST on start-ups?

a. Positive

b. Negative

c. Neutral

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Q.9. What do you think has been the impact of COVID -19 on start-ups?

a. Positive

b. Negative

c. Neutral

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Q.10.What steps can be taken by the government to tackle the challenges faced by start-up

companies?

a. Introducing More Financial Assistance Schemes

b. Introducing More Schemes For Technology Upgrade

c. Introducing More Schemes For Marketing

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FINDINGS

1). Out of 100 respondents,78 of the respondents were female and 22 were male respondents

2.) Among 100 respondents, 54% respondents they had their own start-ups or they wished to
start their own business in future, 23% of respondents did not had start-ups or wished to start
their own business in future,23% of respondents maybe wanted to start up their own business.

3.) Among 100 respondents,

a) 43% respondents chose dislike towards job environment

b) 1% respondents chose they had no family business

c) 52% respondents chose they had interest of starting something on their own

d) 4% respondents chose other as a option.

4.) Among 100 respondents

a) 35 % respondents chose option to be persistent

b) 23 % respondents chose option to know your customer
c) 24% respondents chose option to hire right employees
d) 18% respondents chose option to communicate constantly

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5.) Among 100 respondents,

a) 45% respondents thought that yes women face more challenges to start up their own
business.
b) 20 % respondents thought that no women do not face more challenges to start up their
own business.
c) 35 % respondents thought that women may face more challenges to start up their own
business.

6.) Among 100 respondents,

a) 44 % of respondents thought that financial resources are the biggest challenge faced by
start-up companies

b) 35 % of respondents thought that revenue generation is the biggest challenge faced by

start-up companies

c) 21 % of respondents thought that creating awareness in markets is the biggest challenge

faced by start-up companies

7.) Among 100 respondents,

a) 26 % of respondents thought that product risk is the possible risk that is associated with
start-up companies

b) 47% of respondents thought that competitor risk is the possible risk that is associated with
start-up companies

c) 27 % of respondents thought that market risk is the possible risk that is associated with
start-up companies

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8.) Among 100 respondents,

a) 35% of respondents thought that there has been an positive effect of GST on start-up
companies

b) 36% of respondents thought that there has been an negative effect of GST on start-up
companies

c) 31% of respondents thought that there has been an neutral effect of GST on start-up
companies

9.) Among 100 respondents,

a) 11% of respondents thought that there has been an positive effect of COVID-19 on start-
up companies

b) 81% of respondents thought that there has been an negative effect of GST on start-up
companies

c) 8% of respondents thought that there has been an neutral effect of GST on start-up
companies

10.) OUT OF 100 respondents,

a) 54% of respondents thought that introducing more financial assistances schemes by

government can help to tackle the challenges faced by start-up companies

b) 23 % of respondents thought that introducing schemes for technology upgrade by

government can help to tackle the challenges faced by start-up companies

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c) 23 % of respondents thought that introducing more schemes for marketing by government

can help to tackle the challenges faced by start-up companies

SUGGESTIONS TO OVERCOME CHALLENGES FACED BY START-

UP COMPANIES

It’s every entrepreneur’s dream to help their business thrive and grow into at least a medium-
sized enterprise. The numbers may not be very encouraging, but if you take into account that
most large companies that we know today started as micro-enterprises, often without any
offices, you have to believe that it’s possible to make such transition.
Still, you have to be aware that there are many obstacles on the way to the top and that you’ll
never get there unless you overcome them. The better prepared you are, the better your chances
of achieving success, and you also have to make sure you prevent any realistic problems from
occurring in the first place. That will not only help you achieve better results, but you’ll also
avoid having to deal with various distractions. So, what is it that a start up owner needs to do?

1) Recruit well
Needless to say, no matter how great your business idea may be, you won’t get very far if you
don’t have the right people to turn your idea into reality. You need to know exactly what
professional and personal characteristics successful candidates should have. The sooner you
get the right team, the sooner you’ll be able to achieve your targets. Making a mistake in
the recruiting process means that you’ll have to interrupt the work process and focus on finding
a suitable replacement.

2) Financial issues
Even with the right people and the right idea, you still run a risk of failing if you don’t know
how to manage your finances. Having enough funds for setting up a business is crucial, but you
also need to be careful when planning your expenditure before you actually start making

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enough money. The most typical problems for start ups include underestimating start up costs,
monthly expenses and setting a wrong price for the product or service. That’s why, for example,
many start ups in Australia, which is recording an increasing number of new businesses, are
choosing to hire experts in financial services in Sydney to help them with all the matters related
to finances.

3) Company culture
Your company culture will evolve as your business grows, but you need to make sure you start
well. Your beliefs and mission should be at the core of everything you do, clearly reflected in
every aspect of your business. If your employees share your vision and are clear about what is
expected from them, they’ll be more focused on the tasks, which will greatly improve your
productivity.

4) Make yourself known

Even though it’s difficult to find finances to advertise your offer before you actually start
generating income, you simply have to invest in advertising. Luckily, you no longer need to
spend a lot of money on print advertising material, which does cast your net wide, but is
generally inefficient. Instead, focus on the benefits of digital marketing, where it’s much easier
and cheaper to target specific groups. Have a word with an expert in content marketing, for
example, and see how they can help your business.

5) Nourish customer loyalty

The one thing without which there is no success in the business world is the customers. If no
one is interested in what you are offering, your entrepreneurial story will be over very quickly.
On the other hand, providing exactly what the customers want, at an affordable price and with
great customer support will help you create a network of loyal customers, who trust your brand.
You have to be ready to hear what they have to say about your product and turn their
suggestions and complaints into reality and their satisfaction. Establishing a loyalty programme
is one of the most efficient ways of making a start up popular. You need to remember that
satisfied customers are your most trustworthy promoters.

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These tips are just some of the most important ones for every start up, regardless of the line of
business. Naturally, there are other aspects of running a business that require your attention,
but the tips given here deal with the most typical problems. If you manage to overcome these
challenges and learn from any potentially problematic situation, your business will have much
better chances of surviving the initial phase and developing into a reputable enterprise.

6) Finding Partners
As brilliant and capable as you are, you may not be able to do everything your venture needs

all by yourself. If you’re like most successful entrepreneurs, you’ll need collaborators.

Identifying suitable people can be tricky, because your friends may not be suitable work

partners and those you don’t yet know well may not end up being compatible.

Drafting a list of people you’ve worked with in the past can be a good way of identifying

potential collaborators. Industry gatherings, social circles and alumni networks can also be

useful. Run through your LinkedIn connections and review other social network contacts. If

there’s someone who might be a good fit, see if you can collaborate on a small project to test

compatibility. Plan an event together or collaborate on an article. If friction arises or you find

it difficult to make progress together, that can be a useful warning sign. If you identify someone

who seems like a good fit, consider a short-term trial. That gives you the option of separating

amicably if things don’t work out.

7) Partnerships decision making

Due to the lack of funds, one of the ways of funding a start up launch is through a
partnership. In the ever-changing and ever-expanding digital era, organizations need to fight
hard in order to survive, and start ups also find it hard to find partners that are trustworthy.
Stakes in a partnership are much higher for tech start ups, as their whole business based on
current tech trends can be ruined when these trends fade away and get replaced by another.

When going into a partnership, start ups need to consider different factors before deciding to
collaborate with another company in the same niche industry. Start up businesses should look

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companies that enjoy a good reputation amongst the industry giants and strong presence in
the market.

Growing pains are to be expected when you’re scaling and growing a business, and they’ll
get bigger as you add more employees, customers, and regions. Some of the presented
challenges may come along on your way to success, but with careful consideration and
planning, you can make a successful transition from an early-stage start up to a more
established business. Get your troops and weapons ready, and start reaching your growth
goals one by one.

8) Company culture

Company culture always comes first, and it naturally evolves and shifts as a business grows.
The values that made your company great in the first place should be held at the business’
core. As a business leader, you should ensure your business is kept aligned with its beliefs
and mission, and can do it by establishing a set of values to which one can link every
business decision.

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GOVERNMENT SCHEMES FOR START-UP COMPANIES.

1) Start-Up India Seed Fund

On 16 January 2021, Prime Minister Narendra Modi announced the launch of the 'Start up
India Seed Fund' — worth INR 1,000 crores — to help start-ups and support ideas from
aspiring entrepreneurs. PM Modi said that the government is taking important measures to
ensure that start ups in India do not face any capital shortage.

2) Start-up India Initiative

The Prime Minister of India launched the Start-up India Initiative in the year 2016. The idea
is to increase wealth and employability by giving wings to entrepreneurial spirits. The
government gives tax benefits to start-ups under this scheme and 798 applicants have made
use of this scheme to date. The Department of Industrial Policy and Promotion is maintaining
this initiative and is treating it as a long term project. Moreover, the overall age limit for start
ups has been increased from two years to seven years. And for biotechnology firms, the age
limit is ten years from the date of incorporation. It is one of the best government-sponsored
start up schemes for entrepreneurs as it is provides several concessions.

3) Aspire

The government has made continuous efforts to improve the social and economic aspects of

life in rural areas of India. Since 56% of the Indian population lives in the rural areas, the

government is promoting entrepreneurship and innovation in the rural sector. The ASPIRE

scheme aims at increasing employment, reducing poverty, and encouraging innovation in

rural India. However, the main idea is to promote the agro-business industry. The Ministry of

Medium and Small Enterprises has tried to boost economic development at the grassroots

level. The total budget of the scheme was INR 62.5 crores for the period of 2014-2016.

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4) Mudra Bank

Micro Units Development Refinance Agency (MUDRA) banks have been created to enhance

credit facility and boost the growth of small business in rural areas. The government has

introduced this scheme to support small businesses in India. In 2015, the government

allocated INR 10,000 crores to promote start-up culture in the country. The MUDRA banks

provide start-up loans of up to INR 10 lakhs to small enterprises, business which are non-

corporate, and non-farm small/micro enterprises. MUDRA comes under Pradhan Mantri

Mudra Yojana (PMMY) which was launched on 8 April 2015. The loans have been

categorized as Tarun, Kishore, and Shishu. The assets are created through the bank’s finance

and there is no collateral security.

CHAPTER 5

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CONCLUSION

This study gave us an insight into various problems/challanges faced by start-ups

in india. These challanges come as a road block for the firms wanting to establish themselves

into the already competitive market.

So , a startup should always be aware of these hurdles and instead of going around it they

should rather go over it,taking all necessary precautions and learning from the mistakes that

have been committed in the past by the other startup companies.

From this study, one concludes that a startupwill face plenty of problems and they

must tackle them tactfully to succeed in the market.

Most of the problem and challanges faced by the startup is either relating to finance or

no proper workforce. A proper startup should ensure that finance is allocated properly

and proper team , leader , and a work force is selected in adavce so that so startup goes

well in the start.

The government of india ,led by MR.NARENDRA MODI has takes various steps to make

entry and exit into the markets for new companies(start-ups) very easy and convinent . further

many tax implications and other policies have been lifted to easy the working environment of

start-ups. All this has made it very attractive for a startup to operate in the environment.

A study on flipkart reveals that the entry into the market is not at all easy for the co-

founders ,but by sticking to the core principles they have ensured a firm position in the

market and now they are becoming leading e-sellers of our country and with this pace they

may enter the international market by early 2020

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BIBLIOGRAPHY

Most of the Information is taken through a survey done through various questions asked to 20

people who has just started a new company .

Some information was taken for scripts of ;

Yale Brozen “Determinants of Entrepreneurial Ability”

Yukl, G. A “ Leadership in Organization “

Some of them through websites :

www.google.com

www.wikipedia.com

www.scirbd.com

www.gov.initivaitve.in

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Annexure

Note: Please take a few minutes to complete this survey. Your specific answers will be

completely anonymous. But your views, in combination with the others are extremely

important. The response given will be used for academic purposes only.

Name of the Company:

Date of Inception:

Founder:

Contact:

Website:

Gender:

Questions:

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1)WHERE DID U GET THE IDEA OF YOUR COMPANY?

a) Your own idea

b) Your partner’s idea

c) already established startup

2) What factors enabled you to start this company?

a) Dislike towards job environment

b) No family business

c) Interest to start something of my own

d) Others _ _ _ _ _ _ _ _ _ _ _ _

3) Name the difficulties you faced while starting this company.

a) Marketing/ Recognition

b) Financial Insufficiency

c) Lack of workforce

d) Lack of Technology

e) Others _ _ _ _ _ _ _ _ _ _ _ _

4) Have you been fully successful in overcoming these challenges?

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a) 0% to 25%

b) 25% to 50%

c) 50% to 75%

d) 75% to 100%

5) What do you picture this company to be in the next 5 years?

6) How did you finance this company?

a) Venture Capitalist

b) Bank Loan

c) Personal sources

d) friends and relatives

7) Was there any difficulty in getting the workforce/a team for this company?

a) Yes

b) No

8) If Yes, how did you get a workforce?

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a) Friends and References

b) Campus Recruitments

c) Newspaper Advertisements

d) Word of Mouth

9) When you started of, what was the level of risk involved?

a) 0% to 25%

b) 25% to 50%

c) 50% to 75%

d) 75% to 100%

10) Is it true that if you had sold the idea of your product/service to an already established

company it would do better?

a) Yes

b) No

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