Startups, especially tech startups have become the barometer of enterprise in our times. They are a measure of ambition, risk taking ability, vibrancy and youthfulness of the society and its ability to innovate and find solutions for its members.

India accounts for a small fraction of tech-startups incepted and funded worldwide. Perhaps less than 3%. 2018 saw around 1500 tech startups that were incubated with approximately USD 4 Billion flowing into them. This of course does not include individual, self-funded startups outside of the organized tech sector and the many non tech startups that may have been incorporated. The number though healthy in no way represents the potential that the country has for startups.

Bangalore accounts for a quarter of these tech startups. Though small, Bangalore has carved a niche for itself on the global startup scene but there are other equally powerful centers like Tel Aviv, Bahrain, Stockholm, Sao Paolo and Taipei that it has to compete with. Bangalore has been historically blessed with Indian and Global technology majors basing their operations here, albeit for cost arbitrage and the easy availability of English-speaking skilled workforce, but jury is still out on whether startups have cashed in on this natural advantage.

All those associated with startups know it’s like operating in a battlefield with minefields and trenches. For every startup to unicorn success there are many who remain in the trenches. For every Flipkart, Oyo, Ola and Swiggy there are many that may be laboring away in the trenches. Some will surely come out but many we may never know ever existed. But then that’s the story.

How can we sum up 2018 startups?  Global slowdown and weakening developed economies have put barriers on funds flowing into the start-up ecosystem in India and Bangalore. On the domestic front long-term structural reforms have been a priority and despite honest initiatives from both central and state government, startups have not exactly been the area of focus. One could therefore term the year as modest if not difficult for startups.

And how will 2019 augur? How will the story evolve for India and for Bangalore? Will there be more entrepreneurs entering the startup ecosystem? Will there be more Unicorns created, more early to series B conversions, more late stage global alliances? The answer is a cautious yes.  There is a feeling that the worst is already behind us and let’s face it, anyone connected with the ecosystem is an eternal optimist after all!

Some trends that will drive startups from 2019 onwards

A startup is as good as the startup ecosystem

The startup ecosystems is a function of the political economic and social ecosystem. On the political front both India and Karnataka are lucky to have forward thinking policy makers assisted by advice from experts from the industry. Policy makers must realize though that Bangalore is not just competing with NCR and Mumbai but also Asian neighbors like Singapore & Bahrain other emerging global centers. Funds, ideas and talent have no respect for geographical boundaries. Ecosystem advantage can in no time be overshadowed by infrastructure disadvantage. On the economic front, three basic requirements for start uops are easy access to capital, cheap capital and fair refinancing models. On all three we rank low but there is a serious attempt to make more cash available and lower interests. Similarly, the social ecosystem also has to promote startups with more youngsters opting to join risky startups and linking compensation to success.

Focused startup ecosystem, global ambitions and connectedness

It’s the era of specialization. Bangalore and likewise other centers in India will have to find specific areas for startup ecosystem to emerge and connect them with application areas globally. Everything for everyone will dilute efforts and money. There are many areas to choose from Manufacturing, Precision Engineering, Healthtech Agritech, Biotech Fintech..

It’s the third tech wave and core-tech will lead the startup story

Already Google, YouTube, Facebook and WordPress seem to be from a distant past! If you are a start-up in the app, infrastructure digital media domain you may find it difficult. Products and solutions in AI and synchronized distributed ledgers and robotics will be the job and value creators of tomorrow.

From lift and shift to original startup business models

It will be interesting to note at the end of the year how many global patents have been filed by Bangalore and India startups. At this point the number is woefully slmal. The patents a startup files will be the measure of its originality. There will be a direct linkage between patents filed and success of a startup.

Higher median age and qualification of startup founders

In one-word startup maturity will rise. And so will success rate and as a result their value and job creating ability. More middle-aged founders with experience and qualifications will take center stage at startups. Startup has nothing to do with age. Your mental state drives your passion and startup is all about passion.

Old adage of vanity, sanity and reality will apply to startups

Remember the wise old theory? Topline is vanity, Bottmoline is sanity and Cashflow is reality? Well after much pain startups will finally align to this for their own good. “Buy the customer” just because of Dollar valuation over Rupee may not be always prudent. When it comes to the market, purchasing power parity eats exchange rate disparity for breakfast.

Non-tech is also a startup

While eyeballs are taken away by tech startup the non-tech areas are experiencing buzzing startup activity. Sports, Waste Management, Agriculture, Animal Husbandry, Social Impact business models have some stellar startup activity. Jobs seekers must consider these industries and talent must flow there to foster opportunity.

And finally, Startup is not a lifestyle silly!

 Its not all about Beer, Beanbags, Bermuda’s and Flip Flops at workplace. I find in many startups lifestyle taking precedence over the business model. Founders must be careful. Overemphasis on gaining the cool quotient and style may take away from the hard work rigor and discipline required in the crucial phase of a startup.

And as I said earlier, we are all eternal optimists. The Sun will always shine on the Startup. After all they are the new-borns of enterprise.  Perhaps it was cloudy and misty, but the rainbow has broken, and it will be bright again!

Wish you all a Very Happy New Year. And as we have met in the past look forward to meeting many more of you in future