Business is as old as civilization itself but Startup Business is a gift of contemporary time. Startup is not an existing business. It is a new business centred around innovation or aggregation or both. In this new business it is idea that has replaced capital as prime prerequisitefor doing business, thus making the business more plebian.
Industry and Startups are intimately connected. If the output of the Startup, be it goods or services, are used as inputs by industry then Startups are upstream units to that Industry and in reverse way, Startup are down stream units of mother plant. Startup as a business have caught the attention of young generation bubbling with enthusiasm and ideas but with little or no resource. But resource constraint is no limitation to launch Startup Business as entrepreneurial mindset of Startup is different from business manager. While the former mobilises resources for realising the business goal, latter leverage means to fix the business goal. Ola, Uber, Airbnb and others of this class did not have that much resource but they mobilised resource in the business ecosystem and have become successful Startup Unicorns. What matters is how to leverage the resources around.
Industry is a vast reservoir of resources for Startups very often missed by many. Industry provides all that Startup need in its journey towards developing an innovative idea into a business enterprise. Precisely speaking Startup journey is spread into two phases with seven stages.The journey covers pre-ideation, ideation &POC : 3 Stages under 1st phase of incubation & then Phase-2 escalation with networking, target setting, bench marking and vision building as 4 stages elevating the Startup to a full-grown business enterprise.
Primary need of a Startup is a break through idea. Industry is full of inputs for such ideas/issues/projects. Research and Development (R&D) Department, TQM/TQP, QC, Kaizel Cells are having issues/projects that Startups can bank upon to develop their project. In industry many innovative projects have achieved lab scale success but have remained stagnant due to lack of initiatives for commercialisation. Here is where a win-win situation prevails for industry and Startup. The latter starts where former stops. These Startup projects will have strong industry connect and handholding. Startup interaction at pre-ideation and ideation stage will prove to be immensely rewarding for both. In third stage of POC/Product Development Industry have huge scope for copious collaboration.
90% of the Startup Die in Death Valley Trap
Transition of Startup from incubation phase to escalation is quite crucial to shape it up as desired business enterprise. Between incubation and escalation there is a trap called Death Valley where majority of Startups peter away and perish. Stand alone Startups are more susceptible to fall into this trap. After successful product development very often than not Startups fail to raise fund to finance product making. The situation gets aggravated when they don’t get required market. In 2019, the failure rate of Startups was around 90%. Research concludes 21.5% of Startups fail in the first year, 30% in the second year, 50% in the fifth year, and 70% in their 10th year. Therefore,in escalation phase Startup needs triple connect : Partner Connect, Investor Connect & Market Connect (PIM Connect) to fly past the Valley of Death. While Partner Connect will provide the network for developing the goods and services, Investor Connect gives the much-needed fund to finance the business and Market Connect, the revenue outlook. Without these connects Startup will starve of fund and sales orders and will eventually perish. Industry Connect is highly essential to overcome Death Valley Trap between incubation & escalation phase. Industry can facilitate partners connect as it has readymade network of partners. Back up of an established business organisation will lend credibility to the nascent Startup unit and it helps in raising investors’ confidence. Besides industries may introduced Startups in periodic investors meet that they are required to conduct as a company registered with stock exchange. Apart from the above industry having its own market, marketing network, distribution and sales channels, corporate image and brand, can effectively handhold the Startup for the first five years in marketing of its product. It is during these five years 50% of the Startup die and it is crucial to have handholding by the industry. Mother industry with its up and down stream units are also potential customers and suppliers to Startup.
Industry Connect: A Game Changer
We have seen in the entire journey of Startup, at every phase and stage industry connect is valuable for survival and growth of Startup during the first ten years. It is industry that can indeed give wings to the dream of Startup entrepreneurs. What matter is how the Startup makes its pitch before the industry to make its mentor.
Industry&Startup are in symbiotic relationship. While Startup grow with industry, the latter is sure to get benefit of the following:
- Startup can grow up as an upstream/downstream unit that industry has responsibility to encourage.
- It expands the depth of industrialisation in the hinterland transforming into a door step market for the mother industry.
- Startups create employment for the locals reliving the mother industry from social pressure and facilitates its competitiveness in the market.
- It enables just-in-time inventory by developing a band of vendors and customers around the mother industry.
In the long run, both Industry and Startup become the winner and their symbiotic association a game changer. In Odisha there are 263 medium and large industries. If each industry is having a minimum of 20 Startup projects there will be more than 5000 viable Startups with industry handholding making the cherished dream of Odisha Startups to be at top at National Level come true. The existing level of 1000 plus Startup gets pitch forked to 5000 plus. In short it is industry pitching that can give wings to individual Startups in the State as well as Startup Odisha at large. In association with industry bodies like CII, FICCI, ASSOCHEM etc and prominent incubation centres in the state like AIC-NITF, IIT, TBI-KIIT etc industry may go for bootcamp for campus placement of Startups. Let a new initiative be taken to boost Startups in Odisha.
By Dr. T. K. Chand,
A Reputed & Top Industry Professional