Corporate lawyer Ankur Singla had raised eyebrows when he quit a cushy London job in 2009 to return to India and start Wasiyat--a platform to automate making of inheritance wills. Eighteen months on, with no customer and no savings, it was shutters down. But Singla was unfazed.Six months later, Singla started another venture, Akosha, to redress consumer complaints.This year, the company raised $5.2 million from US-based venture fund Sequoia Capital. Nav Chatterji has had a similar ride. In 2012, when Dallas-based Chatterji flew down to Delhi to attend a wedding, he found that no readymade suit would fit him. The predicament led him to start Seat14A, a ready-to-wear menswear fashion startup which would sell online to clients in the US and Europe. The Delhi-based company went on to raise ` . 30 lakh from 500-Startups, a US-based accelerator. It, however, burnt it all up and downed shutters last December.
Singla and Chatterji are among the markers of resilience in the country's startup ecosystem, where “failure“ is fading away as a bad word. The not-solucky entrepreneurs are fast learning the curve to “start-up“ again or join as top executives in successful startups and investor firms.
For his core team, Singla went for former entrepreneurs, including Vishal Pal Chowdhury , founder of now shut online tests startup TopChalks who was made chief technology officer. “Failed entrepre neurs have an incredible zeal to deal with chaos and work insanely hard,“ Singla said.
Chatterji, who has started Khoobh, a design firm in Delhi, after shutting down Seat14A, said, “We waited for over nine months to raise another round but investors backed out.“
Chatterji's Seat14A was named after his seat number on the flight he had taken to India from the US.
Experts say that “risk“ and “failure“ is no longer taboo words in India's entrepreneurial circles. “Failure was seen as synonymous with wastage in India which is a `no-no' in a resourcescarce economy .This is changing,“ said Rishikesha T Krishnan, director of IIM Indore and former partner at tech firm Helios System Software. “Experimentation is no longer seen as an expensive luxury . It is no longer a taboo to fail.“
In India, about 600 new ventures emerge every year. However, a study by Microsoft Accelerator says that about half of them die in the first year while the 30% that go past the crucial 12-18 months mark also eventually end up in the grave within three years.
For every Snapdeal and Flipkart, there have been dozens of corpses that have been left behind. Despite the high mortality rate, young India appears unafraid to take up the cudgels again.
While the failure rate of startups in the West is no less (about 80% in Silicon Valley), failed entrepreneurs in the US wear their bankruptcies as a badge of honor, as opposed to India where businessmen tend to hide entrepreneurial failures.
“In India, it's always good to announce what's the next move you have taken. Negative perceptions from family and friends can be killing at a time when you are drained financially and emotionally ,“ said Ashish Tulsian, who shut his bulk SMS platform TechnoApex in 2011, when the government tightened norms for the SMS industry .
It's not just startups, but domestic risk capital investors too who are grappling with this conundrum.“We try and find a good home for the team. Look at aqui-hires or even a fire sale,“ said Rehan yar Khan, managing partner, Orios Venture Partners, one of India's most storied angel investors.
Investors, however, are increasingly making it clear that shutting the funding tap has to be an exercisable option.“There is no cookie-cutter approach. We have been involved in closure of certain portfolio companies, and there are liabilities, or outstanding paya bles, such as payroll, that have to be met,“ said Rahul Khandelwal, vice-president at Lumis Partners.
There has, however, been a marked change in perception of the so-called “failed“ entrepreneurs.
“Yes, of course, we would consider backing such an entrepreneur again. Life is a learning game, sometimes the entrepreneur may not have even made mistakes. It just wasn't the best time,“ said Orios' Khan. While entrepreneurs agree that public perception plays an important role in egging them on, it's only in the last two years that Indian metros have started accepting those who failed as the “bold who tried“. Smaller towns, however, are still unforgiving. “The idea is not to listen even to your loved ones if they don't believe in your dream,“ said Bhopal-based Appointy's CEO, Nemesh Singh, who started a company in 2003 after failing to land a decent job after graduation.
Gaurav Yadav, a former Tulip Telecom executive who shifted from Delhi to Lucknow to start Quiz League for Schools last year, said, “In small towns, `risk' is a very negative word, and family is the biggest opposition to entrepreneurial dreams.“
Some entrepreneurs see investment in their startups as equivalent to earning a management degree. “Politics of a large organisation that I experienced in a stop-gap job prevented me from applying for a job again,“ said Singh. “The biggest setback, however, was when my girlfriend left me as I refused to give up my dream.“ Singh had pumped in ` . 10 lakh during the journey . Appointy , now valued at about $25 million, is hiring IIM graduates. The self-funded company earns about $50,000 (about ` . 30 lakh) a month.
Lack of emergence of new ventures from states such as Uttar Pradesh has left these states behind others, such as Karnataka and Maharashtra, in GDP growth. However, the scenario seems to have changed a lot in metros from five years ago, when entrepreneur Deepinder Goyal--now CEO of Zomato--didn't want to disclose to his parents that he had quit HIS JOB to start a restaurant guide.
Goyal has now hired former restaraunteer Sahil Ludhani to head Zomato's New Zealand operations and Shiven Madan, founder of now closed Home Safe, a chauffeur on-hire service, to head global partnerships. “Ex-entrepreneurs are people who have the fire to lead a business from scratch, and have demonstrated these in the past,“ said Zomato's cofounder Pankaj Chaddah.
Enthused by the changing attitude towards risktaking, global conferences such as 'FailCon' have started to host an India chapter to learn from the experiences of startup that had to shut down.
Investors, teachers and mentors are also egging first-time entrepreneurs to “fail fast“ to discover that one golden egg that will earn all stakeholders a billion in valuation. “There are 10 different ways to pivot a startup if it's not working. Role of mentors becomes critical,“ said Pratyush Prasanna, founder of SMS platform PlusTxt, which got sold to One97.Prasanna turned an angel investor and recently helped Bookpad exit to Yahoo for ` . 50 crore. He is now planning to start a new venture.
Snapdeal's co-founders Kunal Bahl and Rohit Bansal also refused to give up after failing twice first in their discount coupon business and then a daily deals site. “Deep down, me and Rohit were never sure what we wanted to build. But accepting failure was never an option,“ said Bahl, who was down to just $100,000 cash in the bank last January . He egged the company to start saving on even power costs.
This week, Snapdeal raised $627 million (about . 3,500 crore) in fresh funding from Japan's SoftBank, ` valuing it at over $2 billion. “India is about to change with a boom in entrepreneurship. It needs to accelerate this by encouraging experimentation and failure,“ said Vivek Wadhwa, fellow at Rock Center for Corporate Governance at Stanford University .
A few entrepreneurs who have seen the entire cycle have a differing view. “Rather than romanticise and live in denial mode, it's better to accept failure of an idea,“ said Santosh Panda, who shut down his first startup, Signlure Technologies, when the hiring market crashed. He lost his savings and mounted a credit card debt, but then bounced back to launch events ticketing startup Explara, which last year raised Rs 4 crore from HBS Alumni Angels and Google India MD Rajan Anandan. “It's proven that the hunger to succeed doubles when former entrepreneurs recoil to start anew,“ said Prasanna.
