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Microsoft India Accelerator research on Indian startup ecosystem company starts and closure
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http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
India Tech Startup Starts and Closure
Microsoft Accelerator Researchhttp://www.microsoft.com/india/acelerator
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
Key notes about this research
1. The Microsoft Accelerator database tracks over 6214 entities and 3948 technology product companies in India
2. We have face-face interactions with founders of 65% of the companies to verify starts and closures besides secondary data
3. Closure data is based on f2f interactions alone
Entities are not registered private companies, but LLC or partnerships
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
2010 & 2011 had most new tech product company starts, but 2012 is poised to trend
lower
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
Bangalore has over 41% new starts followed by NCR and Chennai, Hyderabad has seen steepest
declines over 5 years
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
eCommerce starts made up 1/3rd of all new companies, followed by B2B web
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
Bangalore has most closures, both in number and % of companies started
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
More than half of the 190 closures* in 2011 were companies between 6 months to 1 year of
formation
Closure rate of Indian companies has been ~26% of companies that close within 1 year
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
Besides inability to raise funds, most were unable to get customers to pay money quickly
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
61% of first time failed entrepreneurs are heading back to work at a big company
Failure has such a big stigma in India, that most join a larger company . Many also do it so they can pay off their loans
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
Most entities are not shutdown, but are being kept for side projects
http://www.microsoft.com/india/accelerator© Copyright Microsoft India Accelerator 2012
Takeaways for Entrepreneurs
1. Work on getting as many customers to pre-pay some of your revenue as an advance
2. Raise capital for 24 months rather than the 18 month norm of valley startups
3. If you are going to bootstrap, have funds for 18 months, not 6 months, which is the valley norm