In the past decade, we have witnessed the rise of several startups, venture capital deals, and a massive rise in the number of unicorns. On the surface, it all appears proud and soul-stirring, and maybe it is, as a growing number of startups and ventures have opened the doors for much-unprecedented employment and similar other opportunities. However, there is a disturbing undercurrent forewarning the ecosystem to take steps wisely.
Understand it this way: in 2021, 44 startups joined the unicorn bandwagon. The year also exceeded expectations in terms of investment deals and collective funds raised by startups, out of which fintech and ecommerce domains became the hotspot of maximum financing.
Now, this is where the issue is at the nascent stage. The highest fundings have gone to those domains or revenue models with a proven track record, adding little or no USP to the core idea that can impact the said domain.
The question every entrepreneur, investor, or player of the startup ecosystem must ask themselves is, are we changing the core values of startup ventures? By betting on well-proven, or high-revenue model startups, are we playing it safe and deceiving the principal essence of the startup model?
With many investors and startup players focusing on a few domains and ignoring others, it appears innovative things and out-of-the-box ideas that can revolutionise the world are no longer the focus.
This begs the question, are upcoming startups creating value for customers, or is the startup’s value being created through heavy investments?
All that glitters is not gold
Startups specialising in fintech, ecommerce, D2C, and instant grocery delivery are undoubtedly on the rise, and rightly so like the world, we knew pre-pandemic had transformed dramatically. But with the rising number of startups focusing on just these domains, isn’t it getting a bit overpopulated? So much so that they might reach a point where their number effectively surpasses the customer base.
The core startup model is based on innovation and distinctive objectives or proposals. If all the startups work towards the same goal or investors start backing the companies that have already proven their stealth, will we ever be able to see another revolutionary idea converting into a full-bloomed unicorn?
So, is playing safe the right choice or a bigger risk brewing under the heavy volume investments made in specific sectors?
What are we promoting?
Being part of the startup ecosystem is a matter of great pride. Why? Because we are directly shaping a future that previous generations may not even have imagined. We are pushing our limits. But if the startup ecosystem starts playing it safe, all because revenue generation is the primary motto, then are we really promoting true startup culture?
Risk management is important, no doubt about that, but not taking calculated risks, especially in the startup ecosystem, is plain cheating. Instead of focusing on the number of startups entering the unicorn club every year, we should focus on their longevity and quality.
Instead of looking at short-term revenue generation goals, we should pay heed to backing startups with the ability to create long-term value propositions.
A true startup neither works on a tried and tested theory nor initiates its journey on a worn-out path. The ideas that will bring rebellious and unforeseeable transformation and change the course of history will take the road less traveled with calculated risks.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YS.)
