Why a downturn might actually be the best time to start up and build your business in India

Downturns are supposedly the hardest on startups and founders. Contrarily, starting and building a business during the lows, when there’s considerably less noise, can actually be beneficial.

Of course, at a time like this, numerous vulnerabilities such as the funding winter, shorter runway, longer sales cycle, talent crunch, news headlines predicting the worst-case scenarios, and more can consume your headspace and block you from focusing on what truly matters—building a great product or service.

A long-term perspective can help you look beyond the negatives and spot the positives. History shows you that downward markets undergo course-correction and resurrect themselves and how numerous companies emerged winners from past recessionary cycles. On that note, here are a few thoughts on why ‘now’ could be the best time to start up and grow a business.

Focus on what matters

Funding sources tighten during hard times as investors turn cautious, and the ease of continuing to scale up without showing actual revenue or profits vanishes. When the market slumps, there’s no choice but to get back to the basics of running a business, fall back to a no-frills approach, and fiercely focus on just two things—product innovation and customer delight. 

While tough times can lead to longer sales cycles and lost deals, real market needs seldom disappear into the blue. Customers simply become exceptionally demanding owing to stricter budgets, and only those businesses that focus on offering unbeatable value manage to stay in the race, all while delivering a great and consistent customer experience. Building something valuable that caters to a market that’s largely underserved while also focusing on not losing existing prospects takes greater precedence.

Look beyond urban areas 

True, our urban capitals across the country have some of the greatest startup support networks, but the Tier II and III cities are catching up and can be a great choice to set up business bases. The frequency of VC funding rounds and the number of interested investors are steadily on the rise in smaller cities.

Moreover, compared to metro cities, Tier II and III cities and towns have a relatively lower cost of operations. This is especially true when it comes to office space, expenses around logistics, and other overhead costs. This makes it easier for startups to operate with low budgets, making it possible to survive and grow even during tough economic times. Talent wars are a harsh reality today, but the open secret to winning that war is, again, shifting your focus to the large and untapped talent pools in smaller cities.

There are quite a few non-profits in non-urban and rural areas that support and promote entrepreneurship in Tier II and III cities. Jagriti Enterprise Center Purvanchal, for instance, provides on-ground incubation and mentorship for up and coming businesses in Uttar Pradesh. 

Policy intervention 

The Indian government has been actively supporting the startup ecosystem through various initiatives and programmes. Measures such as tax incentives, funding schemes, and relaxed regulations have made it far easier today for entrepreneurs to start and scale their businesses. 

Additionally, the Startup India initiative–launched in 2016, and one of the biggest programmes to date–constantly aims to provide a conducive environment for startups to grow and flourish. Then there’s the Atal Innovation Mission, which seeks to inculcate a culture of problem-solving and innovation at the school and college level through tinkering labs that enable students to play around with new-age tech, and foster entrepreneurship with incubation centres.

India’s growth potential is nearing realisation

The Indian economy is poised to grow. This is by far the biggest opportunity that startups and founders can take advantage of. We have one of the strongest growth forecasts in comparison with the other major economies. 

Given that we are also reviving (quicker than other nations) after a dip, building for the Indian market now is a good idea that can turn into an onward and upward journey. Besides, there are still many market gaps that need to be filled, especially in the deep-tech space. Companies like Voxelgrids (MRI tech startup) and Genrobotics (robotics startup) have been patiently building in this space, with a focus on real-time market needs that will reap long-term benefits. 

Apart from the timeliness of things, India also has one of the perfect ecosystems for startups today. Over the last decade, the number of startups in India saw 250-fold growth, approximately. The government’s support, India’s growth potential as an emerging market, a large pool of tech talent, good access to global markets, an amazing set of entrepreneurs who are willing to pay it forward and mentor upcoming startups, and a culture of innovation and creativity have all contributed to India’s rise as a startup destination. The country currently has more than 90,000 startups and is hailed as home to the third largest startup ecosystem in the world. 

So, now is the time for those of us who are passionate about solving real problems, while being willing to persevere, and those of us who are compassionate and courageous enough to envision a new future and build a solution or a product that creates impact beyond term-sheets and numbers.