By Shrijay Seth
Nothing exists in isolation. Observe any ecosystem on the planet and you will observe how the constituents collectively contribute to each other’s existence and how inter-dependence is a core element.
This principle of collaboration and inter-dependence extends to other ecosystems too! Take for example a StartUp ecosystem that typically includes the following:
– Entrepreneurs, VCs
– Early Adopters, Users, Customers
– Incubators, Accelerators, Enablers, and Government
For every startup that starts with the thought to register a company and make it big, sustainability is the key.
But then, there’s more to a startup than just entrepreneurs. At the other end of the spectrum, we have users split into early customers, adaptors, beta testing users and generic consumers which influence early adopters.
All these are components of the ecosystem that contribute to the success of startups.
And it does not stop there – the ecosystem also has supportive communities like Kickstarter and other crowdfunding platforms where people even pledge to buy/try the product before it is launched in the market.
Entrepreneurs line up their products to get it validated and ensure successful beta testing. This is how they get feedback and tune the product/service as per requirements, making it market-ready. This is just 1 example of an ecosystem coming into play.
There’s one catchphrase that speaks of inter-dependency of each element present in the ecosystem:
“EVERYBODY HAS A COMMON OBJECTIVE AND VESTED INTEREST – MAKING A SUSTAINABLE BUSINESS OUT OF A STARTUP.”
The success and the longevity of the startup is something of everyone’s interest in the entire ecosystem. Since the evolution of startup ecosystem has been dynamic, its durability is the key factor for the business to survive.
How each one benefits from the success of the startup:
– – Entrepreneurs benefit by gaining insights, in building their own brand and identity, growing their equity and their firm
– The Government benefits by proving the success of their policies and enabling more jobs and employment thru startups/new businesses.
– Enablers exist with a motto to amplify the startup ecosystem and generate more ideas in the market
– The VCs and funders are always looking for greater returns and they are mostly looking for the next Unicorns – a Paytm or BYJUs or Swiggy!
– The early adopters are the ones who are looking to be the pathbreakers, the early recipients of next big thing and slog it out to be loyal ambassadors.
The symbiotic relationship of Entrepreneurs – Investors – Government
- Entrepreneurs benefitting from Investors
Early stage entrepreneurs are perceived to be earnestly seeking funding and depending heavily on it. In fact, there are plenty of myths about being an entrepreneur that one needs to dispel to see the clear picture. One of the more common misconceptions is getting funding is in itself an end, for early age entrepreneurs.
Nothing could be further from the truth. Actually, funding does not define success but is the start of a journey which comes with added responsibility.
This holds true for entrepreneurs and investors. Investors bring clarity, expertise and inputs to streamline operations. There is a sense of urgency and also competition from both, entrepreneurs and investors alike.
In a thriving environment, one has to put forward the best performance possible to avail funding . While on the other hand, the government departments and incubators have performance pressure as they actively seek profiles worthy of their investment.
The investors benefitting from the entrepreneurs
Sure, there is an over-supply of entrepreneurs and disequilibrium brews such competition, startups look beyond funding to kickstart their business. For example, there are other ways to funding and not just big agencies, VCs have to play multiple horses to bet on until they find their unicorn.
The key for an investor is to increase the odds of winning. Here is when the FOMO gets real.
They don’t know the Spotify or Tinder and probably may lose some to find the best bet. It’s a sort of instinctive battle that they fight.
Moreover, VCs and investors are accountable to funders. Being industry experts, they place their bets by taking the necessary calculative risk.
Not knowing who is the next unicorn in the ecosystem, their FOMO is real and this actually makes them vulnerable.
There is a certain amount of pressure to perform, to bet at the right time, on the right StartUp, at the right place, and at the right rate.
Government benefitting from startups
Government rolls out startup schemes that promote business. The primary aim is to generate employment by providing ease of doing business to entrepreneurs. Of course, the long-term benefit involves getting startups to pay their taxes.
Also, there are tax benefits and subsidies provided by the government to MSMEs and new ventures. This also creates a welcoming environment for entrepreneurs to start new businesses effortlessly.
Vulnerabilities of investors
Part of the reasons why such vulnerability exists is because the investors look forward to maximizing gain without being 100% sure of returns.
This is why they bet on entrepreneurs and you can simply not undervalue their role in any entrepreneur’s success story.
VCs invest in companies by being laser focussed to maximize the value to open up a vertical and horizontal portfolio.
For Example; Paytm or Clear-tax has a large portfolio. With the high scope of knowledge transferability thru shared portfolio the entire ecosystem benefits. This is where funding agents work to create synergy between portfolio companies and bring them under one umbrella.
Interdependence of Consumers On Startups
There is an emerging wave of early adopters of services and products provided by the startups.
And since startups are shaping up themselves to be more customer-centric and agile, a lot of new generation workforce and entrepreneurs have started opting for startups.
There are plenty of instances of corporate partnerships between the startups to benefit each other.
eChai.in conducts workshops, podcasts and seminars that benefit the startup community where founders meet and share their ideas.
In turn, Legalwiz.in offer services at a discounted rate to the eChai community members. This is where a symbiotic relationship blooms in the startup economy.
Can you think of any other factors or entities playing a crucial role in the startup ecosystem? How do you think they contribute? Do share your thoughts with me – firstname.lastname@example.org.
About Author: Shrijay Seth is an entrepreneur with more than ten years of experience in working with hyper-growing digital commerce companies across the globe. Currently, he runs an eCommerce strategy and Analytics consulting company, along with a LegalTech venture in India called https://www.legalwiz.