Only 22 percent of startups saw demonetisation as a positive impact in the short run

 

On Monday, venture debt firm InnoVen Capital released their India Startup Outlook Report 2017, highlighting the perspectives of founders and CXOs from 170 different startups, including both bootstrapped as well as funded ventures.

Ajay Hattangdi, Group COO, and CEO India believe that the startup outlook report is part of InnoVen’s continued effort to understand and communicate the nature of the Indian entrepreneurship ecosystem. He adds,

This is more of a touchpoint with founders to understand the mood and outlook of different companies in the ecosystem, while understanding the impact of the recent policy decisions made by the government.

Quickly speaking on the respondent demographic:

Revenues: The largest set of respondents, approximately 57 percent, saw early revenues of more than $1 million. While 29 percent of the respondents had just an idea or proof of concept, 5 percent had more than $10 million in annual revenues.

Moreover, 49 percent of the interviewed startup were bootstrapped, while 14 percents were Series A and B funded startups.

 Founding year: While 36 percent of the interviewed startups started in 2016, 24 percent were founded in 2015. Only 23 percent of the startups had started in or before 2013.

The findings

With findings spread across aspects like fundraising, profitability, challenges and policy, the following are the interesting trends highlighted by the report:

1. Fundraising

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirty-five percent of founders attempted to raise around in 2016 and were able to do so, while 50 percent didn’t make any such attempt. Only 15 percent of the founders interviewed reported trying to raise funding and being unable to get any from the market.

This could be since a good chunk (36 percent) of the respondents had just started in 2016.

  • Startups pitched to at least six to seven investors before raising a round, the report claimed.
  • Further, the report claims that 94 of the respondents were looking to raise total funding to the tune of $800 million in the coming year.

Also, for the entrepreneurs, strategic fit, active networks, commercial terms of the deal and strength of the brand (from where the money is raised) were key points in choosing a lead investor.

What is surprising is that 50 percent of the respondents agreed with or were neutral on the topic of them possibly living in a technology bubble about to burst.

But what does this technology bubble really mean? Ajay explains,

“The thinking might be that there are so many investments going only to the technology sector. Therefore, the sentiment says that there might be an attempt to gauge inside the bias.”

Thirty-five percent of the startups believed that robust business models were key to improving investor sentiment. On asking Ajay whether this was an indicator of a restructuring in funding dynamics, he replies,

Well, the funding will be available for good companies. But we see a movement away from companies who haven’t been able to provide strong metrics of growth. Therefore, this year, we might see some conversations happening around consolidations. However, it will only see some modest growth, where investors will abandon some companies while trying to consolidate others across portfolios.

But Ajay believes that this is a good time for investors to invest at their preferred valuations owing to the down rounds. He also believes that the quality of startups has improved considerably.

2. Profitability

Fairly balanced, the majority of respondents, according to the report, stated growth as their focus area in 2017. VC-backed companies, however, rated achieving profitability in the next one to two years as the key objective.

 

3. Exit Expectations

Seventy percent of respondents were open to an exit, with approximately 60 percent rating an IPO (offshore or in India) as the most preferred exit route.

 

4. Challenges

Overall, raising equity, managing talent and market creation were voted the top business challenges going into 2017.

Looking at sectors, e-commerce and healthcare startups rated fundraising and revenue growth as major challenges, while enterprise players rated customer acquisition as such and Artifical Intelligence startups rated talent management as their major challenge.

 

5. Over-hyped and Under-hyped sectors

On one end, while Agri-tech, Artificial Intelligence, and logistics were voted as the most under-hyped sectors, hyperlocal and digital payments were marked as the over-hyped ones, along with being the hot sectors in 2017.

6. Talent and Hiring

According to the report, 42 percent of all respondents had women in leadership positions at their startups, up from 33 percent last year.

Chief Technology Officers and Sales Heads, meanwhile, were rated to be the toughest hires.

 

7. Government Policy

While the Goods and Services Tax was rated the most helpful government initiative by the retail and logistics sectors, media and content companies liked the government’s digitization move.

On this, Ajay comments,

“There has been a good positive validation from startups on the government’s initiatives. However, the startups feel that there are still things that can be done better; for example, the betterment of digital infrastructure and better taxation.”

Further, on the debate of protectionism raised by bigger players like Flipkart and Ola in the past, only 9 percent of respondents felt better incentives were needed for domestic players to compete against global majors, according to the report.    

Also, asking whether the recent demonetisation affected the startup business in a bigger way, Ajay said,

“The impact of demonetization is interesting. It has affected some and played well for others. There have been some positive impacts on startups in payments, food delivery and hyperlocal. We have seen some negative impact in terms of e-commerce for high-value transactions, specialty pharma, as well as in the B2C space mobile applications. So a complete mixed bag in general.”

However, the report states that 22 percent of the startups felt that demonetization was favourable in the short-term play, while 52 percent of the startups believe that the measure would have a long-term impact on things.


 

How to Train Your Brain to Focus

How to Train Your Brain to Focus

“You have brains in your head, you have feet in your shoes. You can steer yourself any direction you choose.” —Dr. Seuss

 

People often say that if you follow your passion you’re never really “working” at work. But that’s not always true. To understand why you can still feel mentally overwhelmed, let’s look at how the human brain is configured.

The prefrontal cortex is the most advanced segment of the most advanced section of the brain. It contains the most expansive evolutionary structures and is responsible for the cognitive functions we think of as uniquely human, such as the ability to set complex goals, plan our futures, restrain our instinctive impulses, make an informed decision and organize our activities. Collectively, these sophisticated abilities are often referred to as the executive functions of the brain.

Given that the prefrontal cortex in humans is far more capable than that of any other species on the planet, why do we still feel mentally overtaxed so much of the time?

Consider the dramatic economic shifts that have occurred in the last century or so. The number of people doing physical labor has significantly decreased while the number of “knowledge workers”—as author Peter Drucker named them—have significantly increased.

One aspect of this transformation is that the vast majority of our modern workforce needs more Emotional Intelligence  (people skills) as well as more facility with abstraction (conceptual skills) than it ever needed before. Both of these abilities are anchored in the prefrontal cortex.

To be clear, we’re not arguing that we work harder today than our great-great-grandparents did. But during the last few centuries, the demand for executive brain function seems to have increased and become more widespread. And because it takes anywhere from 100,000 to 1 million years for relatively minor changes to occur in existing biological structures, we could be waiting a long time for our prefrontal cortex to enlarge its capacity in response to the demands we place on it.

Multitasking is not the answer.

In various kinds of companies across all types of industries, we meet people who are worn out, lack focus and who tend to be more reactive than strategic. They believe multitasking is the only way they can stay ahead of the myriad demands put before them.

The problem is that our brains can provide us with only a finite amount of focus at any given time. Scientists such as Daniel Kahneman, author of Attention, and efforts, have conducted research that bears this out. According to some estimates, it can easily take up to 40 percent longer to complete projects when you’re interrupted than it does when you can maintain specific focus.

It’s fine to perform two or more tasks at once if quality or accuracy is not a high priority. But the widespread belief that multitasking makes us more efficient is far more myth than science. At every level, we see rampant exhaustion and intellectual depreciation as a result of this misunderstood social norm.

Create an island in the stream.

When faced with the unceasing flow of communication that vies for our limited attention, think of a way to put yourself in a separate zone—a kind of “island in the stream.” Zones can be physical or a temporal.

You might believe it’s impossible to take even short timeouts from your particular brand of madness. We’ve heard some of our clients say, “My boss requires that I always answer quickly!” and “Everything needs my attention immediately because my co-workers count on me.” But there are workarounds to address almost any challenge.

Communication to others about the appropriate thresholds for the interruption in our zones is critical to their success. There are many creative ways to establish your boundaries In one hospital we studied, nurses wear brightly colored sashes while they dispense medicine to ensure there will be no intrusions, which could cause potentially fatal mistakes. One office we toured has a noisy bullpen; co-workers there designated a specific conference room as a silent workspace.

When you set and agree to flexible limits for your zones, you not only commit to them yourself but also encourage others to respect and support your parameters.

Change the culture.

It’s not unusual to walk a fine line between collaboration and continuous interference. In high-tech, future forward companies, we often hear about the eradication of private offices. In some instances, we’ve seen the replacement of desks assigned to a specific person in favor of impersonal cubbyholes claimed only one day at a time.

An open and flexible office setup has many advantages, but the resulting breaches of privacy can dissipate mental resources. Still, we don’t have to accept continuous interruptions as a fait accompli.