Performance, and not location, determines sustainability of startups: IIT Madras

CHENNAI: As India witnesses a busy pace of process around entrepreneurship, the positioning in which you start your corporate won't play a major position in its scaling up, as according to IIT Madras’ tenth annual Indian Venture Capital and Private Equity report released on Saturday.

The find out about discovered that while towns like Bengaluru or Mumbai do have a better probability of raising capital in the first round, there isn’t a major distinction in the choice of enterprises that raised successive rounds of capital throughout towns.

169 Bengaluru-based startups raised 2nd round of funding, and this determine stands at 125 for Mumbai, 143 for Delhi, and 133 for different towns.

Commenting at the conclusions drawn, Prof. Thillai Rajan, Department of Management Studies, IIT Madras, said, “While companies in towns like Bangalore are able to get extra mission funding to start with, the merit stops there. After that, in terms of exits and returns, there aren't any main variations between [companies in] different towns.” Once a mission is mature, it is just efficiency that impacts its continuance, he added.


With as regards to 1.26 million companies created during 2000 to 2017 (the period of the find out about), the report discovered that best 0.five% had been able to lift mission capital funding. Among those, Chennai startups raised the highest moderate amounts of funding in first round at Rs. 590 lakh, though the choice of Chennai-based startups funded was once discovered to be lowest.


Further, the share of companies shaped in smaller towns and cities increased from 65% to 76%, and correspondingly, depend of companies shaped in the main tier 1 towns has fallen from 35% to 24%, signaling the penetration of the entrepreneurship culture to the interior regions of the rustic.


The moderate returns learned via buyers from investing in startups was once discovered to be 13.25% with around 40% of the firms a success in handing over returns higher than this imply. Sectorally, era startups emerged as the select for mission capitalists as instrument industry, monetary era, and client products comprised 63% of companies that gained mission funding.


The report analysed publicly disclosed mission capital and personal fairness deals in India during 2000-2017 period to reach at the findings, and was once released during TiECON Chennai 2018, an annual entrepreneurship convention organized via TiE Chennai.
Performance, and not location, determines sustainability of startups: IIT Madras Performance, and not location, determines sustainability of startups: IIT Madras Reviewed by kailash soni on October 06, 2018 Rating: 5
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