Almost seventy percent of the startups globally is doomed to fail with only five to ten percent becoming large and scaling up, predicts Kris Gopalakrishnan, the co-founder of Infosys and former CII president.
He was speaking at the announcement of the 12th Innovation Summit 2016 to be held on July 28th and 29th, of which he is the chairman. He said, “Almost seventy percent of startups will fail. About 20 percent will survive but will not grow. They will remain small enterprises, and may be only five to ten percent will become large and scale up – that is the spastics globally.”
He also adds there’s nothing to be concerned as this is a part of the natural process of evolution. “The key is what are the learnings, and how do we continue to nurture this,” he added.
Flipkart and Snapdeal have made their marks in the market globally and would be an example to people in the coming three to five years now, according to Gopalakrishnan.
“I would say Flipkart and Snapdeal – these companies have made a mark. Paytm and Freshdesk – there are so many of them actually. They have made a mark and that process will continue. Maybe three years from now and five years from now, you would start talking about these companies in a big way,” he said.
He also pointed out certain segment which stands a future in the Indian startup ecosystem and he also predicted some consolidation and hoped some Indian-started entity will remain because global domination is possible in the internet field as it is not bound by any borders.
“When you look at transport, hospitality, logistics – these are the companies, which will be the names in future in years to come,” he added.
Replying to a query, Gopalakrishnan said both private equity and venture capital funding has slowed down for different reasons because the exits are not happening.
“Both private equity and venture funding have slowed down for a different reason because exits are not there. When this happens, money is not recycled. Most of the venture funds are waiting for some exits to happen and the exits are happening through mergers and acquisitions – consolidation where you may not be able to get the full value of the investment.”