Aspiring startup founders should first assess market potential

Ravi Eswarapu, a veteran in the field of IT, paints a rosy picture about the future of startups mainly by first generation entrepreneurs. In the data-driven world of disruptive technologies, he sees a bright future for startups with focus on strengthening the ecosystem. Eswarapu, who is the chairman of advisory board of IT Association of AP (ITaaP) served as Vice President and Head of Corporate Quality in Tech Mahindra. He co-founded Pena4 Tech, Schemax Tech, InterveiwBuddy, Antar IOT and Alcove Partners. In an exclusive interview to BIZZ BUZZ, he says a strong startup ecosystem means a strong base of mentors and coaches, advisors, investors, incubators, accelerators, infrastructure and technical support, banking and financial lending systems, product / service development support, go-to-market strategy help, market access, business networking opportunities, credit/risk assessment services, and low-cost retainer services (legal, compliance, patent). It is good to have physical access to most of them, in case where the need to get the big players into the act, the same can be enabled virtually. A relentless effort driven by a thought leader with support from local government and stakeholders shall make all this happen, he opines

Andhra University Next Gen Tech Startup Incubation Center will be operational in May 2021. It is a collaborative initiative intended to help create next gen technology startups and promote entrepreneurship to solve some of the problems commonly associated with running a startup by providing workspace, seed funding support, mentoring, and training to grow their business

The reasons for failure of startups could be: faulty assumptions/strategy, bad execution of strategy, no market for the product/solution, market access issues, inability to keep up with innovation or adapt to changing market conditions, aggressive or deep pocketed competition, team imbalance, inadequate advisory or mentoring support, ran out of funds, inability to attract investors

How is the startup ecosystem at present?

This is the best time to start a startup in India. Our country is currently the third-largest startup ecosystem in the world and is home to 21 unicorns valued at $73.2 billion, and more than 50 startups might join the unicorn club as early as by the end of 2022. Entrepreneurial activity has picked up in India with a vibrant ecosystem of startups, incubators, accelerators, investors, mentors, advisors, innovation hubs, legal, finance, compliance, patent and other support structures.

How is the ecosystem in Vizag, the main IT hub of Andhra Pradesh?

Vizag's ecosystem is still evolving, and we can expect a lot of activity in the coming years. There are quite a lot of early stage start-ups and quite a few growth stage start-ups that need help in mentoring, nurturing, funding, advisory, infrastructure support and strategy. In the next three years, I expect to see quite a few noteworthy success stories from this region.

What is the goal of AU Incubation Center?

The Vice-Chancellor of Andhra University, Prof PVGD Prasad Reddy has initiated the process of setting up of a top-class Incubation Center that will act as a hub in promotion of entrepreneurship/startups leading to employment generation and economic development in the northern part of Andhra Pradesh. He has taken me onboard to lead the initiative. The Incubation Center shall serve anyone interested in startups including the students of the university and its affiliated colleges, local Incubation Centers looking to collaborate and need support, local entrepreneurs especially women, and intrapreneurs

(faculty and research scholars wanting to start-up). Andhra University Next Gen Tech Startup Incubation Center is a collaborative initiative intended to help create next gen technology startups and promote entrepreneurship to solve some of the problems commonly associated with running a startup by providing workspace, seed funding support, mentoring, and training to grow their business. The focus shall be on the use of Next Gen Technologies for multiple critical sectors - pharma, marine, rural/tribal supply chain development, talent/skill development and learning, manufacturing, automation, robotics, AI and ML, VR/AR, gaming, FinTech and AgriTech.

When will be the Incubation Centre at Andhra University operational? How is the progress so far?

It will be operational in May 2021 with the Phase 1 constituting 10,000 sq.ft. with 160 seats for startup incubation and co-working space. Work on Phase 2 has also started in February 2021 for adding another 10,000 Sq.ft. of incubation space that is expected to be ready for use by August 2021. Seven growth stage startups and a few early stage startups in the next gen tech space sSmart product, hardware testing, ERP product development, low code product, data analytics and AI) have already agreed in-principle to operate from the Incubation Center which shall start operating from the Incubation Center from June 2021, which means that most of the space created under Phase 1 is already taken, which is very promising.

How to promote startup/entrepreneurship culture among the youngsters? Should more youngsters get into starting their own ventures?

The start point is awareness about the good and not-so-good aspects of starting up. Youngsters, especially the first-generation entrepreneurs need to understand as to what it means to start your own venture – the risk and reward. Usually they start with too many assumptions that are not validated in the real world. Youngsters do have a lot of ideas, but ideas by themselves do not mean anything until you execute them in the real world.

A very important part is that the wannabe startup founders, while assessing the business potential of their idea also need to assess themselves for readiness to take up the uphill travel, ability to take calculated risk, long term commitment and the sacrifices in life. If one is not ready, it is better to wait for the right time. I waited till I was 40!! So this applies for the youngsters wanting to launch startups and the not so young too.

You have a lot of experience in setting up the Vizag Center of Satyam/Tech Mahindra and co-founded, invested and grew startups like Pena4 Tech, Schemax Tech, Interview Buddy and Antar IOT. How do you see the future of startups in Vizag?

It is promising! You are no longer a lone cowboy wanting to startup early in life, and there is a lot of help available. This is going to get better and better. A mature ecosystem is needed to help mentor the startups from initiation right through to the growth/scale-up phase. The good news is that in the past year or so, the world has taught us to make things happen virtually. This means easy access to the startup ecosystems across the globe while making things happen locally. AU Incubation Center intends to contribute in a major way to the ecosystem creation and development in and around Vizag with the help of partner institutions like STPI, TiE AP, Startup India, IT Association of Andhra Pradesh (ITAAP), Alcove Partners, and others.

Though many come forward to become entrepreneurs, the percentage of successful startups is low. What do you think are the reasons for the high rate of failure?

Startups are bound to fail, and a lot of them will fail within the first three years of operations! If the expectation is that all or even most of the startups need to be successful, then we are starting on a wrong premise. A 10-20 per cent success rate is pretty good. So expect to see a lot of startups that fail to take off. This is the reality. The reasons for failure could be one of these and several of them: faulty assumptions/strategy, bad execution of strategy, no market for the product/solution, market access issues, inability to keep up with innovation or adapt to changing market conditions, aggressive or deep pocketed competition, team imbalance, inadequate advisory or mentoring support, ran out of funds, inability to attract investors. It's ok to fail, and it is also important to fail fast, learn the lessons from failure and move on to the next business idea.

The number of startups is more in e-commerce rather than on the technology front. How can we overcome this trend?

It is not what it seems, and it is actually the other way around. The e-commerce startups are more popular amongst the common public as they need to be part of scaling up, while the technology startups in the product/solution/service space mostly serve the corporate clients and hence are low on the popularity index. In fact, there are quite a lot of tech startups that work with eCommerce businesses in the areas of AI, Content Management, AR/VR, Blockchain, Target Marketing, CRM, Warehousing, Automation, Logistics, and many others.