Startups must realign with changing Customers' needs to stay relevant

How the environment in the startup ecosystem has changed this year from funding and talent perspective?

Things have been shaping up for better only in the startup world. The quality of founder we see today is very high. Especially, in web 3.0 and cryptocurrency space, we see high quality talent founding these ventures who are very young. This was not the case earlier. The space is growing on all fronts. There is some dearth in talent. This has happened due to increased demand. Subsequently, costs have also gone up (for hiring and retaining those talents). To take care of the rise in cost, even funding has also increased as investors understand this increase in cost. This has led to better valuation of startups.

India has created a record number of 44 unicorns in 2021. Will 2022 be see repetition of such trend given the current economic environment?

If not 2022, I am very much confident that 2023 will be a good year for startups. If you see startups across the world, it has been witnessed that things can change very quickly. If companies are turning unicorn in 8-9 months, then we may see shortening of this time period going ahead.

There is now an anticipation in the market that fund flow to startups is likely to come down this year due to economic slowdown. Even Y Combinator and Sequoia have written to their portfolio companies about this scenario playing out in the near future. Will scarce funding lead to a slowdown in growth of startups this year?

Good companies will never face dearth for funding. The game is to identify which is a good company. This is a cyclical process. If we see too much money flowing in, there has to be consolidation. Investors will also step back and evaluate their strategies. Specially, there were some setbacks seen in the crypto and web 3.0 space. So, due diligence has increased by investors.

Which phase of funding- early stage or growth stage- will see maximum impact?

I don't think there will any such thing like maximum impact. If there is a slowdown (in funding), then everyone will get impacted. What I am saying is that investors will do more due diligence now.

We have seen layoffs of staffers by some startups in recent months. Will we see more such layoffs going ahead?

Things will consolidate for sure. When consolidation happens, companies will evaluate as per the expectations of the customers. What is relevant 10 years back, may not be relevant today. When pandemic came, there was a different pain point that startups tried to address. That pain point is going away as people are returning back to normalcy. That is applicable to any online grocery or online food delivery or online education. So, needs of people keep changing. When the Covid came, the needs changed overnight. Now, things are slowly changing. When something like the present scenario happens, companies have to find out what is the new need that is evolving. How these startups reposition themselves to stay relevant with the current demand. Those startups which are able to reinvent and realign themselves, they will remain as relevant company.

Corporate governance issues have cropped up in some startups in recent months. What are your views on overall corporate governance standards of the Indian startup ecosystem?

Out of large number of startups, if four-five startups come up with corporate governance issues, that is not a trend. We have seen personal ethics of startup founders to be very high. However, there will always be some instances. Audit and other regulations have some limitation. Therefore, intent is the main thing.

How eLagaan is helping startups to scale their operations at the current environment?

We work with 100 companies which are in the process of raising funds. Our motto is to help the startups to scale faster. We facilitate this process by removing a lot of bottlenecks and saving a lot of time of the founders.

We manage all the backend operations like legal support, defining system and process among others. This helps founders to focus on core operations of the company. So far, we have worked with more than 750 startups, and about 185 funding rounds.

We have worked with companies like Oyo, Udaan, and many more established startups.

As far as growth plans are concerned, we are taking a boutique approach because we don't want our quality of service to suffer. We are looking into deeper engagement with clients.

You have seen the whole ecosystem for the last one and half decade- starting from Sachin Bansal to 22-year old IIT graduate setting up new ventures now. What fundamental changes have you seen in these years?

Everything has changed. Good number of people are now considering startup as an option. Earlier, people were not keen to start something new. Then, quality of talent which is accessible now, is very good. In fact, many good quality talents are only joining startups. Funding is much more accessible now with huge number of investors.

Earlier, there were only handful of investors. We see a decent growth in valuation. The most important change is with regard to customers.

Earlier, most of the products were for global market. Now, India itself has emerged as a huge market. Customers are using the products or services of startups which are very new to the market. Customers are open to try out new companies.