More Indian entrepreneurs diving into second start-ups after first failure: FailCon

A lot of start-ups have also changed tracks, switched to a different line of business after their first route did not succeed
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First Published: Sat, Feb 23 2013. 03 53 PM IST
A still from FailCon conference. Photo: Stillmatica
A still from FailCon conference. Photo: Stillmatica
Updated: Sat, Feb 23 2013. 07 42 PM IST
Bangalore: More technology entrepreneurs from India are willing to hedge their bets on start-up ventures despite having failed the first time around, as venture capitalists (VCs) and investors are more willing to take risks and invest capital now than they were five years ago, according to industry executives and investors.
More investors are willing to bet more on start-ups now as the consumer market in India has become much larger than what it was 5-10 years ago and the cost of failure in start-ups has also come down, said several entrepreneurs on the sidelines of Failcon — an event for failed start-up ventures — on Saturday.
“Entrepreneurs and investors have now started thinking long-term,” said Brij Bhasin of GSFIndia, which provides “seed” money or initial capital to budding start-ups. “The ecosystem in India is changing rapidly. There are more angel investors available in India than previously. Most investors are realistic about the chance of success and they know that 60-70% of the start-ups are not even going to make it through the first stage. But that doesn’t discourage them any more as there’s still a big critical mass to focus on.”
A lot of start-ups have also changed tracks and switched to a different line of business, after their first route did not succeed, an investor said.
“More than half of the companies we’ve invested in over the last 12 months are doing different things now from what they were doing originally. Basically, they realized mid-way that what they started doing in the first place was just not good enough,” said Ajeet Khurana, a venture capitalist at an angel investor group called Mumbai Angels.
For example, an e-commerce start-up called Taggle, which was launched in June 2010 as a group buying site and was shut down in December 2011, decided to “pivot” away and shift its focus to electronics retail specifically after their original model did not work out for them, according to the former CEO of the company, Rutvik Doshi.
“The failure of a start-up is not viewed as negatively (today) as it used to be 10 years ago from a socio-economic perspective. If you’ve tried hard and then failed, it’s not seen as a bad thing by investors,” said Doshi, who now works at Inventus Capital Partners. “Obviously, the freedom you get here now is still not as good as Silicon Valley, but things have definitely improved.”
Also, the stakes of a failed start-up have become much less expensive now. Start-ups nowadays can be started with as little as $50,000 whereas the number used to be around $5 million previously, a venture capitalist said.
“The positive thing is usually it only takes $50,000-500,000 experiments for people to fail these days whereas it used to take $5 million experiments or greater to fail. So we can experiment more efficiently, fail on a more small-scale basis,” said Dave McClure, a Silicon Valley venture capitalist and founder of 500 startups.
FailCon, being held in India for the first time this year, is a one-day conference where technology entrepreneurs, angel investors and VCs get together to discuss the failure of their first ventures, and advise budding entrepreneurs on how to avoid those mistakes.
Mint, owned by HT Media, is one of the media partner of the event.
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First Published: Sat, Feb 23 2013. 03 53 PM IST