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Growth Challenges of High-Tech Startups WORKSHOP ON GROWTH ISSUES FOR STARTUPS IN INDIA 9 TH DECEMBER 2015, ASCI, HYDERABAD Presented by: Jignasu Yagnik Entrepreneurship Development Institute of India Ahmedabad Based on Research Study Sponsored by Department of Science and Technology “Problems and Issues Faced by Hi-tech Entrepreneurs in Launching, Managing and Growth of their Ventures” Dinesh Awasthi, Archana Dholakia, Bipin Shah and Jignasu Yagnik
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Background The findings are based on responses of 48 Entrepreneurs running New Hi-tech Firms (<48 months), spread across 10 states. Data were collected during November 2014 –Feb-2015 Industry sectors covered ICT (48%), Food (19%), Engineering (13%), Healthcare (8%) and others (Plastic, Research, Chemicals etc.) 12% Distribution of Units by Initial investment ◦ Less than 25 lakhs (73%) ◦ 25-50 lakh (10%) ◦ > 50 lakh(17%)
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Operational Issues Affecting Production Operational Challenges Hamper Stabilization, a stage precursor to Growth phase The key operational challenges bothering Hi-tech Firms are Challenges% Issues Related to Skilled Manpower 29% Space/Infrastructure constraints 15% Getting Payment on Time 13% Regulatory Issues 8% Others (Marketing, Raw Material etc.) 18% No Problem33 % (%ages may not add to 100 due to multiple responses)
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Marketing Problems Three Major Problems related to marketing faced by these HTFs are Problems% High Cost of Entering New Market66% Regulatory Requirements29% Domination of Established Player29% (%ages may not add to 100 due to multiple responses) 30 Respondents
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Problems Faced by HTFs in Exporting their Products Almost one-third of these enterprises were involved in exports The key problems faced by exporting firms are Problems% Logistic issues45% Marketing and Branding22% Government Procedures11% Rules and Regulations in different Countries 11% No Problem11%
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Top 3 Growth Challenges Addressed by HTFs in the Recent Past Challenges% Product Innovation73% Cost Containment49% Making Customers Happy45% 37 Respondents (41 more than 2 yrs.) (%ages may not add to 100 due to multiple responses)
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Challenges in Executing Immediate Growth Plans Two-third of these young enterprises have immediate growth plans Their immediate growth challenges are Challenges% Inability of Venture Capitalists/ Banks in evaluating worth of our products 57% Lack of Skilled Workforce /Talent Acquisition43% Regulatory Issues20% Infrastructure/ Facility constraints14% R & D limitations14% Others (Quality, Sustainability etc.)10% (%ages may not add to 100 due to multiple responses) 37 Respondents
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Top 3 Growth Challenges in Next 2-3 Years Challenges% Obtaining Finance53% Product Innovation53% Improve Supply Chain Management43% Improve Margins40% 39 Respondents (%ages may not add to 100 due to multiple responses)
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Major Growth Constraints of Startups According to Domain Experts Constraints% Lack of Funding92% Managerial Deficits of Entrepreneurs not compensated by hiring professionals 56% Talent Acquisition and retention48% 25 Experts
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Top 3 Recommendations for Large-Scale Emergence of Startups Recommendations% Relaxation in Rules for Funding Startups38% Govt./Banks Should Revise their appraisal criteria – Accept Knowledge as Asset 35% Better Industry-Academia Linkages to address problems faced by firms 31% 42 Entrepreneurs
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