Fart Up India

So NDTV INDIAN of the YEAR AWARD 2015 WENT TO “5 UNICORNS OF INDIA THAT HAD PUT INDIA GLOBALLY ON THE WORLD MAP”

While this indeed is a great news but this led me to ponder whether we really are in a world where it is so easy to build a company worth  a Billion dollars. Does it really reflect the true value of the company their ideas,their leadership?

There is no denying the fact that this indeed is a best time for startup not only in India but globally .There is so much free money flowing in the market that every body wants to grab a pie out of the cake. Especially after crisis of 2008 most of the institutional investors are staying away from traditional financial instruments where money used to get pumped in big numbers (Stock and Real estate etc) But a deeper look at these numbers tells a different story. Lets take a look at some of the Unicorns which has become an essential part of everybodys life in metropolitan India .

First such name in my list is Flipkart,So Flipkart as we all know founded by Sachin Bansal and Binny Bansal in 2007 has been operational for a decade and is valued around $11Billion. But it is yet to make a single penny for its investors. In its last official statement a company analyst said They Hope to be in Profit by next 2 years.  They have been thriving primarily because of the big funding they have been getting from big investors who are investing with a hope that this Seed will become a Fruit bearing Tree soon 

I firmly believe that Flip Kart will definitely be in profit in couple of years because of the mere fact that e-commerce is still under 1% and yet to pick up in India but This valuation has set up a wrong example for lot of Upcoming Start ups and young entrepreneur’s .Most of the startups in this space are grossly over valued and are following herd mentality which is lacking innovation and to the downside they have killed lots of small gali-nukkad start ups with their offers like Billion Day Sale which is primarily to offer products at much cheaper rate than their original price which a small dukaanwaala will never be able to compete with.

Let us take a closer look at another hot start up ZOMATO.It does not needs any introduction since this being the only start up which is present in many other countries outside INDIA,founded in 2008 it is currently being valued around 1Billion USD. Though it has made some profit in the recent months  but that too after shutting down operations in 6 cities and consolidating its workforce 

However others in the same Industry have bitten dust after raising stupendous amount of capital like Restaurant aggregator Dazo had shut operations in October; Eatlo Tech Solutions Pvt. Ltd closed in December and Tinyowl continues to struggle for funds

Another real estate startup Housing.com once valued around 400 Million USD has seen its valuation plung to less than 50  Million USD after series of lay off s and an immature attitude of  ex CEO Rahul Yadav

The core of startup hype is that start-ups are surviving on VC/PE/angel money and not on its own earned profits. When that source eventually dries up, some will go belly up. Only those with business models that generate real cash profits will survive

Other problem that I see is that most of the founders of these startup don’t have any innovation and their sole moto is to create a business out of a cracked success model just like we do Copy + Paste in software world, once the business model has attracted some customers all that founder is looking for is to get acquired by a big fish in the river and exit with a sweet deal for themselves

Is it another Bubble just like dot com burst another start up burst ?

Well All I can say is just like Human Body after eating too much (read money) farts due to indigestion, we are going to see lot of these farts in coming days in terms of Shutdowns, lay off, valuations being plunged

“FARTUP INDIA!!!”