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Over 90% Indian Startups Fail In First Five Years: IBM

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A study by IBM has revealed that over 90 percent of Indian startups fail within the first five years, reasons being lack of innovation and stalled funding.

The startups in the country are facing funding roadblocks both at entry and exit stages while successful global startup ecosystems are well supported by active investor communities.

“We believe that startups need to focus on societal problems like healthcare, sanitation, education, transportation, alternate energy management and others, which would help deal with the issues that India and the world face,” said Nipun Mehrotra, Chief Digital Officer, IBM India/South Asia, in a statement

IBM’s Institute for Business Value (IBV) recently collaborated with Oxford Economics to understand India’s startup ecosystem.

The Findings at a Glance: 

They interviewed 600 startup entrepreneurs, 100 venture capitalists, 100 government leaders, 500 leaders of established companies, and 22 educational institution leaders to understand the impact of startups on the economic growth of the country.

The also found that the top business advantages enjoyed by Indian startups are the country’s economic openness, skilled workforce, and its large domestic market.

Furthermore, the study observed that a proposed reduction in corporate tax from 30 percent to 25 percent is likely to boost startup activity.

Seventy three per cent of Indian business leaders surveyed believe that ecosystems can help accelerate innovation and almost 80 per cent of the executives from established companies say collaboration with startups accelerates new ideas.

Seventy per cent of the venture capitalists believe that talent acquisition is one of the biggest challenges faced by Indian startups, and limited availability of necessary skills impedes growth.

An earlier study found 80 per cent of engineering graduates in India unemployable. 48 per cent of employers in India find it tough to hire the right talent, the study found.

Stakeholders’ (established businesses, startups, VCs, Government, higher education) involvement and contribution is key to creating a conducive environment for the success of the startup economy.

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