Till a year ago, startups were raising dollops of capital, hiring, growing giddily and earning plaudits for their ambition and risk-taking. Today they are hitting the headlines for slightly different reasons
Till a year ago, they were seemingly doing all the right things—raising dollops of capital, hiring, growing giddily and earning plaudits for their ambition and risk-taking. Today, they’re hitting headlines for slightly different reasons: Inability to raise capital, mounting losses and having to let go of personnel hired in the boom times.
While such an inevitable cycle brings along with it many lessons, including Newton’s conclusion that heavier objects will hit the Earth with a greater force than lighter ones, it doesn’t take away from one reality: Busts will come and busts will go, but startups matter in a thriving economy.
Why? Well, you’d be tempted to scoff at this during layoff season—as per the Inc42 Indian Startups Layoff Tracker, 44 startups had laid off a little over 15,700 employees in 2022 till early November. Net-net, though, startups do create jobs. According to the Department for Promotion of Industry and Internal Trade, India’s 73,205 officially recognised startups created over 7.5 lakh jobs in the country (till June). A recent report by HR-tech firm BetterPlace suggests that more than 8 million jobs were created in the frontline industry (workers that provide essential services) in FY22; ecommerce contributed the highest to this demand, followed by logistics and mobility.
Another reason for keeping the faith with startups is that they are more likely to produce breakthrough innovations than traditional companies. Such innovations tend to emerge in the startup phase when the venture and its founders are young; as they get bigger and older, the innovations are fewer and at best incremental.
(This story appears in the 02 December, 2022 issue of Forbes India. To visit our Archives, click here.)