3 things startups must focus on to survive ‘tech winter’

3 things startups must focus on to survive ‘tech winter’
Representational Pic

Startups disrupt traditional business landscapes, so when the landscape for startups itself faces disruption, you can expect consternation and caution to abound. As reported by startup ecosystem market intelligence platform, CB Insights, 2021 was a remarkable year for global venture capital investment, with deal values doubling over the previous year as investors poured money into some of the world’s most innovative startups. But like all periods of rapid growth, this level of investment can’t be sustained indefinitely, and so this year we have seen a contraction in both deal volumes and values. 

CB Insights data also shows, as at Q3 of this year, global venture funding reached US$329.2 billion, with a projection to hit US$438.9 billion by the end of 2022. This means we could see an approximate 30% decline in value compared to the US$630.3 billion invested globally in 2021. 

These declining numbers have caused concern among startups across India. However, there are strong reasons to believe that this situation widely referred to as venture capital or ‘tech winter’ is something that many startups will be able to weather. 

While the overall numbers are down compared to a year ago, they show that significant volumes of venture capital are still being invested – numbers that would have seemed unlikely just a few years ago. For instance, total global funding in 2020 reached US$298.2 billion, and this year’s figures have already surpassed that amount. Furthermore, CB Insights also reports that 66% of overall deals year-to-date have happened at early-stage, which should give new founders confidence that funding for fresh, innovative ideas is still available. 

Though running a startup in any economic climate isn’t easy, startups can focus on these three things to keep the lights on during these muted times:

OPTIMIZE SPENDING

There’s no doubt that in times like these, investors are apt to focus on the fundamentals, with an emphasis on revenue rather than growth, and an accompanying desire to see costs streamlined and more conservatively managed. Some of the biggest costs a startup takes on when starting out include people, marketing, and the cloud infrastructure the business is built on, so founders must assess if they are using cloud services efficiently.

This means ensuring that they are choosing the most cost-effective pricing models and aren’t using more cloud services than they actually need. There are tools offered by Amazon Web Services (AWS), which startups can leverage to ensure that they are using the cloud optimally. 

An example is Indian AI-based data solutions startup, iMerit Technology, whose revenue growth has nearly doubled every year for the past five years. To ensure they’re managing their tech costs as they scale, iMerit has taken advantage of AWS’s Cloud Financial Management Support to deep dive on their cloud spend analysis and uncover opportunities to run more efficiently. Through this exercise, the start-up discovered that services like Savings Plans and rightsizing their instance usage could reduce their cloud spend by about 20% per month.  

BUILD CAPABILITIES AND COMMUNITY FOR LIFETIME SUCCESS

Heightened motivation to save on costs does not mean that startups should forgo their ambitions for growth and learning. Upskilling is as critical now as it’s ever been, which is why we work closely with startup customers to help them equip their teams with the most in-demand digital skills. 

In challenging times, it’s equally important to grow your network and community, so we help startups build connections in the ecosystem by introducing them to potential customers and investors, as well as offering peer networking and learning opportunities. This year, we launched new programs to bring startup executives together to share ideas that will help them better navigate their way forward. In India, we power programs such as SaaS Central and ML Elevate, that feature both in-person and online events designed to help startups network and learn from each other, to build stronger businesses. 

STAY FOCUSED ON IDEAS AND OPPORTUNITIES

Despite the concern and conservatism in the ecosystem right now, we are still confident that this is a great time to launch and grow a startup in India. Even with the current uncertainties, there continues to be an opportunity for entrepreneurs in India with great ideas to obtain funding. As startups continue to innovate and solve the world’s biggest problems, it will be exciting to see the big ideas that come out of these unique times. 

Related Stories

No stories found.
logo
Greater Kashmir
www.greaterkashmir.com