‘Startups’ — A word that everyone gets excited these days, isn’t it? Something that comes to mind at first — own boss, will become rich, people will work under you, CEO title and more. But the truth is, it is not that cushy as it appears though. I have done few startups in lifestyle, education, dating, classifieds, media etc, and few of them were good enough, few were a total failure and few were pivots as well. In my last few years of experience, I have gone in all good, brutal and bad phases though but truly, it was an awesome and immense learning experience.
I have seen the changing developments in the startup ecosystem very closely and have been part of that developments too. I do feel 2017 will be more challenging than 2016 but it will the year of execution, big exists, M&A, new growth milestones, sustainability, innovation, IPOs, and a lot is going to happen in 2017.
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I think there are top 10 challenges that every startup is likely to face in 2017 as:
1. Don’t Do Startup. Build Business:
The shift will happen more on profit based businesses that will provide edge for linear growth. The focus will be on getting more profit and re-investing same to have continue the product or startup. The challenge will be to build right businesses than just doing the startups. Building businesses out of the startups would be the focus in 2017.
2. Bootstrapping Will be the Key:
The key of success will be more bootstrapping for longer time. Raising funds are getting higher and so bootstrapping will be encouraged more. Startups are needed to plan for the bootstrapping very seriously else need to ready to fail.
3. Unit Economics Will Matter:
The growth economics for any business or startup will matter in 2017 more than GMV or expansion. The consumer spending vs the profit will make more sense than just GMV. The challenge will be to build business based on right unit economics. Spending would be needed to reduce to a significant amount. LTV, Margin, CAC and Net Profit will matter a lot.
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4. Hiring Kick-Ass talent will be Costly:
The right talent is getting more costly as the value of knowledge has increased than degree. The emerging & cutting edge technologies is going to the focus in next few years and availability of resources are less. Therefore, because of supply and demand gap, the cost will be higher. The industry focus has been shifted to automation, intelligence and insights either it is manufacturing, travel or eCommerce. The small startups will have to face this because for them it will be tough to hire such costly talent. The sharing economy is growing though but it is not effective in technology development yet. On the other side, cost of living, travelling, eating have increased multi-folds as well. The startups are required to plan quite carefully while hiring the talent. Not Degree will matter, but skills will be matter in coming time.
5. Funding Will be tough:
No doubt about this that in 2017, funding is going to literally tough. Already from 2015 to 2016, 50% of the funding has been reduced already. The trends suggests that funding will be more on unit economics side than just idea. Startups are really needed to work hard for innovating and scale-able ideas that are capital efficient.
6. The competition will Matter:
Get ready to face the ‘sharp & fierce’ competitor. With the high growth in number of startups in both tapped and untapped sectors, it is not going to be easy to stay in the competition if not have edge over innovation and defensive strategies to compete with. Differentiation over high barrier will matter in the coming years.
7. Innovation & Execution will be the Success:
No matter what you build or execute, innovation is going to be the key for the success of the product or startups. If the business or startups are being built just following the western trend or copy paste, it is not going to work at all. That time is over now and only innovation and the key of executing that innovation is going to matter a lot. Millions of people are building innovative products or technologies and in that case, your execution will be the next key for success over innovation.
8. Keep Valuation Realistic:
The fund raising will be realistic based on the real valuations. The investors are not going to throw money as like in 2015 again. The investment will be based on your unit economics & sales than just building the product or business. Be ready to face the significant reduction in the existing valuations and also the new valuations will be totally realistic only.
9. No Copy Paste will work:
2017 will be the year of disruption in many areas and hence copy pasting of the ideas will not survive. The startups that will be built on copy pasting model, will not work at all. The re-inventing of wheel is going to make the disruption than copying the idea.
10. Tax Liability Will Increase:
Indian tax regulations have significantly changed in 2016 with include of multiple taxes & liabilities. The startups are going to pay lot of taxes that were not applicable in 2016. For small startups to big enterprises, this challenge will be there with some easiness due to GST Bill (if executed on time and properly).
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The change will be there for sure. Each year teaches something good and bad but both the lessons of life are needed to be learnt. The coming 2017 is surely going to be the great year in terms of development, execution & disruption. The year is going to be more exciting with lots of new learning.
Article Written by Layak Singh | He’s the founder of (Artivatic is B2B AI Platform for Personalized Recommendation & Automated Real Time Decision Making)