Over the past few decades, the method of doing business has seen an unprecedented change. Facebook- a web content platform employs no content writers. Airbnb and Uber, the world’s largest hotel and taxi companies respectively, own no hotels or cars. This would have been unimaginable only a few decades ago. Such a revolution in the method of doing business owes much to the start-up culture that began in the Silicon Valley in 1990s. The dot.com boom that kick-started the start-up erasaw the coming up of innumerable internet-based companies. These start-ups recognised the potential of internet as a medium to drastically alter the existing norms of doing business and create radically different precedents.
So, what are start-ups and how are they different from conventional businesses? While an all-encompassing, agreed-upon definition of start-ups doesn’t exist because its scope and nature are continuously changing, they have a fundamental principle: finding innovative solutions to emerging needs of the market through products that are irreplaceable and irresistible to the consumers. They distinguish themselves from other businesses by adopting an entirely new template of functioning formulated for their particular need instead of adopting existing templates.
Their unique business model has also allowed for start-ups to innovate their sources of funding. They function through several rounds of funding, often starting off pretty low through bootstrapping. Since the risk factor is higher and the possibility of success very low, only a few work-out enough to be able to acquire funds through seed-funding, venture capital and eventually going public and into stock marketing. Because they adopt such radical methods and challenge the existing norms, start-ups have often been called ‘destructive’.
The evolution of the start-up space over time:
There have been three significant stages in the evolution of the start-up space, all owing to the dominant trends prevalent in the global market:
- IT boom
- Consumerism
- Innovation
While the history of start-ups remains hazy, and not one example can be pointed out as the starting point, the mainstreaming of start-ups is synonymous with the IT boom that took place in the Silicon Valley in the USA. Most of the E-commerce giants today like Facebook and Amazon were born out of this boom. The internet came with vast possibilities for those who could think out of box, locate needs of the market and put together thought and action to generate products that consumers had not come across before.did not know they needed.
The wave of consumerism became the second nudge when liberalisation of economy, an open global market and the ease of doing business through the internet resulted in a much-needed growth in the start-up sector. Many developing nations soon joined this movement realizing that theyencompass world’s growing middle-class with huge purchasing power.
The third wave of innovation has been instrumental in introducing and initiating a shift to B2B (Business to Business) model as well as the setting up of Global Capacity Centres (GCCs). Research and Development (R&D), became an integral part of companies as innovation made businesses stand out and market themselves. Hence, the most recent trends in the start-up are towards establishing a global connect and customer base for scaling up.
The coronavirus pandemic has altered the industry significantly. While start-ups faced many challenges in terms of shifting to remote work, figuring out procurement and distribution of products,they also brought new ideas that cater to the special circumstances of a pandemic ridden world . For instance, the exponential growth that the e-learning sector is witnessing is a prime example of start-ups benefitting from the pandemic.
The future is embedded in free thinking and experimentation. Start-ups show huge promise in this regard as they are highly flexible and accommodative and remould themselves according to the demands of the time. They look out for brilliance and innovation, and are quick to adapt to changing circumstances.
