X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
Investing in India? Get Equitymaster Research  
Is India ready to fail? 
(Wed, 27 May Pre-Open) 
 
Do you know the single most important criterion necessary for being a country that churns out successful tech start-ups?

According to an interesting piece that we came across in Livemint, the answer is to have a 'fail fast' culture, where failure is accepted and taken as a norm. This may sound counter-intuitive. But let us explain.

The tech sector is driven by a high degree of creativity and innovation. To facilitate this, there must be an environment where a lot of new ideas are tried and tested. Of course, this means that a lot of ideas are set to fail. But that's how the industry dynamics are. The tech sector is a largely failure-based industry.

Here are some interesting statistics... In America's Silicon Valley, tech companies last two years on average. An estimated 70-90% of start-ups fail.

If there is such a high failure rate, why would investors put money after such risky ventures?

The reason is that once in a while there are bound to be success stories like say Flipkart, Snapdeal, InMobil, etc. Successes like these can provide venture capitalists lucrative exits and more than make up for a bunch of other failures.

Interestingly, it seems that India is slowly adapting to the 'fail-fast' culture. There are signs that India's US$ 150 billion IT industry is gradually witnessing a transition from being a back office powerhouse to an innovation-hungry tech culture. The key drivers of this trend are returning engineers from the Silicon Valley who have their vision set on the big opportunities in the Indian market. At the same time, venture fund investments have been injected by the billions.

So indeed it is a healthy sign that the Indian tech start-up sector is witnessing a boom.

But there are many challenges too. While the 'fail fast' culture is slowly taking root, failure is still seen as a taboo. Also, the 'fail fast' culture is limited to just a few tech cities like Bengaluru, Gurgaon, etc. Hopefully, the scenario should change soon to sustain the tech start-up boom in India.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives  RSS
Read the latest Market Commentary
 
BSE-30
 

 
Go
 

Equitymaster requests your view! Post a comment on "Is India ready to fail?". Click here!

  
 

S&P BSE SENSEX


Apr 21, 2017 (Close)

MARKET STATS