5 Tips for Startups to become Unicorns and Go for IPO

Here are a few tips to notice and keep the impact of these ugly possibilities in check.

Tip 1: Make the Funding Last

Being flush with funds after a long time of counting pennies can be a huge relief. Sometimes, too much of a relief, that can lead to a feeling of having achieved the final goal, and splurging on any and every idea. Getting the funding is hard, but not the hardest part of being a startup, especially if the solution is valuable in the market and differentiated from what already exists. It is better to be slow and steady than fast and furious in the startup race circuit. Look at Five Star Finance that achieved Unicorn status with only USD 200 Mn in funding, and took 37 years to reach here.

Tip 2: Prioritise Fund Allocation

So, if you have gotten funding, stop and think about what are the critical elements that need to be funded to stretch the money as far as possible. After all, given enough time all good ideas can reach their full potential. Spending too much, too fast, in too many non-critical elements is a cardinal sin for a startup. Most of the startups get this step wrong because they start believing that their funding proves that they know better than the market. See how Snapdeal floundered without clear focus on the critical elements for success. Also, Hike was erstwhile hailed as the youngest startup to get Unicorn status but it lost its path in a labyrinth of features, which reinforces the need to get the basics right.

Tip 3: Focus on Speed of Scale

If anything is critical at a startup, it is the acquisition of new customers at a pace faster than the market and competition. This is one of the critical elements that funding has to be pumped into. A deep dive into the cost of acquisition is pivotal for consistent progress.Look at how Amazon is still in this mode of growing their audience base at the cost of never having shown a profit till date, but no one is complaining, because they are way ahead of competition and still increasing the gap.

Tip 4: Think and Stay OpEx

Being flush with money is empowering, but funding money is not real money. The funding is a loan from your own future, so be ready to answer to your future self if you don’t think through every expense. Hence, it is a good idea to spend as little as possible on a recurring basis rather than making large one-time capital expenditures that can deplete the funds faster, and shorten the runway that is required for a startup to grow its wings. We are yet to see how the series of acquisitions by BYJU’s scripts their exit story.

Tip 5: Never Lose Flexibility

It is important for a startup to experiment. After all, every startup is an experiment in itself. So, before the startup forms a reasonably resilient structure, it will have to try out different bones and joints to find its core, particularly in terms of recruitment. This flexibility can be in terms of the number of seats required, employment to be provided, to the kind of skill sets needed in every phase of its early life, or even the kind of HR tools and processes. Most startups appreciate the benefits of contract staffing for managing the manpower needs as per employment seasonality in growth cycles.

Conclusion

While this nuclear explosion of startups and unicorns in India seems promising, the future may come with a looming risk of apparent congruence. The startup ecosystem, especially in the e commerce space, is driving the growth engine for job creation and has bolstered over at least 6.5 lakh jobs. What’s more? We are creating new benchmarks for ourselves.

Having been a startup ourselves that went for IPO not so long ago, we have always worked closely with the startup ecosystem and are currently serving over 20 Unicorns from only one of our business units. With this evolving experience of working with multiple startups and unicorns across industries, we have seen and solved their challenges from up close. We have seen the exhilarating feeling when one piece of the puzzle fits into place, and have been party to the pain when a simple overlooked idea causes a disruption down the line.

TeamLease offers end-to-end people supply chain products and solutions that help startups to add & augment flexible staffing to their business at a low cost opex model, making them nimble and responsive to the fast changing market requirements. Our belief is that every startup needs a fighting chance, and in providing it, we want to become their partner of choice for staffing and employment related offerings, and grow with them.