“The Intention Behind The Word ‘Startup’ Is Scalability, Or Else, It Is A New Business”

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Afflicted with real questions—not just startup buzzwords—aspiring founders in India must rethink scale, funding, and survival. It all begins with mindset, models, and meaningful action. That is what Sundara Nagarajan, Managing Director of Innovation Scaleup Advisors, said during an engaging session at the EFY Expo in Pune.

Rather than simply calling it the ‘starting of a business,’ the word ‘startup’ captures the ambition and vision behind it—a captivating pursuit of today that builds tomorrow. But when the dreamers step into reality, one asks, “How do I raise capital for my startup?” Another adds, “I do not even know how to register a company or find funding—where do I begin?” Queries keep flooding in, “Should I work part-time before jumping in full-time? What is the success ratio for startups? Are product businesses more successful than service ones? Can services be productised to scale? What happens if the team quits early on?”

These are not just theoretical questions, but real concerns from people ready to act, not just study. And that is precisely where I begin: action. In entrepreneurship, this is fundamental because general case studies rarely help. Every business is unique. Success does not follow a script—it follows your ability to move forward, one successful decision at a time. One must be ready to work within one’s means and business context.

Years ago, when someone said they were ‘starting a business,’ it usually meant they had lost a job, given up an academic or government service, or failed a competitive exam. A few were drawn to an opportunity they perceived as a more valuable use of their time in life. Their family and acquaintances generally did not encourage them in India. Today, the situation is somewhat better in that respect of social excitement. But, not all such business enterprises can be called a startup.

The intention behind the word ‘startup’ is rapid scalability, and it is important to understand that. For example, running a local tea stall is a form of self-employment—honest, hardworking, and often sustainable. But building the next Starbucks—that is a startup. Scalability originates from the economies of scale—the ability of the enterprise to grow profitability (acceleration of profits) in relation to its revenue growth. That is where venture capitalists enter the picture.

India is a nation of traders, businessmen, and entrepreneurs. Approximately 65% of earners operate businesses, while fewer than 30% hold formal jobs. Grassroots entrepreneurship is both widespread and vital to the economy. It is not limited to startups or large companies, but includes daily ventures—a vegetable vendor managing sourcing, supply chain, and sales, servicing a high-interest loan is also running a business with a dynamic strategy.

Success and failure in startups, beyond the hype…

Around 95% of startups fail—a hard reality. Statistically, only 1 in 20 is likely to succeed. But the picture is more nuanced. Some business models, like product distribution or services in renovation, plumbing, or electrical work, have a higher probability of success. Yet even in these, 60-70% still fail, mostly due to capital exhaustion, often within 10 years. Surviving beyond that 10-year mark usually signals cash flow, profitability, and resilience. The truth is, business operations are complex, and success is rarely just about the idea.

Suppose I represent Toyota—I am not making the product; Toyota handles production, marketing, and sales strategy. They give me a price, and I open a dealership, manage inventory, treat customers well, and sell the cars. My main job is operational—managing working capital, paying Toyota for stock, and ensuring I sell the cars quickly enough to recoup the investment and earn a small profit, all while serving a specific area in the city. This business model is not innovative; it is operational and about execution. And over 60% of such businesses fail, often due to bad execution.

Now, when you are starting a technology startup, such as inventing a vaccine or something completely new, the probability of success is very low—less than 1%, approximately 1 out of 400. This is because such startups involve fundamental research and development of new technology, where no one knows precisely how to do it yet. People starting a business need to understand the type of business they are starting and choose their path accordingly.

Do you remember the story of Edison and Tesla? Edison was more of a businessman than a scientist. He started his first business at the age of 15 by distributing newspapers, an innovation at the time that he knew could make money. Most of his inventions were based on electromagnetic theory and the technological advancements of the time. This is known as the Edison quadrant—a well-understood technology with immediate market applications.

On the other hand, Tesla pioneered new technology development without a clear commercial application strategy. Unfortunately, he died poor, showing the reality of success in science versus commercial applications.

Today, we hear many buzzwords like artificial intelligence (AI), generative AI, agentic AI, and artificial general intelligence. Most of the audience understands terms like LLM and their commercial use. This is application innovation—relatively low risk and mainly market risk, not product risk. For example, services like Swiggy, Zomato, Ola use cloud-based internet technology to deliver food or rides. However, starting a digital laundry service would be less successful because the affordable alternatives do not justify it. So, application innovation must achieve innovation adoption (customer experience) and sustained usage (customer success).

When considering any business, you must assess the market’s size and the likelihood of continued use of your solution. What people today commonly refer to as deep tech often causes confusion. The key factor with deep tech is that it involves both high levels of technological innovation and high-value, evident, practical applications, sometimes, multiple application domains. In other words, it is not just about using advanced technology, but also about creating fundamentally new technology with significant real-world use almost immediately.

Here comes the vaccine example. In such cases, relentless scientific research is essential. The problem space is clearly understood, but a solution has not been found yet. For example, another application case is wanting to travel from Delhi to San Francisco in three hours—there is no service now. But, if it existed, there would definitely be a market for it. The challenge is creating it at an affordable price. So you need a sustainable business model combined with technological inventions. That is deep tech—solving a known problem in technology innovation and appropriate execution. The market is clear because the problem already exists and affects many.

How to turn the vision into a venture: raising capital

In my generation—I graduated with an engineering degree in 1980—starting a business in India was extremely difficult. There was no funding, no startup-friendly support system, and licenses were hard to get. People like Dhirubhai Ambani, who began professional life in a petrol pump and built Reliance, were exceptional entrepreneurs. But today, things have significantly improved from the ecosystem perspective. The government is more supportive, more willing investors are visible, and venture capital is available if you have a good business idea.

The government has also launched the Startup India programme and supports technology business incubators, especially for students. If you have an idea but are unsure about how to start a company or navigate the legalities, joining an incubator is the best step. There are over 1500 incubators in India, both in educational institutions and those run privately. They provide mentors, services, and networks to help you nurture your idea and grow the business model. What matters is having a strong idea with business value.

For those wondering how to register a company or transition from employee to entrepreneur, this is an ideal time to start up in India. With the support of a growing system, it is only getting better.

The leap from employee to entrepreneur: Is it time?

If you are an employee, you essentially exchange your time and expertise for money. The difference in pay across professions is determined by the market. In the past, employees stayed with companies for 30–35 years, not necessarily out of happiness but due to a lack of choice. Today, the scenario is different and there are more opportunities for the talented. If employees are good, they will find jobs.

The future of jobs looks like one professional serving multiple enterprises concurrently, and engaging in competitive collaboration. We can already experience this model in India, especially in the startup community.

Transitioning from employee to entrepreneur starts with financial literacy and stability. If you want to leave your job to start a business, check your personal finances first. How do you manage your personal wealth? Will you survive for two to three years without a monthly salary? If not, do not start a business. Learn how to manage money first. Thankfully, personal finance is now taught in schools. Learn investing and understand returns. You are not ready to run a business if you do not understand investments. Even business leader jobs in large, well-established companies may not prepare you to design and run your financial system.

Again, if you are not business-savvy but skilled in technology, consider finding a co-founder who handles the business aspects. Once you are financially stable, the idea comes next. A business starts with a problem and offers a solution. You must solve a problem for a human willing to pay for the solution. For instance, your idea cannot be for the manufacturing industry—who in the manufacturing industry suffers the problem you are solving, and is willing and able to purchase your solution?