While it’s heartening for entrepreneurs to see their peers raising funding and getting into the billion-dollar club, it gets frustrating at times as well. Through his own story, Deep Kalra, founder of a (now) unicorn, shares why he is disgusted with the whole business of throwing around terms like ‘unicorn’.He gives some tips on how to win the long-term game.
Unicorns are mythical creatures, conjured up by fabulists for centuries.They are not rooted in reality.So the reason why billion-dollar startups came to be called ‘unicorns’ was the sense of awe that a creature like a unicorn evoked in people. It is considered an achievement to join this exclusive club, and just like other exclusive clubs, this too gave rise to an elite class among entrepreneurs. Unfortunately, entrepreneurship, by its very collaborative nature, can’t thrive on this bifurcation. Moreover, with more than 200 billion-dollar companies, the ‘exclusivity’ aspect of the club is lost and all we may be left with is an intrusive division.
Bill Gurley, an early investor in Uber and Snapchat,addressed the outcome of too many unicorns, and ‘decacorns’—companies withvaluation of $10 billion or more—when he said, “More people are employed by money-losing companies in Silicon Valley than ever before”.
Bill was quick to predict dead unicorns in early 2015. He said,
If the free flowing capital, which is driven by low interest rates, ever dries up, it will affect more than just money-losing startups.
Earlier in September 2016, billion-dollar company Mode Media shut down after raking in $90 million in revenues the previous year. This may be just an exception where mismanagement of fundshad a domino effect and an eventualshutdown, but one cannot deny the fact that with more unicorns around, the essence of a startup and its focus on right metrics is in the danger of being lost.
Out of 30,000 tech startups in India, nearly 3,000 have received external funding. While bootstrapping is a choice, many startups of the remaining 90 percent—2,7000 startups—have been trying hard to get funding. And with each funding and valuation discussion, it gets tough to maintain focus. Anupam Garg, an ex-startup founder, says,
“We were working towards getting some traction while not losing track on profitability. But when we saw companies with relatively poorer numbers getting funded around us, it did bother us, and we can’t deny it. This happens in many sectors where you see follow-up round of investments jeopardising many first-round investments(of early stage startups with similar business model).”
In arecent interaction, Deep Kalra, founder of MakeMyTrip (MMT), shared his views on this. He said,
I think that the whole business of using words like ‘unicorn’, ‘pentacorn’ and ‘decacorn’ is disgusting, because I’ve been a struggling entrepreneur for really long.
‘Very often you’ve done nothing to deserve it’
Deep shared that his darkest years were between 2001 and 2004, when the company had just enough…