Raising funds is the big challenge for app entrepreneurs: IAMAI survey

A dipstick survey of boot-strapping 2,925 internet start-ups was conducted across five cities – Jaipur, Hyderabad, Ahmedabad, Pune and New Delhi – by the Internet and Mobile Association of India (IAMAI). The survey found that a majority 74 per cent of the respondents are leveraging mobile technologies to scale up their business.

Interestingly, 12 per cent of the respondents also mentioned that their product is completely mobile based. Given that many of the respondents were still in the process of developing their product, they plan to leverage the mobile platform in future when they actually launch their products. Probably, in the next couple of years, most of these start-ups will become mobile only start-ups.

The survey finds that mobile is the key platform for new business generation (customer acquisition) and customer retention and transaction completion, in terms of finalising the deal. Digital payment is another major factor for going mobile. Many start-ups are in the field of mobile specific services or into Internet of Things (IoT) based products like wearables and other gadgets; hence they are completely based on the mobile platform.

Over 70 per cent have mobile friendly websites, while 50 per cent have their own apps to tap the mobile platform. There is a clear preference for bespoke apps for the indigenous products being developed by these start-ups. This is indicative of the fact that we are rapidly moving towards an apps economy and apps entrepreneurship and in the next two years, probably, will be an app dominated ecosystem and therefore, we need to build for it.

According to the survey, around 60 per cent of the respondents earn anything between 30-90 per cent of their revenues from mobile. Noticeably, 11 per cent have a completely ‘mobile only’ business and hence 100 per cent of their revenues come from mobile. A sizeable section of respondent were developers; many still at alpha or beta stage of development, and hence have not yet started earning revenues from their start-up endeavours.

While they are building their apps economy, IAMAI asked them about their very basic problems. The problems mostly are of funding, resources and scaling. There are prescriptions for the first two problems, and if the first two problems are taken care of, then the third problem will be solved automatically.

Very few of the respondents had any kind of formal funding in the form of business grants, loans or lines of credit, let alone angel or venture capital funding. Given the profile of funding, it is no surprise that funding is considered to be the biggest challenge. Thus, it is imperative that the government should start funding the start-ups through approved incubators, for the start-up ecosystem and the apps economy to grow in India.

35 per cent of the respondents have also mentioned that ‘manpower’ is a major challenge for these start-ups in their effort to scale up. Thus, there should be special focus of skilling and retraining, and the government should create a separate skills development council aimed at skills training particularly for the digital industry. At least 21 per cent of the respondents have mentioned ‘scaling’ as their major problem.

Only 3 per cent of the respondents have mentioned government regulations as a challenge. While there is a lot of talk about ease of doing business in India, this survey just proves that budding entrepreneurs are ready to grind and go through the grill.

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