Being a Startup is Not a Branding in Itself

India is now the third-largest startup hub in the entire world!

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This fact, a rather accurate one in theory, is frequently cited to celebrate our country's entrepreneurial spirit. But, as we sing paeans to the burgeoning startup ecosystem in India, it is easy to forget that quantity often does not guarantee quality. I have been in the startup scene for a while now, and in these years, I have been fortunate enough to meet some brilliant founders who have brought absolutely unique perspectives to the table. But, now, as I look around, I see that every Tom, Dick and Harry is calling their business a "startup".

Worse, some perfectly promising startups are refusing to grow out of their starting phase and develop sustainable businesses that last.

I cannot deny that it is indeed very daunting to make inroads into the big bad world of business, shedding the "startup" tag, and fighting it out with established corporate firms. However, as much as I empathise with the founders, I can't help but point out that change is the only thing that is constant.

Clinging to the "startup" tag when your business is way past that stage is not doing you or your existing investors any favours!

In recent times, referring to a new business as a "startup" has become frustratingly commonplace. I don't deny that most business owners work day and night to get their ventures up and running. Their business is their baby, and it is perhaps natural to try and make it sound a lot cooler than they think it is. And, with startups getting all the online attention, savvy co-working spaces and a pride of place in government policy, being a "startup" has become the latest fad in our country and beyond.

First off, let's refresh our memories about what a startup is really all about!

What is a “Start-up"?

A Startup is a phase of the new business that an entrepreneur starts with a shoestring budget. In the initial stages, the founder typically raises funds from friends and family, or simply bootstraps the operations. Later on, such startups go on to raise massive sums of money from venture capitalists and private equity investors, their value rising through the roof with every single funding round.

If you found yourself agreeing to this definition, then you, like the people running after the "startup" tag, have forgotten the true essence of the word. All the things I have mentioned above are indeed associated with some of the most successful startups in the world. But, more importantly, real startups have some unique value proposition to offer to society. They are disruptive and novel, and they bring fresh ideas and innovation into the business scenario. They set new standards with their products, services or processes. It could be a brand new product or simply a smart new way to run a business; but a startup absolutely has to have something new to offer to the market.

For example,

Opening a restaurant with crowdfunding does not make it a startup!

Pioneering a business model that adds value to the industry and its consumers, does. Having funding rounds may get your name into online news portals, and working from home with a laptop may make for a great Instagram shot, but the bitter truth is that these things alone are not enough to turn your business into a startup.

Startups are built with a lot of blood, sweat and tears, and it involves much more hard work than a #hustle on social media can ever encapsulate.

Startups that Don't Want to Grow Up

If there is anything more frustrating than non-startups hijacking the tag, it is established startups refusing to grow up. There are some great startups out there, who have gone through the hoops of building a business model and raising funds. At this point, one would hope that these promising ventures would want to expand and establish themselves as formidable businesses. After all, the founders started the business in the hope of growing it to great heights right?

Imagine what would have happened if big companies like Google and Amazon clung to their startup status and refused to mature into the massive corporate houses they are today. Of course, attaining a corporate status comes with its own set of complications, but one cannot deny that it has its perks.

Besides, it's the only clear trajectory of growth.

Many startups, which are prepared to make an organic move to the next stage, like to hold on to the "startup" tag for dear life because they think that they would not get any more funding otherwise.

In some ways, the funding-obsessed culture of the startup ecosystem is to blame for this attitude. The discourse on this issue has made it appear as though getting funded is the primary focus of building a start-up. Building a business model that can be scaled and expanded in a sustainable way has sadly taken a backseat. This refusal to move into bigger and better things baffles me to no end. I absolutely fail to understand why a firm would like to be known as a newbie forever.

In any case, being in the category for too long can bring unanticipated neglect, even from their precious investors.

"Startup" Tag isn't a Good enough Brand

The discussion brings me back to my original point of content: that being a startup is not a branding in Itself. Every business, old or new, tries to make a name for itself. An easily recognisable brand name and a robust brand image are essential parts of attracting new customers and retaining older ones. When a business tries to improve its branding, it is trying to set itself apart from all its competitors. A branding exercise is essentially an attempt to establish oneself as the key player in that category.

By definition, a brand is specific to the business itself. It tells a story of the company, its products and its people. It is meant to connect with customers and establish solid business relationships. On the other hand, the "startup" tag is something you share with 50,000 others in India and about 100 million businesses around the world. Sure, it can spark some interest and get you a few moments worth of conversation with an important contact, but if you can't establish what your business truly does and how it adds value to the world, the tag itself will mean nothing.

It is not untrue that the "startup" tag, in certain scenarios, may get you a foot in the door, but having a real and properly fleshed out value proposition is what will keep the door from being slammed on your face. And if a startup waits around for too long before taking the next step towards growth, it is likely that even that foot in the door advantage will vanish quite soon. Of course, the flashy headlines of startup success and the dazzling stories peddled by industry publications are extremely potent when it comes to blindsiding the most brilliant of founders. But, at the end of the day, it is the founder's responsibility to look at the bigger picture and plan for the years ahead!

After all, you'd like to hit bigger milestones than simply raising tens of millions in funding rounds, wouldn't you?