Bajaj Auto Managing Director Rajiv Bajaj lately shared some valuable insights for entrepreneurs who are navigating the challenges of building successful startups. He was present at the CNBC-TV18’s Global Leadership Summit today and warned against what he calls the “burn strategy,” which is said to be a common pitfall for many new-age businesses.
Upstarts are businesses that lack similar vision and they burn through resources instead of building something meaningful. Bajaj highlighted the way such companies often rely on tactics like underpricing to gain attention and this damages their brand. High employee turnover and poor service add to the spiral of failure.
Bajaj said that startups build but upstarts burn. He urged the entrepreneurs to mainly focus on creating value and not on depleting resources. He simultaneously also pointed out that established companies are such startups that have stood the test of time.
The advice of Bajaj comes at a time when India’s startup ecosystem is at a crossroads. The 2021 was a record-breaking year when $35 billion poured into startups and 40 unicorns were born. The momentum slowed down thereafter and venture capital funding plunged to under $8 billion by 2023 equipped with layoffs and business closures. More than 35,000 companies had to shut down their businesses last year as they scrambled to conserve cash.
Market regulator SEBI is reportedly planning to increase the maximum investment limit for angel funds in startups from ₹10 crore to ₹25 crore.
The message of Bajaj is a timely reminder for entrepreneurs as building a business requires more than just money. Focusing on sustainable growth over quick wins will determine which businesses thrive and which fade away.
