The success of a start-up is like a sophisticated lock. To unlock its potential, a combination of factors is needed

The devastating second wave of Covid-19, ironically, saw an unprecedented rise in the number of start-ups in the first four months of this year. They raised investments worth$7.8 billion - nearly 70 per cent of the overall corpus of $12.1 billion raised in the 2020 financial year.

The year 2021 has so far also observed an increase in the average funding size of $25.21 million, up from $14.94 million in 2020 and $18.41 million in 2019, making it one of the highest average deals in the last five years. In the backdrop of the pandemic the world is taking giant leaps towards the digital economy and huge interest in funding digital start-ups is evident.  The global availability of funding with venture capitalists and the overall optimism and buoyancy in the digital technology industry have further fast-tracked the pace of investments.

So, what drives founders to set up start-ups? First, obviously, is the sense of freedom and independence they enjoy in personal ownership and management of the business which increases their commitment, agility, passion for innovation, and risk-taking abilities. For many founders, money is not as much a motivating factor as the quality of life the freedom provides.

Other external factors are unemployment, an economic slowdown, and delays in their career growth. The level of education plays an important role in choosing entrepreneurship. Research shows that the last company they worked for — known as the incubator company — plays a crucial role in launching a start-up,deciding on the type and location of business by providing the network, market and industry knowledge, and required skill-set.

Although several push-and-pull factors influence businesses, it is a well-known fact that an average of nine out of 10 start-ups fail.The success of a start-up is never guaranteed. It is an intricate network of interconnected factors that either enhances or reduces the possibility of success of a start-up.  Success, it has been seen, results from three factors:Quality, experience, and skillset.

In addition, the family support founders enjoy impacts their ability to be successful. A secure, encouraging, and helpful family structure goes a long way in helping founders cope with the pressures and demands of a new venture. There is another view, however, that focuses on the strength of the business concept and the ability to raise funds to implement the business idea, instead of highlighting only the entrepreneur's characteristics and competency. In this context, it is advisable to start a business that has an amicable business environment, provides products and services beneficial to customers, avoids monopolistic or oligopolistic markets, and provides a sustained stream of cash flows.

Generally, new start-ups experience problems in practically all critical aspects of business like the areas of accounting and finance, marketing, and human resource management. In addition to the organisational difficulties, personal glitches like high workload, isolation from organised bigger companies, and an overall ambiguity also impact on the end product. Finance, which is the lifeline of any venture, new or old, is hard to come by for a new start-up. Above all, overall bad management can spell a start-up's doom.

The success of a start-up is like a sophisticated lock. To unlock its potential, a combination of several factors needs to come into play - the qualities and experience of the founder, the type of business and the product or service being offered, the right network and marketing support, the back-end support in manufacturing the product or providing services, and, above all, the availability of funding. With the right permutation of these elements, the success of any start-up is a sure thing.

(The writer is Associate Professor at Amity University, Noida. The views expressed are personal.)