Bajaj Auto Managing Director Rajiv Bajaj has cautioned startups against falling to the trap of “burning strategy” like most “upstarts,” while revealing his success mantra for the new age entrepreneurs.
“Upstarts are those who don’t have a build strategy. They have a burn strategy,” Rajiv Bajaj said on Thursday at CNBC-TV18’s Global Leadership Summit.
On the other hand, according to Bajaj, startups are companies that focus on building strategy, technology, brands, products, consumer experience, employee satisfaction and strong financials.
Drawing his own analogy of startups, upstarts and champions, the Bajaj Auto MD highlighted how new-age entrepreneurs should focus on building brands, products and technology rather than burning funds.
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“There are three terminologies here — startup; then there is a word that I like to call most of them, which is upstart; then us, the winners or the champions,” Bajaj said.
While speaking at the event, he said, “In my mind, startups are those who have built a strategy. They build technology, brands, products, and consumer experiences. They build employee satisfaction, and they build not just a strong topline but also a strong bottom line.”
He went on to explain that upstarts operate with a “burn strategy.”
“Upstarts are those who don’t have a build strategy. They have a burn strategy. They burn technology – their batteries. They burn brands by reducing prices every month. They burn products in their factory, in the trucks, at the dealerships and on the road,” Bajaj added.
“They burn employee relationships with 50% attrition. They burn consumer relationships with poor service. This is a burn strategy. So this is upstart versus startup,” he said.
Further, the managing director said startups and champions are actually the same, emphasising that established companies are essentially startups with a proven track record.
“As far as startups and champions are concerned, they are actually the same. The only difference between a company like Wipro and Bajaj or a so-called startup is that we are startups with a story because we’ve been around for long enough to have built a story,” Bajaj said.
Meanwhile, India’s startup ecosystem has been facing a tough phase since the past few years with the dried up funding and once-high-flying startups entering into a phase of slowdown. According to a Tracxn report, investors put $35 billion into Indian startups in 2021, more than in the previous three years combined. That year produced 40 Indian unicorns (unlisted startups worth more than $1 billion).
However, as interest rates increased, the money dried up. In 2023, venture capitalists’ (VCs) investment in startups slipped below $8 billion, with only two firms joining the unicorn club. Layoffs and bankruptcies grew more widespread as companies concentrated on protecting capital, with over 35,000 enterprises closing their doors by 2023. Although VC funding this year is expected to be similar to last year, there are hints of a recovery in India’s startup scene.
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Recently, reports suggested that market regulator SEBI is planning to raise the maximum investment limit by an angel fund in a startup to ₹25 crore from the current ₹10 crore. This move is likely to boost funding for new-age technology companies and startups in other sectors.
