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2012-12-12

87 tech start-ups in India faced closure in 2012: report

In a startling release made by the Microsoft’s start-up support programme, Microsoft Accelerator in India, out of 379 technology start-ups that were launched in India in 2012, 87 of them have faced closures due to multiple reasons in 2012, itself. The fig

In a startling release made by the Microsoft’s start-up support programme, Microsoft Accelerator in India, out of 379 technology start-ups that were launched in India in 2012, 87 of them have faced closures due to multiple reasons in 2012, itself. The figures were made available by Mukund Mohan, CEO-in-Residence, Microsoft Accelerator at Microsoft, in his blog.

Surprisingly, Bangalore, which saw the highest number of tech ventures coming up in the last five years, also witnessed the highest number of closures. More than 70 per cent of the shut downs were seen in Bangalore followed by more than 55 per cent in other cities. Delhi saw around 35 per cent closures while around 25 start-ups in Mumbai were closed.

Among the reasons cited by Mohan in his blog for the closures were inability to raise funds that accounted for 61 per cent of the shut downs followed by inability to collect money, getting a better opportunity, inability to get customers and founder’s own issues that held 43 per cent, 39 per cent, 28 per cent and 19 per cent respectively as other root causes for shutting down operations.

Mohan further said, “Over 60 per cent of the failed entrepreneurs don’t go on to start another company or join a start-up, but instead go to work at a much larger company.”

The study tracked over 6,214 entities including 3,948 tech-product companies and few service companies. The study was carried out via face to face interaction with the founders of 65 per cent of these companies and also relying on secondary data but the closure of the data was completely based on face to face interviews, according to Mohan.

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