Startups find it difficult to hire CXOs

NEW DELHI: Recruitment at CXO levels and raising funds continue to be the main challenges for startups. This is due to the decrease in hype around startups and difficulty in convincing experienced professionals to quit their job and join a startup.
According to the annual startup outlook report by venture debt firm InnoVen Capital, almost 40% of startups surveyed said that hiring a CTO was the toughest.The report surveyed 100 startups, from early-stage to unicorns, across sectors.
“Raising funds is on every founder’s mind, with almost all of them on a growth stage. With talent, the challenge is that the scenario has changed from 2014-2015, when there was a lot of funding and everyone wanted to join a startup. Over the last two years, we have seen a lot of downsizing in the space. This has reduced the risk appetite of people to join a smaller company, who would otherwise be sitting in large MNCs,” said Ashish Sharma, CEO of InnoVen Capital.
Sharma added that unlike the global scenario, all Indian startups were focussed on growth rather than profitability. While 52% of early-stage startups with an annual revenue of less than a million dollars were focussed on growth, almost 69% of startups with more than $10 million in annual revenue were also focussed on growth than profitability.
About 41% of the respondents said that their cash burn rate was lower in 2017 as compared to the year before, which is an improvement from last year’s survey, when 34% of respondents had lower cash burn than the year before. On an average, startups had to pitch to close to seven investors before securing a fund raise.
About 54% of the surveyed startups said they had a favourable experience with fund raise, compared to 36% in last year’s study. “This could also be because a lot of the big startups raised big cheques this time. That affected the entire funding environment,” said Sharma.
Taxation and availability of cheaper financing options were major concerns for startups from the government policy perspective. More than 40% called for better tax policies, while 32% of the startups felt better incentives were needed for domestic players to compete against global majors as compared to 19% in last year’s study.