Surviving Through Tough Times
A cockroach can survive and continue to move for a long time despite various hardships and the same quality when imbibed by a startup makes it a “cockroach startup.” Such a business or venture is a less risky investment and is favoured by investors who do not believe in moving fast but are looking for steady growth.
At a time when the Indian startup ecosystem has been forced to focus on sustainability rather than growth, cockroach startups have gained attention. These ventures focus on containing their costs and working towards achieving profitability rather than growing at a fast pace.
Main Features of a Cockroach Startup
A startup that manages to survive despite macro challenges, execution-related problems, or funding issues can be termed a cockroach startup. Some important features of these startups are:
- Passionate Founders- Founders who are passionate about their ventures and committed to making them work are willing to sacrifice their gains and continue to work.
- Patient and Sustainable Growth- These startups adopt a patient approach and work towards recovering from failures by adapting to changing market conditions. They recognise problems, change their strategy, and find solutions to deal with them.
- Thrift is the Mantra– These startups focus on minimising spending on fixed assets. They focus on revenue generation and profitability by cutting down unnecessary or avoidable expenses.
- Adaptable and Willing to Pivot– These startups are quick to adapt and change their business model, products, or services to meet the changing market conditions or customer preferences. Willingness to cut down costs change business lines and pivot goes a long way in building a good business.
- Long–Term Outlook– These startups work to survive over the long term and develop their business strategies accordingly.
Cockroach startups often rely on their funds and revenue to fund their growth rather than raise funds from investors and venture capitalists. This enables them to deal with economic downturns or market fluctuations in a better way. Zerodha is a good example of a cockroach startup. While getting outside funds is a good way to validate the business model, it also brings with it certain conditions that the founders have to meet while running their business. Given the changing scenario where investors are becoming cautious, more and more businesses are focusing on building a good and sustainable customer base rather than becoming unicorns.
Cockroach or Unicorn?
But not every startup can become a cockroach. This is because the macro environment and the competition in the industry are important factors that determine whether a business can be run frugally or expanded aggressively. The decision to go the unicorn way or adopt a cockroach-like stance depends on many factors including the amount of capital required to grow or sustain.
To conclude cockroach startups survive even after facing the harshest of conditions. But it has also been found that many of these ventures are averse to risk-taking and embrace innovation and ambition. An ideal situation is to be adaptable, ambitious, and sustainable depending on the macro environment.
