What Happens When Well-Funded Startups Enter Your Market

What happens when well-funded startups enter a market? Sometimes they grow the pie for everyone. Sometimes they change customer expectations so quickly that early players are forced to adapt. For founders, it can mean rethinking the entire business.

In 2014, Yash Shah started eSwashthya, one of the earliest e-pharmacy ventures in India. At that time, ordering medicines online was still a new idea. The company grew steadily by working within the margins available in pharma. As Yash recalls, "Margins in pharma are 10 to 15 percent, maybe 20 percent at best, so we worked within those limits."

A few years later, larger, well-funded startups entered the space with significant capital. Their approach relied on aggressive customer acquisition strategies, including steep discounts that went far beyond the traditional margins in the industry. “They began offering 30 to 35 percent discounts on medicines,” Yash said. “But in pharma, the business does not allow that. It was far beyond the real margins.”

The impact was immediate. Customers moved toward those offers, and the market changed almost overnight. Early players found it difficult to compete, and even the bigger companies later went through valuation cuts and consolidation as the industry adjusted to new realities. “It disrupted the way the category worked,” Yash noted.

For eSwashthya, this turning point became the start of something larger. “We used our base of eSwashthya customers who needed more health services apart from medicine delivery,” Yash explained. “We took that opportunity to give them pathology and other services by building ES Healthcare Centre.”

That same thinking opened up international opportunities. “We got a chance to expand those services in Dubai, where there is a huge market in home healthcare. So we started giving last-mile health services there. And in Tanzania, we began with doctors at the doorstep, which led us into doctor tourism. It was again a home healthcare service, but this time for African people.”

What happens when well-funded startups enter a market does not have one outcome. Sometimes it drives growth and validation. Sometimes it creates pricing pressures that are difficult to sustain. And sometimes it forces founders to look beyond their first idea and discover bigger opportunities. Markets shift, customer behavior changes, and the rules rarely stay the same.

The bigger question is not only what happens to companies, but what happens to founders when the ground shifts beneath them. Do they collapse under the pressure, or do they turn disruption into their next chapter?