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The Indian Startup ecosystem has attracted over USD 5.5 Bn of PE/VC in 2015 alone and is the third largest Startup base worldwide. It’s heartening to see the Government take notice and launch the “Startup India Standup India” initiative.
The Indian Startup ecosystem has attracted over USD 5.5 Bn of PE/VC in 2015 alone and India emerged as the top destination for FDI as compared to China and USA. India has the third largest Startup base worldwide and is the youngest “Startup nation” in the world with around 72 per cent of the founders less than 35 years old.
With such vibrant start-up potential, we were eagerly waiting for some dramatic reforms and incentives from the Government to boost the potential of these youthful and energetic companies wanting to make a difference to the Indian Economy at an economic and social level. It’s heartening to see the Government take notice and launch the “Startup India Standup India” initiative.
Before I jump into what this initiative has to offer what intrigues me about the Action plan of this initiative is the way it is written. It’s not a “Stereotypical” government policy document. It’s different! The way it is written is an attempt to match the zeal of start-ups. The Action Plan is simple, straight forward and energetic, just like any young Indian Startup would envisage it’s own functioning to be. The Government has tried to respond to the entrepreneurial passion with a new -never heard before tone!
The Lawyer in me says- “Let’s dissect this” but the Indian in me says “How Refreshing!”
Having said that, let’s try and see what this Goodie bag called “Start up India Stand up India” has to offer.
What is the goal?
To build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Action Plan is divided across 3 areas: a) Simplification and Hand holding b) Funding Support and Incentives and c) Industry-Academia Partnership and Incubation.
So if it is all so rosy, why are some experts complaining?
I do think that incentives/plans and framework set up for collaborative efforts are commendable. A lot of thought and expert evaluation seems to have gone in to the Action Plan. The problem areas are very pertinent to the industry and reflect the Governments resolve to make life of start ups simple is worth applauding. However, there are still some areas that have not been addressed or thought through.
A few instances are below:
How and when do Startups benefit?
The Startup Action Plan is barely a week old, some of these initiatives will be implemented by April 2016 and the time lines some others are yet to be notified. For now- it would be a good idea for upcoming start-ups to analyse their products and innovation standard to meet the defined criteria. It may be a good idea to map their business decisions to maximise the benefits of this initiative. Existing start-ups on the other hand may want to consider how and what out of this initiative could apply to them or what incrementally could be lobbied for as an Industry.
All in all; Startup India Stand Up India stands for New age Indian companies and the dream that we Indians are living. Let’s hope that through good execution that dream becomes a reality!
Who or What qualifies as a start-up?
A 'Startup' has been defined as an Indian entity (i.e., private limited company, registered partnership firm, or limited liability partnership not more than 5 years old; the annual turnover (as defined in the Companies Act, 2013) of which has not exceeded INR 25 Crores in any previous financial year and which is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property;
An entity formed as a result of splitting up or reconstruction of an existing business will not be recognised as a Startup
The mere act of developing products or services or processes which do not have potential for commercialization; or undifferentiated products or services or processes; or products or services or processes with no or limited incremental value for customers or workflow would not be covered under this definition.
To be considered eligible, the Startup should be:
What benefits/incentivesdoes a Startup get under this Action Plan?
a) Effective April 2016, the Government has promised on-the-go accessibility through a Mobile App for registering Startups with relevant agencies of the Government and backend integration with Ministry of Corporate Affairs and Registrar of Firms for seamless information. The App shall also have a tracking facility.
b) Filing for compliances and obtaining information on various clearances/ approvals/ registrations will be one stop.
c) Collaborating with various partners (including venture funds, incubators, academia mentors, etc) in the Startup ecosystem will be possible through the App.
What kind of support is envisaged for fostering of entrepreneurship and Innovation?
The Action Plan aims to accelerate growth of Startups in sectors other than technology such as agriculture, manufacturing, social sector, healthcare, education, etc. across India, including tier 2 and 3 cities, and other semi-urban and rural areas which is commendable and reinforces the the balanced approach taken by the Government.
As quoted in the Action Plan “A pivotal component for growth of Startups is regular communication and collaboration within the Startup community, both national as well international. An effective Startup ecosystem can’t be created by the Startups alone. It is dependent on active participation of academia, investors, industry and other stakeholders.
The following initiatives are planned to meet the above mentioned objective of fruitful collaborations
The more I look at the kinds of things that the government wants to do with education, the more it occurs to me how important a role technology needs to be playing in the implementation process.
Uber, the popular Bangalore based cap operator was asked to change its payment mechanism by the Reserve Bank of India. Popular ecommerce sites like Myntra, Urban Ladder, Flipkart, and many other have been under the scanner for various regulatory matters like FDI violation, VAT related issues, Enforcement Directorate probes for maters before April 2013, Payment mechanism violations etc. With each passing day new violations or potential violations seem to be added.
We have a culture of fundamentally solving problems. We place huge emphasis on speed to market and the power of prototyping. It is almost impossible to get everything right.
The nature of the game and the implied rules of determining value for disruptive companies are very different than the game being played by traditional companies.
We are at the cusp of creating great technology businesses in India. It can’t happen without the right support from a great board. And a great board needs independent directors.
It’s really hard, but so powerful. The "hack" culture of Facebook or the "do no evil" approach of Google or the "respect everyone" culture of the Mahindras. It is amazing to see what great things can be accomplished when a founder drives core values effectively through an organization.
Here’s a prediction: tech companies will raise more private money than IPOs. And a lot of that money will go towards (re)educating consumers, giving them access to debt for anything they want, and providing them a whole lot of video.
What started off as a simple goal to make the world a better place has turned into a race to make it happen within a certain time. Once you are sure about that, take a deep breath and get ready to jump on the treadmill, because it will definitely be an exciting run.
Those that make it through are not unscathed – they have battle wounds. The challenges of the first year take their toll… emotionally, organizationally, culturally. While the first year has likely felt like a sprint, it is important to remember that this is a marathon and it is impossible to continue to run a marathon at a sprint pace.
The DIPP recently told the Delhi High Court that the marketplace model used by ecommerce companies is “not recognised” in the country’s foreign direct investment (FDI) policy and that the financial watchdogs are to investigate any violation.
Entrepreneurs and investors are jointly trying to imagine and create a new world. There is no straight line to this process… it is a series of assumptions and iterations – a process of Experiment, Fail, Learn, Repeat.
Handling a downturn has little to do with what you do when the downturn starts, but more to do with how you built during the boom. At the start of a downturn, if you’re asking “What do I do now?” it’s probably too late.
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