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ENTREPRENEURIAL
GOVERNMENT SCHEMES
ON
GROWTH OF START-UPS
Meaning of Startup:
A Startup is a new company which is:
In the first stage of operations
Based on a new idea can be product or service
Has limited funds
Requires Additional Funding From Venture Capitalists and Angel Investors
Important Terminology In The World of
Start-Ups
Venture Capital :
Money provided by venture capital firms to small, high-risk, startup companies with
major growth potential.
Venture capitalist:
An individual investor, working for a venture capital firm, that
chooses to invest in specific companies.
Incubator:
An organization that helps develop early stage companies, usually in
exchange for equity in the company.
Angel Investor:
Individual who provides a small amount of capital to a startup for a stake in the
company.
Debt Financing:
This is when a company raises money by selling bond, bills, or notes to an
investor with the promise that the debt will be repaid with interest.
Basic Requirement for Growth of
Start-ups
Meaning of Research:
Research is sincere, comprehensive, intellectual searching for facts and
their significance or inference with reference to the problem under study.
Research is systematic activity to achieve the truth.
It includes the identification of study area, the procedure for collecting
data, analyzing the data and finding the conclusion or truth based upon the
scientific procedure.
Research Methodology:
Research methodology is a systematic way to solve a problem.
It is a science of studying how research is to be carried out. Essentially, the procedures by which
researchers go about their work of describing, explaining and predicting phenomena are called
research methodology. It is also defined as the study of methods by which knowledge is gained.
Its aim is to give the work plan of research
Role of Data Collection in Research Methodology:
Data collection is the process to gather information about the relevant topic of
research, which is being done by researcher. Data collection is a term used to describe
a process of preparing and collecting data.
For studying the impact of entrepreneurial government schemes on growth of startups
I have chosen secondary data for conducting my research.
Secondary Data:
Secondary data are those data which have already been collected and analyzed by
some earlier agency for its own use, and later the same data are used by a different
agency.
The various sources of secondary data can be divided into two broad categories:
1. Published sources
2. Unpublished sources
Limitations of The Study
In this only secondary form of data collection could be used as collecting primary
data was difficult.
The present study has relied largely on qualitative methodology of data collection
(though quantitative methodology was used to a limited extent) and is therefore
restrictive. Therefore, more of quantitative methodology of data collection should
be undertaken in future to provide wider perspective to the present study.
Analysis & Interpretation
On the basis of the study the analysis of this study is as follows:
India is the 3rd ranked global startup system and has become the fastest growing
ecosystem in the world and if this all goes well, next year by this time it should be the
second largest.
The total value of VC and PE deals in 2014 was $15.2 billion, with the largest
investments in consumer 12technology, real estate and banking/ financial
services/insurance.
In 2014, 43 startups were acquired; so far this year the number has been 41, with
startups themselves being the most acquisitive of the lot. Of the 41, merely two deals
were struck by large corporates, with Godrej and Mahindra & Mahindra as the buyers.
Angel investments is emerging but still very limited in India, making up only 7% of early-stage investment
compared to 75% in the US. Innoven's India Angel Report suggests that median angel round has grown from
Rs.52 lakhs to Rs.138 lakhs from 2014 to 2015.
With over $5 billion worth investment in 2015 and three to four startups emerging every day, India has paved
its way to secure the third position in the world in terms of the number of startups, 4200 and counting, a growth
of 40%, by the end of 2015.
As per the statistics given in the report, the number of active investors in the ecosystem has grown from 220 in
2014 to 490 in 2015, depicting a 2.3X growth. Further, 8 out of every 10 top VC/PE Firms in India are foreign,
and global investment in the Indian economy.
The boom in the startup ecosystem has generated employment for around 80,000 to 85,000 people in total.
More than 65% of the startups are located in NCR, Mumbai and Bangalore.
The stats on the demography of the ecosystem says that 72% of the founders are less than 35 years old making
India home to the youngest entrepreneurs in the world, with gender breakup of 91% male and 9% female.
Majority of the 1200 new startups are B2C, primarily present in 3 segments namely e-
commerce, consumer services and aggregators followed by hyperlocal, health-tech,
edu-tech and analytics.
More than 50 per cent of the 1,200 startups focus on e-com, consumer services and
aggregators; and female founders and co-founders in startup ecosystem is around
nine percent.
The moral of the story, then, is that policy thinking needs to be reflective and
inclusive rather than simply being a spectacle for publicity. It needs more partners in
design to avoid the blunders that will probably be the fate of Startup India.
Recommendations
The complicated tax regime of India is a major problem for startups, with
each state levying their own sales tax and having separate procedures for
licenses and taxation, makes expanding across India a cumbersome process.
The proposed Goods and Services Tax (GST) common across the country,
therefore, holds substantial promise to ease taxation issues for business.
Encourage and facilitate crowd-funding for new ventures for the startup eco-
system to evolve beyond the guidelines and templates provided by just one
class of capital providers VCs.
Scope of Further Study
This study opens up new grounds for further research. Further studies
can address the following issues to have more insights on the subject.