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What Indian Startups Really Want From The Government

Less noise, more action.

23/06/2017 8:39 AM IST | Updated 23/06/2017 8:39 AM IST
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"Has any startup in my network raised funds/debt under #StartupIndia? Two of our startups have DIPP certificates, but have no clue what to do next?" this is what Arvind Jha, a Gurgaon-based entrepreneur posted recently on LinkedIn, asking fellow entrepreneurs for suggestions.

After three years of PM Narendra Modi's government in power, there have been a series of media report cards on what went right or wrong. There has been extreme criticism and some praise as well. In terms of what it has done for startups, it is a mixed bag. When I spoke to entrepreneurs before writing this article, I realised one important thing. At the least, there is someone to listen to these voices today. This was not the case five years back.

Before committing to lofty goals, [the government should] try the idea in a bare minimum fashion. No frills. No promises. Just pure execution to gather feedback on how the program operates. Ankur Warikoo, founder, nearbuy

This government has brought startups to the mainstream by launching the Startup India campaign and then dedicating one arm of government to focus exclusively on it. However, the execution of all the initiatives is slow and the loopholes are many. Still, the foundation for improvement is laid. Almost two years into launching the Startup India Campaign, now is the time for the government to zoom into this macro-mega plan and address numerous challenges on the ground level.

In the last three years, the government has announced a ₹10,000 crore fund to invest in startups,

tax benefits for startups under the Finance Act 2016 and Digital India which is likely to give a lot of business to startups. None of these initiatives has picked up as envisioned.

On the brighter side, Anirudh Rastogi, Lawyer and Founder Partner, TRA says that the scale at which the Modi government's Startup India program has been launched is likely to bring about a positive shift in the perception of entrepreneurship and create a more supporting ecosystem. "It is to be acknowledged that some of the provisions of the program, when launched, were not feasible or really beneficial to startups, but the government has shown a willingness to continuously make improvements. The recent amendment to the procedure for registering startups is a case in point," he adds. The government also recently inaugurated the Startup India Hub to expedite the disbursement of funds and tax services, reducing the time lag between the inception of the idea and creating success. While gaps continue to exist, everyone in the startup ecosystem wants this initiative to succeed.

Here is a look at what startups are hoping the government will do.

Short-term testing along with long-term goals

The government's plans are so long term that startups are not able to see immediate outcomes of these initiatives. Ankur Warikoo, founder of nearbuy, says the government might benefit from thinking like entrepreneurs do, "Operate on a minimum viable plan. Before committing to lofty goals, try the idea in a bare minimum fashion. No frills. No promises. Just pure execution to gather feedback on how the program operates."

He cites the example of a recently launched plan under the NITI Aayog which plans to set up thousands of labs across schools, to foster innovation and entrepreneurship amongst school students. "It is commendable on the part of the government. But to ensure that it doesn't just remain a grand plan, let's go ahead and see the impact of this intervention on a few schools, in a controlled environment. If the results show promise, then keep building on it. Ironically, the government seems to be in a hurry to implement such ideas (a marked change from the previous administration) but needs to maintain realism of execution. The initiation of programs should not call for celebration. The achievement of such programs should."

Transparency and constant two-way communication

Funding is the biggest problem with startups and there is no clarity in terms of how these funds are being deployed by the government. Arpit Agarwal, principal, Blume Ventures who works on the investor side with early-stage startups says, "Even after more than a year of launching the Startup India initiative, the startup creation process remains similarly challenged and the pace of funding remains slow." Despite having all the right intentions and talent working on the proposals, the government is unable to take Startup India to all the nook and corners of our country.

Announcing funds of 10k crore and other such big words without any impact or way to access those funds seems like a black box for now. Soumit Saha, co-founder, Dino

Of the ₹10,000 crore fund, only 623 crores has been put into venture capital funds which can be further invested into startups. Arvind Jha, who is a Startup India-certified entrepreneur suggests that a transparent system through which startups know that in which all companies have these ₹623 crore been infused till now will help. Perhaps a structured communication channel where startups meet regularly to solve problems or a quarterly transparent report on development and deployment of these funds will be useful. This could solve problems for entrepreneurs like Soumit Saha, co-founder, Dino who feels, "Announcing funds of 10k crore and other such big words without any impact or way to access those funds seems like a black box for now. I'm not even sure who is on the panel for the allocation of these funds, and how does one even start to think about accessing that money."

Focus on social entrepreneurship and rural areas

One shoe does not fit all, especially when it comes to entrepreneurship. Take the case of demonetisation. While many startups benefited overnight with it, some in rural areas had to shut shop. Agri-tech suffered, daily wages to labourers or farmers could not be paid and social sector startups were hit hard as rural areas do not have enough banks. Aashish Beergi, co-founder, MASH Project says, "As per the recent report of Global Social Entrepreneurship Network (GSEN), India does not rank among top ten social enterprise-friendly nations. While programmes like Startup India have supported commercial entrepreneurs, little has been done for social entrepreneurs." The government needs to bring focus on policies supporting social entrepreneurs as they are among the strongest forces of social and economic development. Customised benefits to startups in rural areas and cities could be proposed.

Dedicated provisions to startups for business to government (B2G) vertical

The government has suggested that it will procure services and products from startups to encourage entrepreneurship. Is it that easy to have the government as a customer of your business? Startups have to complete with big MNCs and Indian private players in order to pitch and many times they are not even able to make it through the application process. Amit Mishra, Founder, Id8 Ventures says, " For example, if the government has a provision in which it gives 20% or so reservation only for startups when it comes to procurement, then many entrepreneurs will be encouraged to apply for this." Moreover, there are many niche problems that only new-age innovative companies can solve. Hence, the government should encourage startups in those specific areas where big companies do not operate.

Note: The views and opinions expressed in this article are those of the author's and do not necessarily reflect to the organization she is associated with.

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