Research Paper on Start-up Programmes

By: Shubham Mishra

(Research Scholar)

Faculty of Commerce

Banaras Hindu University

TITLE;-
Start-up Programmes in India : Opportunities and Challenges
ABSTRACT:-
“ Startup India:- Transforming India from the land of job seekers to job providers”
This research proposal suggests an exploratory approach to collect the best practices of
successful Start-ups. It tries to establish a Reliable and Accessible platform on which
Academicians and prospective Startups Entrepreneurs can build on. It is intended to get full
information regarding the Opportunities that a Startup can grab and the Challenges faced by
the Startups that creates hurdles for any successful Startups to flourish and fulfills their
dreams. In addition to this how Entrepreneur, Innovation and Technology are closely inter-
related with each other is also to be taken under consideration.

INTRODUCTION:-
STARTUPS = ENTREPRENEURSHIP + INNOVATION + INCUBATION +
TECHNOLOGY

For any startups these four elements are necessary. if any one of them lacks then there comes
a little bit difficulty in flourishing a Startup.

Still Startups have not been clearly defined anywhere in the context of India, however
Government of India has defined Startup (for the purpose of govt. scheme) as (1)

Start-up means:

 An entity, incorporated or registered in India

 Not older than five years,
 Annual turnover does not exceeding INR 25 Crore in any preceding financial year,
 Working towards innovation, development, deployment or commercialization of new
products, processes or services driven by technology or intellectual property.
(1) MINISTRY OF COMMERCE AND INDUSTRY(Department of Industrial Policy
and Promotion) notification,New Delhi, the 17th February, 2016G.S.R. 180(E)
Entrepreneurship has been defined as:-

As the process of designing, launching and running a new business, which typically begins as
a small business, such as a startup company, offering a product, process or service for sale or
hire. It is the "...capacity and willingness to develop, organize, and manage a business venture
along with any of its risks in order to make a profit."

Innovation can be understood as:-

The process of transforming an idea or invention into a good or service that creates value or
for which customers will pay.

Incubation can be understood as a:-

A business incubator in business speak is a company that helps new and startup companies to
develop by providing services such as management training or office space. Business
incubators differ from research and technology parks in their dedication to startup and early-
stage companies

KEY WORDS: STARTUPS ENTREPRENEURS, INNOVATION, INCUBATION ,

ANGEL INVESTOR, VENTURE CAPITAL

BACKGROUND AND RATIONALE:-

Startup India – A clamor that is being heard across the world like never before. Everywhere
you go today, you can‘t miss hearing or reading about how India is the next big Startup
Nation!

On 15th August 2015, Our Honorable Prime Minister Mr. Narendra Modi stood at the Red
Fort and made a call to ―Startup India, Stand up India‖. ―Startup Nation India – From a land
of job seekers to a land of Creators.‖ His words were echoing the sentiments of today‘s India-
the flame had already been ignited in the minds of India to create awesome products and
companies which will change the world! The Prime Minister‘s call was Reassurance that the
Government is understanding and supporting the sentiments in our minds.

Never before in the history of the country have so many powerful forces come together to
enable the Indian Startup Ecosystem. The gods have made their will known, the Oracle has
spoken! The time is here when India is becoming a Startup nation. All these words Influenced
me to work upon this Relevant Topic.

Although the term ‗Start-ups‘ is relatively new. Evidences shows that startups have been
started from the last two or three Decades. However Entrepreneurs were there from the last 2
Centuries but they were lacking Technology, Incubation and Innovation. But in the last two
Decades we have noticed a lot of startups have really embarked their presence. names like
‗Mark Zuckerburg‘ who launched ‗Facebook‘ in the year ‗feb 4,2004‘ and was awarded as
the Person of the year by ‗TIMES MAGAZINE‘ again ‗Amazon‘ by ‗Jeff Bezos‘ in the year
‗july5,1994‘ an Online shop which has brought a Revolutionary change in the marketing field
and change the people views of shopping products. Similarly, there are so many names like
Apple, Microsoft, Google, Twitter and so on. They all have started to do something different
and are now within the top 10 richest Persons in the world.

There are numbers of definitions about Start-ups at the moment giving broad and narrow
meaning to it. whatever they are the underlying truth is that for establishing Startups the key
point is Innovation or something New. As stated by ‗Seth Goddin‘ in his book ‗Purple cow‘
that people are not interested in seeing a White or Black cow or even White cow with a black
patches for a long period of time while they are looking for a cow in a Purple colour. Again
‗Neil Blumenthal‘ co-founder and CEO of ‗Warby parker‘ ―A Startup is a Company working
to solve a problem where the solution is not obvious and success is not guaranteed,‖ Again
Start up is defined by ‗Adora Cheung‘ Co-founder and CEO of Homejoy, one of the Hottest
U.S. Startups of 2013. ――It‘s when people join your Company and are still making the
Explicit decision to forgo stability in Exchange for the promise of tremendous growth and the
excitement of making immediate impact.‖ whereas According to ‗Merriam-Webster‘, Start-
up means ―the act or an instance of setting in Operation or Motion‖ or ―a Fledgling Business
Enterprise.‖ For being a Startup you just don‘t need to establish New business even old
business can also be a Startup as stated by ‗Y Combinator‘ that ―A company five years old
can still be a Startup ,‖however we can say that Startup means an entity who is having an
ability to grow. As ‗Graham explains, a Startup is a company designed to scale very quickly.
It is this focus on growth unconstrained by Geography which differentiates Startups from
small businesses. A restaurant in one town is not a Startup, nor is a franchise a Startup.‘ ―It
stops being a Startup when people don‘t feel as though what they are doing has impact,‖ said
Russell D‘Souza, co-founder of Ticket search Engine ‗SeatGeek‘.

There is still a vacuum in the literature, Research and Awareness about the factors that lead to
success in the field of Startups. However, studies have been done already on
Entrepreneurship and Innovation which both are essential parts in Start-ups. As Herbig et al.
(1994 pp. 37 and 45) have observed: ―Innovation requires three basic components: the
infrastructure; the capital; and the entrepreneurial capacity needed to make the first two
work‖. Moreover, innovation has to address market needs, and requires entrepreneurship if it
is to achieve commercial success (Zhao,2001). For this reason, it is important to introduce in
the analysis the role played by the Entrepreneur and to determine those elements or factors
that would have any effect on him (Oakley, 1990; Aghion and Howitt,1998). however its just
the beginning later on, My studies will definitely bring some Revolutionary conclusions
ahead.

But still a lot to be explored regarding this topic.

RESEARCH QUESTIONS;-
It is suggested to focus this Doctoral Research on addressing the following points ;

1. Why the Impact of Start ups are more in the Developed countries or Western
countries with respect to Developing countries like India by collecting various
data through economic surveys and others tools and techniques;
2. What are the various Opportunities available to the Startups in India and the
Challenges faced by the Startups in respect of Finances, Scalability,
Measurement of success/growth, and so on.
3. Role of Innovation and Technology in Incubation or Setting up of Start-ups.
4. Role of Government in promoting Startup programmes through various
incentives, allocation of funds, security, risk cover.
5. Atlast Role of Family ,Societies and Communities in promoting or coping up
with the challenges.

THEORETICAL FRAMEWORK ;
After having an overall view about concept of Startups. Startups have been divided among
three stages

STAGES IN STARTUP BUSINESS CYCLE;-

 PRE-STARTUP
 STARTUP
 GROWTH

1) PRE-STARTUP STAGE:-Starts with an idea which is unique and then transforming this
into potential scalable products or services. This stage continues till the Products or services
reaches to the client for the first time .This stage is very crucial stage because many Startups
fails to survive in this stage as there is lack of Funds, Mentorships, Investment, Infrastructure
and other facilities.

2) STARTUP STAGE:-After setting up the business unit and delivering its products or
services to the customer, Entrepreneur looks for increasing its sales and its customer base
through its efficiency and effective uses of technology.it also focuses on pushing up the
growth of the business aggressively and also in a sustainable manner.

3) GROWTH STAGE:- Last stage in Startup cycle is Growth. In this stage Start-up faces a
global competition from various business unit as it is in its maturity stage and hence it has to
maintain its uniqueness .however another option available for the Startups is to sale its unit to
a giant unit if it is no longer innovative in nature.
After dealing with the stages, Funding is another important aspects of business unit. Funds
are considered a very important component for Start-ups. Funding can be divided among
three stages.

STAGES OF FUNDING:-
 ANGEL INVESTMENT / SEED FUNDING
 VENTURE CAPITAL
 PUBLIC MARKETS / PUBLIC ISSUE

1) ANGEL INVESTMENT / SEED FUNDING:- Angel investors invest in small Startups

or Entrepreneurs. Often, Angel investors are among an Entrepreneur's family and friends. The
Capital Angel Investors provide may be a one-time investment to help the business propel or
an ongoing injection of money to support and carry the company through its difficult early
stages. In early stages every Startups rely solely on Angel investments or Seed funding. They
invest solely into the entrepreneur with an idea. since they are sole investors hence there is
very less encumbrance of government compliances. Angel investments provides funds for
normally 1-3 yrs.

2) VENTURE CAPITAL;-Venture capital is used to scale the company‗s business model.

Generally .Venture capital includes larger financial institution which provides funds at the
Startup stage when the business has taken his shape and size .Venture capital focuses on
building the sales force and establishing a global presence. Venture capital investments
provides funds for normally 3-8 yrs.

3) PUBLIC MARKETS /PUBLIC ISSUES :- At the later stage when the Startups began to
flourish and have a good reputation in the market .People knows about the startups and have
a confidence in the Entrepreneurs decision .In such a stage startup can access funds from the
public markets. These issues are important for expanding more aggressively and actively to
innovate the products .A combination of private and public equity .provides a large amount of
liquidity in later stages. Public issues can be raised normally after 8 years or so

Still an emerging field, Start-ups are slowly picking up Momentum among

Researchers. the Concept of Startups started recently in India but it has been arised in the
Western countries three to four Decades earlier. seeing the success of Startups in Western
countries, India is also applying it and they are adopting this in style.in just few years few
Startups such as ‗Snapdeal, Flipkart, Ola cabs, Oyo rooms are making their marks in the
world economy and competing with best Startups worldwide.

The Accelerated boom of Entrepreneurs, massive funding raised by Startups

and their reported astounding valuations validates that this is probably the best time for the
Startup Ecosystem in India. Numbers do the telling: The rapid growth of startups in India.
The 2014 NASSCOM Startup Report has found India to be the fastest growing and third
largest Startup Ecosystem is in the entire planet.
CURRENT STATUS OF STARTUPS IN INDIA
The current scenario is considered to be the most viable for Startups and why not? The
Technological advances, more Accessible resources, knowledge pool, massive funding,
emerging global standards and thriving domestic markets are fueling Startups and creating
conducive environment for their growth. Indian Entrepreneurship has a rich history. While
the current Entrepreneur mindset may differ from what it was in the pre-independence era,
the period did see surge of Startups, of course, at a much slower rate than the present. With
India celebrating its 70th Independence Day in a few days. In an article published in
‗Techstory‗ ―Startup India : How India is Turning Into A Startup Nation !‖by dipti gore‘ she
concluded after analyzing various factors that India is going to become a Startup nation by
2020 ahead of China and France. In Recent years, the Indian Startup Ecosystem has really
taken off and come into its own—driven by factors such as massive funding, consolidation
activities, evolving technology and an burgeoning domestic market. The numbers are
telling—from 3,100 startups in 2014 to a projection of more than 11,500 by 2020, this is
certainly not a passing trend. It‘s a revolution. And it‘s going to change the way the markets
are working today in India.

India, a country of 1.25 billion people, is home to the world‘s second largest population.
India‘s population base is expected to serve as a huge asset for the country in the next few
decades. India is poised to become the world‘s youngest country by 2020, with an average
age of 29 years, and account for around 28% of the world‘s workforce. The country‘s
population pyramid is expected to ―bulge‖ across the 15–64 age bracket over the next
decade India will be experiencing a period of ―demographic bonus,‖ where the growth rate of
the working age population would exceed that of the total population. Another important
thing which is coming out is Indian startups gets bolder, they are taking up the hard decisions,
risky projects, and the trends from recent years are showing a shift from silicon valley to
India as they are knowing the fact that India is turning out to be the next startup nation.
Rushil Goel from Boston Consulting to Ola Cabs, Peeyush Ranjan from Google to Flipkart as
senior vice president of engineering; Namita Gupta from Facebook to Zomato as chief
product officer; Niket Desai from Motorola Mobility to Flipkart as chief of staff; and Gaurav
Gupta from ScaleArc to Snapdeal are some of the examples of this drift

However, the process of Startups have been in existence before the Independence in the
colonial era also in the form of Entrepreneurship which also to be taken into consideration in
my study.
.

As it is quite clear from the fig 7 that India ranked 5th amongst the top five countries in the
world in terms of start ups.US ranks no.1 in the list with more than 83000+ startups. 2nd in
the list comes China with more than 10000 + startups and then 3rd on the rank is India with
almost more than 10000+ startups. Then UK and Canada following India with 7900+ and
6100+ respectively

Image courtesy ;-Microsoft ventures, Zinnov, NASSCOM START-UP INDIA REPORT

2015
From the fig.(*1) given below it is quite clear that :-

 India has been ranked 3rd largest Startup hub with more than 10000+ startups in the
world just below China and US.
 Average Age of startup founders is aged 28 yrs.
 9% of the total startups founders is Women
 Expected average no. of startups increased from 800 to 2000 from 2015 to 2020
which was 480 in the year 2010
 Number of incubators has grown by 40% to 110 during 2014-15
 Growth in the Participation of Woman Entrepreneurs is approx. 50% in last 12
months
 Majority of Startups are Tech- based approx.. 43%
 Total Tech startups are expected to increase from 4300 units in 2015 to more than
11500+ by 2020
 Major junk of Startups are established in Metro cities.
 Approx. 60 % new jobs have been created by SME‘S (Small Medium Entreprizes.
 Number of PE‘s / VC‘s have been doubled.;

ROLE OF GOVERNMENT IN PROMOTING STARTUPS ;-

On 16th Jan 2016, Prime Minister Mr. Narendra Modi announced bunch of benefits and
schemes to promote start-up ecosystem in India. The event was called ‗Startup India, Stand
up India‘. It has immense importance because, for starters, it was the first of its kind dialogue
between India‘s startup community and the government. Startup India is a flagship initiative
of the Government of India, intended to build a strong ecosystem for nurturing innovation
and Startups in the country. This will drive sustainable economic growth and generate large
scale employment opportunities. The Government, through this initiative aims to empower
Startups to grow through innovation and design.

Before coming to the initiative I want to quote ‗Ms Nirmala Sitharaman‘(*2) words that
―All over the country, youngsters are coming up with ideas of entrepreneurship … They
don‘t have time to wait, we don‘t have time to lose,‖ and this is truly said this statement
shows haw the govt. is committed towards Startups.

1* Sources:- NASSCOM Startup India report 2015, Startup India-Momentous Rise of the
Indian Startup Ecosystem, CII report on a snapshot of India‘s Startup Ecosystem, Secondary
sources, News article

2* Ms Nirmala Sitharaman , Minister of state (Independent charge) govt. of India

With regard to this govt. of India have launched various programmes for gearing up the
startup ecosystem in India which are as follows :-

1) MAKE IN INDIA :- In September 2014, Prime Minister Narendra Modi introduced a big
initiative ―Make in India‖ to promote the manufacturing sector by promoting companies to
invest in the sector. The intent of the campaign is to attract foreign investments and
encourage domestic companies to participate in the manufacturing thereby contributing to the
growth story. The government also took various steps to build a favourable environment to
do business in the country. The main focus of ‗MAKE IN INDIA ‗ campaign was to:-

 The government increase the foreign Direct Investment limits for most of the sectors.
 Protection of the intellectual property rights of innovators and creators by upgrading
infrastructure, and using state-of-the-art technology

2) STAND-UP INDIA:- In August 2015, he announced a new campaign ―Standup India‖ to

help startups with bank funding and encourage entrepreneurship among the young Indians.
He also requested all 1.25 lakh bank branches to fund at least one startup founded by tribals
and dalits. Standup India: On 6th January 2016, the Union Cabinet has given approval to
Standup India campaign which aimed at promoting entrepreneurship among women and
scheduled castes and tribes .Stand up India is under the supervision of ‗DIPP‘ Dept. of
industrial Policy and Promotion.

3) SETU FUND :- The setting up of the SETU (Self-Employment and Talent Utilization)
fund has been hugely welcomed by the startup community. Under this fund, the government
will be launching an incubation center in order to create opportunities for self-employment
and new jobs particularly in technology-driven areas. The center has allocated Rs 1000 crore
for this purpose.

4) GOVERNMENT FUND:-

Government will set up a fund with an initial corpus of INR 2,500 crore and a total corpus of
INR 10,000 crore over a period 4 years (i.e. INR 2,500 crore per year).The Fund will be in
the nature of Fund of Funds, which means that it will not invest directly into Startups, but
shall participate in the capital of SEBI registered Venture Funds. Key features of the Fund of
Funds are highlighted below:

– The Fund of Funds shall be managed by a Board with private professionals drawn from
industry bodies, academia, and successful Startups

– Life Insurance Corporation (LIC) shall be a co-investor in the Fund of Funds

– The Fund of Funds shall contribute to a maximum of 50% of the stated daughter fund size.
In order to be able to receive the contribution, the daughter fund should have already raised
the balance 50% or more of the stated fund size as the case maybe.

– The Fund shall ensure support to a broad mix of sectors such as manufacturing, agriculture,
health, education, etc.
5) MUDRA BANK :- MUDRA (MICRO UNITS DEVELOPMENT AND REFINANCE
AGENCY LTD.) Several entrepreneurs in the MSME sector have often complained about
lack of or difficulty in getting finances to run their business. Often, while applying for loans,
these companies are asked for large collaterals by the banks, which made their business
unsustainable. The 2015 Budget addressed this problem by setting up of the Microfinance
Unit Development Refinance (MUDRA) bank.

MUDRA Scheme: On 6th January 2016, the Union Cabinet has given approval to the
following proposals:

• The cabinet has approved the creation of a Credit Guarantee Fund for MUDRA loans

- It is expected that the fund will guarantee loans of over INR 1,00,000 cr to micro and small
businesses in the first instance

- According to the finance minister, the MUDRA scheme is expected to provide benefits to
1.73 cr. People

- The fund will guaranteeing loans sanctioned under Pradhan Mantri Mudra Yojana w.e.f.
08th April‘15

• The cabinet also given its go ahead to convert MUDRA Ltd. into MUDRA Small Industries
Development Bank of India (SIDBI) Bank as a wholly owned subsidiary of SIDBI

Additionally, the government has set a target to provide a total loan of INR 1.22 Lakh cr. to
promote new entrepreneurs and fund the unfunded businesses with the help of banks

5) ATAL INNOVATION MISSION (AIM) & SELF EMPLOYMENT AND TALENT

UTILISATION (SETU) SCHEME :-

The Atal Innovation Mission (AIM) shall have two core functions:

– Entrepreneurship promotion through Self-Employment and Talent Utilization (SETU),

wherein innovators would be supported and mentored to become successful entrepreneurs

– Innovation promotion – to provide a platform where innovative ideas are generated

The main components proposed to be undertaken as part of the mission include:

 Entrepreneurship promotion:

• Establishment of sector specific Incubators including in PPP mode.

• Establishment of 500 Tinkering Labs.

• Pre-incubation training to potential entrepreneurs in various technology areas in
collaboration with various academic institutions having expertise in the field.

• Strengthening of incubation facilities in existing incubators and mentoring of Startups.

• Seed funding to potentially successful and high growth Startups.

 Innovation promotion:

• Institution of Innovation Awards (3 per state/UT) and 3 National level awards.

• Providing support to State Innovation Councils for awareness creation and organizing state
level workshops/conferences.

• Launch of Grand Innovation Challenge Awards for finding ultra-low cost solutions to
India‘s pressing and intractable problems.

Govt. has set aside ₹ 1000 Cr. for SETU fund.

6) SMART CITIES AND DIGITAL INDIA PROJECTS :-

The Smart Cities Initiative by the current Narendra Modi led government is expected to
create a huge opportunity for companies to provide services. The plan which aims to create
about 100 smart cities in India is expected to require services in waste management, clean
energy, traffic management, internet availability, transport solutions, smart grids, education,
e- governance, healthcare and sanitation and more. The smart cities initiative by the Modi
government is attracting huge interest within and outside the country.

The Prime minister also recently launched the India Smart Cities Challenge which invites
citizens to contribute to creating a vision for their city. Recently Govt. has selected 20 more
cities in which Varanasi (P.M‘s constituency seat) has also been selected.

DIGITAL INDIA:- In July 2015, the PM announced the Digital India initiative that
aims to connect rural areas by developing their digital infrastructure. This translates into a
huge business opportunity for startups. E-Commerce companies in India are planning to
break into India‘s rural market as a part of the government‘s Digital India initiative.

In September 2015, PM Modi visited Silicon Valley, US and had meetings with a number of
founders of technology firms and industry leaders such as Satya Nadella and Sundar Pichai to
talk about his ambitions of developing a better startup ecosystem

According to NASSCOM startup report 2015, every year more than 800 tech startups are
being set upon India. By 2020, a projected 11,500 tech-startups are going to emerge and will
employ around 250,000 people.
7) STARTUP NETWORK :-

The Modi government is creating an ecosystem for supporting young entrepreneurs through a
formal network of incubators, accelerators and mentors that would help set up, grow and
stabilize new businesses, with an emphasis on social enterprises and commercial adaptation
of grass-root level innovations.

The network that would include institutions like the IIMs, IITs, Indian Institute of Science,
research parks and industry bodies, is being steered by the Ministry of Skill Development and
Entrepreneurship as a ‗high-impact scheme‘ to spur job creation.

The new startup network would also bring on board existing entrepreneurship promotion
initiatives such as the National Science & Technology Entrepreneurship Development Board
(set up in 1982 under the Ministry of Science and Technology) and the National Institute for
Entrepreneurship and Small Business Development under the aegis of the Ministry of Micro,
Small & Medium Enterprises.

8) TAX RELIEFS :-Govt. of India in his budget has provided various tax benefits to the
Startups. Some of the key benefits are :-

 Tax Exemption on Capital gains.

 Tax Exemption to Startups for 3 yrs.
 Tax Exemption on investments above Fair market value.
 Royalty Tax has been slashed from 25% to 10 %.

9) Legal protections against Intellectual Property Right (IPR):-

A fast-track system for patent examination at lower costs is being conceptualised by the
central government. The system will promote awareness and adoption of the Intellectual
Property Rights (IPRs) by the start-up foundations. The scheme for Startup Intellectual
Property Protection (SIPP) shall facilitate filing of Patents, Trademarks and Designs by
innovative Startups. Various measures being taken in this regard include:

 Fast-tracking of Startup patent application

 Panel of facilitators to assist in filing of IP applications.
 The Central Government shall bear the entire fees of the facilitators for any number
of patents, trademarks or designs that a Startup may file, and the Startups shall bear
the cost of only the statutory fees payable.
 Rebate on filing of application. Startups shall be provided an 80% rebate in filing of
patents vis-a-vis other companies.

The scheme is being launched initially on a pilot basis for 1 year; based on the experience
gained, further steps shall be taken.

10) FASTER EXITS FOR STARTUPS :-In the event of a business failure, it is critical to
reallocate capital and resources to more productive avenues and accordingly a swift and
simple process has been proposed for Startups to wind-up operations. This will promote
entrepreneurs to experiment with new and innovative ideas, without having the fear of facing
a complex and long-drawn exit process where their capital remain interminably stuck.

The Insolvency and Bankruptcy Bill 2015 (―IBB‖), tabled in the Lok Sabha in December
2015 has provisions for the fast track and / or voluntary closure of businesses. In terms of the
IBB, Startups with simple debt structures or those meeting such criteria as may be specified
may be wound up within a period of 90 days from making of an application for winding up
on a fast track basis.

11) OTHER BENEFITS :-Apart from these benefits govt. has provided various other
schemes such as :-

 Building Innovation Centres at National Institutes.

 Setting up of seven new research parks.
 Promoting Startups in the Bio-technology Sector.
 Launching of Innovation focused Programmes for students. such as :-
 Innovation core
 National Initiative for Developing and Harnessing Innovation (NIDHI)
 Uchhattar Avishkaar Yojana .

All these initiatives taken up by the govt. has provided a great assistance and Opportunities
for growth to the startups. But still there is a lot to be done ahead. Startups still faces various
challenges which are discussed in the next chapter.

CHALLENGES LAGGING THE GROWTH OF STARTUP ECOSYSTEM

World Bank’s Report: Doing Business 2016

• India is ranked 130th out of 189 economies on the ease of doing business, 133rd on the ease
of trading across borders and 157th on the ease of paying taxes.

• India is ranked 155th in case of starting a business

• On an average, Indian businesses need to make 33 tax payments annually with around 243
hours spent to prepare and pay taxes in a year

• In contrast, China requires just nine tax payments annually, while the US doesn‘t trouble its
taxpayers more than 11 times annually for tax payment.

Apart from various opportunities, the startups have to face several problems too which
creates hurdles in the growth of startup ecosystem some of them are:-

1) CULTURE AND AWARENESS:-

Entrepreneurship and startups are only a recent phenomenon in the country so not much of
the people are aware of this. Doing a startup is tough and every country sees more failures
than success. More often than not an entrepreneur needs to be prepared to face failures and
unprecedented hardship. However, culturally we are not groomed to fail and failure is
frowned upon. Entrepreneurship thrives on celebrations and a society that fails to appreciate
business failures stifles innovation and creativity even before it can start. Entrepreneurship is
often about failing and learning from those failures and starting all over again. People need to
start accepting failures and allow second chances.

2) MENTORING:-

Doing a startup is perilous and often a lonely journey. You may have co-founders, but you
may not necessarily possess the business acumen to succeed. Having a brilliant idea is
different from making that idea a business success. For a startup, it is very important to have
mentors who have been through a similar process of starting or have business experience.
However, there is no formal mechanism to mentor startups in the country. Every mentoring
that happens is on an ad-hoc basis. A startup that has raised funds can count the investors for
some form of mentoring, but honest, unbiased, good business mentors are far and few in
between.

3) FUNDING :-

Capital and access to capital has been a perennial problem for startups. While, of late angel
investors, venture capital and private equity have brought succour to some extent, a large
number of startups still grapple to raise funds from institutional setup. Funding challenge is
not merely limited to seed rounds, but also for later stages till the startup reaches its growth
stage because no investors or institution are willing to finance in a risky & unpredicted firms.

4 ) LOCATION:-

The most important problem faced by an Indian startup is the location from where it is being
launched. India is a place of varied culture and taste, thus, every product might not be
welcomed equally by every region. A survey found out that 42% of the failed startups
attribute their failure to the lack of their market need. Now, this is where we shouldn‘t follow
Steve Jobs‘ suggestion of ‗not asking what the customer wants.‘

5) LACK OF TECHNOLOGY AND INFRASTRUCTURE :-

As we all know that technology and infrastructure are very crucial part of startup ecosystem.
but still India is lagging behind just because of sound and upgraded technology. Appropriate
IT-infrastructure has become a need for Indian businesses given the growing number of
consumers online. And for the safety of all credit and debit card holders performing online
transactions.

DESIGN / METHODOLOGY/APPROACH ;
In order to solve the Research problems the data will be gathered by closely studying the
tools, techniques, processes and procedures adopted in successful Start-ups Ventures. It is
suggested to carefully divide Startups based on pre-decided criteria, choose a number of
small to large successful enterprises in UK, USA and India, and within India several states
and last taking samples from PM‘s constituency seat ‗VARANASI‘ which fit in these
categories, Approach the Founders & Senior Management and conduct interviews with them.
Wherever possible, surveys and questionnaires will be used. Role of Technology specifically
the use of affordable Information Technology tools in all the stages of the life cycle of these
startups businesses will be thoroughly investigated. It may not be feasible to analyse different
types of varied businesses and derive a clear set of established practices. Keeping this in
view, it is expected to discuss the findings based on the background, Industry and type of the
business. Quantitative techniques are considered as well as there may be a need to combine
both Quantitative and Qualitative methods for more accurate analysis. It is recommended to
include only those Ventures that are the brain children of one or two Start-ups. The list of 50
Startups will be evaluated which are either working or have been closed in Varanasi Districts.
taking their views generalizing a conclusions that what is the real position of a Start-ups in
Varanasi. What are the Opportunities available to them and what are the Challenges they
have to face.

CONCLUSIONS, SUGGESTION AND FINDING:-

From the above study we can conclude that there is no doubt that Startups have been started
way back 3-4 decades in the west but for India it is a very new phenomenon. whether it came
late but it came with a bang . Initially people were not in a frame of mind to accept this
concept but later the youth generation of India, the new entrepreneur class accepted this
opportunity of establishing startup. and this led to the formation of a new era‘ from the land
of job seeker to job providers‖

Govt of India under the leadership of P.M. Modi has ignited this concept of startup and from
then there is no looking back. And this effects are showing in the reports published from
various agencies. India ranked 3RD IN THE NASSCOM report 2016 with over 11500 startups
till 2020. Again in the ‗EASE OF DOING BUSINESS 2016‘ India ranked 130 in the list of
189 countries with an upward shift of 4 rank from 134 in the year 2015. Govt. of India has
also initiated various scheme such as SETU FUND, MUDRA BANK, ATAL INNOVATION
MISSION(AIM), ROYALTY TAX,BUDGET ALLOCATION, STARTUP NETWORKS,
SMART CITIES AND DIGITAL INDIA for promoting startup ecosystem.

Suggestion:- India is having a huge asset in the form of youth generation. India is poised to
become the world‘s youngest country by 2020, with an average age of 29 years, and account
for around 28% of the world‘s workforce .Some of these steps are:-

 Proper Mentorship
 Ease in formation and closure of Startups
 Availability of funding mechanism
 Minimum legal constraints & protection against IPR
 Better infrastructure & friendly startup ecosystem
 Incubation facilities to every prospects startup.
 Connecting skill India & make in India initiative with startup.
 Any provision for loss making startup at early stage
 Access of internet connectivity throughout the country mainly in remote and rural
areas.
 Net neutrality.
 Changing social attitude.
REFERENCES;
 http://techstory.in/startup-india/
 http://www.startup-india.org/
 http://yourstory.com/2015/12/india-100-top-startups-2015/
 http://yourstory.com/2015/12/indian-startups-raise-9billion-2015/
 http://www.bythestartups.com/the-story-of-indian-startups-from-the-pre-
independence-era-to-the-present/
 http://yourstory.com/2015/07/half-year-2015-funding-report/
 http://thenextweb.com/in/2015/07/05/india-the-worlds-fastest-growing-startup-
ecosystem/#gref
 http://www.profitbooks.net/startup-india/
 http://www.doingbusiness.org/data/exploreeconomies/india/~/media/giawb/doing
%20business/documents/profiles/country/IND.pdf?ver=3

BOOKS/ ARTICLES

 research proposal on social entrepreneurship by RRebelly

 ―PURPLE COW ;-Transform your business by being remarkable by ―SETH
GODDIN”

REPORTS

 ― BUSINESS REPORT 2016‖ :- ECONOMY PROFILE (13TH EDITION) by World

bank group flagship report
 Startup India Start-up India–Momentous Rise of the Indian Start-up Ecosystem
(Edition 2015)
 #startup India –status report ( June 2016 )
 #startup India – Action Plan ( Jan 2016)
 Mudra bank report (2014-15) performance based and state wise.
 Startup India:- an overview by ‗Grant Thorton‘ (ASSOCHAM INDIA)

ANNEXURES:-

 Fig 1 (pg no.7) Top 5 countries among the world. Microsoft ventures, Zinnov,
NASSCOM, START-UP INDIA REPORT 2015
 Fig 2( pg no 8) current scenario of startups in India .Sources:- NASSCOM Startup
India report 2015, Startup India-Momentous Rise of the Indian Startup Ecosystem,
CII report on a snapshot of India‘s Startup Ecosystem, Secondary sources,
news article
 Fig 3 (pg no. 17) sources : doing business database.
ACRONYMS :-

NASSCOM:- The National Association of Software and Services Companies (NASSCOM)

ASSOCHAM :- The Associated Chambers of Commerce of India

CII:- Confederation of Indian Industry ,

IIT:- Indian Institute of Technology.,

IIM :- Indian Institute of Management.

IP:- Internet Protocol,

MSME :- Ministry of Micro Small and Medium Entreprises..

SEBI:- Securities & Exchanges Board of India

VC :- Venture capital

PE:- Private Equity

govt. Government ,

UT- Union Territory ,

PPP :- Private Public Partnership

Dept. Department

Yrs:- Years ,

Cr :- Crores ,