The Emerging Start-up Ecosystem of New India
Published on : Friday 05-08-2022
Strong government and corporate support is accelerating the start-up ecosystem as never before, says Darshana Thakkar.
Nowadays, everywhere in the news, digital and social media, we hear the words Start-up and Unicorn. In the field of start-ups, India is leading the world. India has the 3rd largest start-up ecosystem in the world, which is expected to witness consistent YoY annual growth of 12-15%. I firmly believe that every challenge has the potential to convert the same into an opportunity by adopting the right strategy at the right time. The Covid-19 pandemic has brought tremendous opportunities to the Indian start-up ecosystem.
Facts about the Indian start-up ecosystem
India has about 50,000 plus start-ups; around 8,900-9,300 of these are technology-led start-ups. 1300 new tech start-ups were born in 2019 alone, implying there are 2-3 tech start-ups born daily.
Indicators of growth in the start-up ecosystem: The increase of start-ups was 15% year-on-year in 2018, while the number of incubators and accelerators has grown by 11%. Significantly, the number of women entrepreneurs stood at 14%, up from 10% and 11% in the previous two years.
Start-ups in the country have been able to create an estimated 40,000 new jobs over the year, taking the total jobs in the start-up ecosystem to 1.6-1.7 lakh.
Bangalore has been listed among the world's 20 leading start-up cities in the 2019 Start-up Genome Project ranking. It is also ranked as one of the world's five fastest-growing start-up cities.
Drivers of the start-up ecosystem
In recent years strong government support from the centre and state level and support from the corporate sector is accelerating the start-up ecosystem as never before.
Since the start-up India program was launched by the Indian government in January 2016, the government has been trying to ease and strengthen the regulatory environment in which start-ups set up and operate. These will, in turn, play an essential role in boosting innovation and entrepreneurship in the country.
The Indian start-up landscape has shown tremendous growth over the past decade and has become the third-largest start-up ecosystem in the world. Over the past seven years (2015-2022), there have been:
i. 9x Increase in number of investors
ii. 7x Increase in total funding of start-ups,
iii. 7x Increase in the number of incubators.
Corporate connect
Enterprises are realising the disruptive potential of start-ups and are thus, partnering/investing in them. Many corporates and unicorns are investing in start-ups. Many large corporates have launched a particular drive to provide R&D and funding support to innovative start-ups.
Government support
The government of India understands the value of working with disruptive innovators across the value chain and using their innovations to improve public service delivery.
To encourage innovations and start-ups, the government provides support in different ways to start-up ecosystems.
Start-up India and DPIIT
The government's leading role in promoting start-ups has been to set the direction of growth through effective policy design. The Department for Promotion of Industry and Internal Trade (DPIIT) has catalysed nationwide networking, training, mentoring and targeted entrepreneurship outreach campaigns.
Startup India hub
Startup India Hub was launched to provide a one-stop digital platform for the entire start-up ecosystem to enable knowledge exchange and access to funding. The portal serves as a virtual incubator for start-ups by providing access to information, knowledge, industry programs, Government schemes, and networking opportunities within the start-up community. DPIIT is supporting the start-up community in the following way:
i. Legal Support: self-certification of 3 environmental laws and six labour laws
ii. Intellectual Property Rights (IPR): rebates in cost of patent application and assistance in IPR filing
iii. Relaxed Public Procurement Norms: equal platform for start-ups vis-à-vis experienced entrepreneurs and companies
iv. Fund of Funds: with an initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore, for investment into start-ups
v. Tax Exemptions: income tax exemption for three years
vi. Fostering Industry and Academia Partnerships: through the development of incubation centres and research parks
vii. Infrastructure support by building R&D Parks and Innovation Centres at national institutes
viii. Sensitisation of High Net-worth Individuals (HNI) through knowledge workshops
ix. Capacity-building workshops for various State Government Officials and potential investors like family businesses, corporate houses, and small entrepreneurs
The government in India actively supports start-ups and entrepreneurs by launching multiple programs and initiatives to train and provide financial assistance, technical support, subsidies, and other essential services to these entrepreneurs and start-ups to fuel their growth.
Type of support to start-ups:
1. Institutional Support
a. Policy Formulation and Implementation: A dedicated Startup Innovation Policy to accelerate the growth of start-ups
b. Mentorship Modules: Mentorship for business plan creation, taxation, and legal issues, marketing, sales, supply chain, and sectoral expertise for start-ups
c. Knowledge Repository: Online courses, idea banks, research reports, Government schemes, sample pitch decks, etc., hosted on the Startup India portal as a ready knowledge base for start-ups
d. Capacity Building of Stakeholders: Regular workshops for capacity building of all ecosystem stakeholders, including start-ups, incubators, Government bodies, investors, academia, etc., and
e. Innovation Showcase: Biannual innovation showcases to stay abreast of the latest technological advancements and engage with them.
2. Infrastructural Support
a. Setup New and Upgrade existing Incubators: New start-up incubation centres to support students and researchers to explore the commercialisation of their R&D.
b. Conduct Programs with Incubation Partners: Open call to applications in partnership with a corporate partner or incubator for start-ups and innovators, providing 9-12 months of incubation to enable their growth.
3. Funding Support
a. Pitching Sessions: Platform to showcase products or services for relevant Investors, Venture Capital (VC) Funds, and Angel Networks
b. Seed Grant: Support early-stage start-ups and innovators in the form of Cash Prizes or Seed Grant in the ideation, validation, and commercialisation phases.
c. Fund of Funds: Infusing capital into early- and late-stage start-ups ecosystem. Mainly enables funding to start-ups with market traction that are looking to scale up operations.
4. Access to Market
a. Public Procurement: Organising a Buyer-Seller Meets at regular intervals with all Central and State Government Departments, PSUs, Corporate entities, and Industry Associations to encourage them to procure from start-ups.
b. Pilot Opportunities: Selection of start-ups through Innovation Challenges or other models to help them showcase their products and services.
c. B2B Facilitation: Network of corporate entities, industry associations, Government departments, and PSUs, leveraged to provide procurement opportunities to start-ups.
I want to share some key government schemes launched to create, develop, and encourage start-ups ecosystems and entrepreneurs:
SAMRIDH Scheme
Under this scheme, start-ups get help for development, growth, product innovation, and funding support.
The goal is to accelerate around 300 start-ups by providing them with investor connect, customer, connect, and other opportunities for global expansion in the upcoming three years.
MeitYStartup Hub (MSH) acts as the implementing agency for SAMRIDH. It will take equity in start-ups for the government's contribution via SAFE/Promissory Note, just like an accelerator.
Multiplier Grant Scheme (MSG)
The scheme is to close the gap between R&D and proof-of-concept as well as globalisation and commercialisation. It also helps to boost the growth of indigenous goods and services and makes it happen faster.
This scheme empowers collaborative research and development (R&D) among industry and institutions/academics to develop products and packages.
A grant of up to Rs 2 crore per project is available under this scheme, and the project duration criteria are less than two years.
NewGen IEDC
The full name is NewGen Innovation and Entrepreneurship Development Centre, which aims to teach the spirit of entrepreneurship and innovation through mentorship, support, and guidance.
It is a five-year program that is provided in educational institutions. The selected institute will receive a financial grant of up to Rs 25 lakh and recurring expenditure of up to Rs 10 lakh.
Under this scheme, students will be encouraged to take up innovation projects with the possibility of commercialisation.
SMAM
This scheme is to provide financial help to small and marginal farmers for hiring implements and machinery in low mechanised regions. The goal is to popularise technology for primary processing, low-cost scientific storage/transport, value addition, and crop by-product management through capacity building and
Dairy Entrepreneurship Development Scheme
This scheme is to support the unorganised milk sector to make its structure and enable initial milk processing in the village only.
The activities under this scheme comprise activities such as enhancement of milk production, transportation, procurement, processing, preservation, and marketing by providing back-end capital for bankable projects.
Apart from these, all government schemes and support, incubator, accelerator, and mentors are the main pillars of the start-up ecosystem.
Incubators
Incubators are facilitators that help start-ups grow their businesses, especially in the early stages. An Incubator is like a college for start-ups. They focus on supporting start-ups by providing financial assistance, workspace, training, networking, mentoring, marketing, and business management opportunities. Incubators can be state-funded or private and within various higher education institutions:
i. 700 + Active incubators
ii. 14000 + Incubation capacity, and
iii. 7 X increase in incubators and accelerators.
Accelerators
Accelerators provide support to start-ups in their growth stages. It is done through a cohort-based program that includes education, mentorship, and funding support. These programs are organised by corporates, incubators, State and Central Governments, and HEIs. There are numerous accelerators in India, more than 150 registered on Startup India Hub.
Mentors
Mentors guide start-ups throughout their growth journey by sharing knowledge and experiences with young entrepreneurs. They also provide networking opportunities for start-up founders.
Mentorship is provided by a wide range of experts, including corporate leaders, Government officials, academic researchers, and various business leaders. Mentors can also register themselves on Startup India Hub and support start-up founders.
At Transformation, we are accelerating the success of the start-ups by providing mentoring and hand-holding support to the start-up in the region. We have an association with CED, the Government of Gujarat, and other incubation centres and universities. We are also providing complete hand-holding to start the business.
We are Start-up Sarthi for:
a. Idea generation, selection, SWOT Analysis, and starting of business.
b. Guidance in the critical decision-making at a different stage of business start-up
c. Support in a feasibility study to estimate market demand and production capacity.
d. Help to define marketing strategy and to coach to implement same in line with the target market
e. Support in business operation during the initial period of business operations.
f. Support to avail benefit of the different government schemes for the start-up business
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Darshana Thakkar is MSME Transformation Specialist and Founder, Transformation – The Strategy Hub. An Electrical Engineer followed by MBA – Operations with rich industry experience, Darshana is an expert in transformation, cost reduction, and utilisation of resources. She has invested 25 years in transforming Micro and Small Enterprises. Her rich experience in resolving pain areas and real-life problems of SMEs helps organisations achieve quick results. Her expertise in managing business operations with limited resources helps clients transform their business practices from person driven to system driven with existing resources.
Darshana has helped many organisations to increase profitability and achieve sustainable growth. She is passionate to support the start-up ecosystem of our country. She is associated with CED, Government of Gujarat as a Business Function Expert in the Entrepreneurship Development program, as faculty for industrial subjects in the Second Generation Program (SGP), and as a start-up mentor and member of the start-up selection committee in the CED incubation centre. She is a certified corporate director registered with IICA and the Ministry of Corporate Affairs, Government of India. Apart from this, she is an author and publishing her blog, article, and case study related to the MSME industry. Email: [email protected]
