Start-ups in India
Introduction: Start-ups are young companies founded to bring unique product or Services to market and make it irresistible and irreplaceable to customers. Start-ups are rooted in innovation, addressing the deficiencies of existing products or creating entirely new categories of goods and services. For example, Netflix and Beyond Meat etc.
Eligibility and Funds for Start-ups: To be eligible for registration under Start-up India, a company need to be incorporated & registered in India up to 10 years from the date of incorporation and having annual turnover of not more than Rs 100 crore for the financial year etc. In May 2021, Govt. rolled out 975 crore funds for start-ups. Union commerce minister Piyush Goyal on Monday formally unveiled a Start-up India Seed Fund Scheme (SISFS) to handhold and financially support early-stage start-ups across 300 incubation centres. This fund is expected to benefit around 3,600 start-ups and boost the start-up ecosystem, particularly in tier-2 and 3 cities which are often deprived of adequate funding. The fund aims to provide financial assistance to start-ups for proof of concept, prototype development, product trials and market entry. SISFS will secure seed funding, inspire innovation, support transformative ideas, facilitate implementation, and start a start-up revolution.
Grants of up to Rs 5 crore is provided to eligible incubators selected by an expert committee. They shall be offered grants of up to Rs 20 lakh for validation of proof of concept, prototype development or product trials. Furthermore, investments of up to Rs 50 lakh is provided to start-ups for market entry, commercialization or scaling up through convertible debentures or debt-linked instruments.
Practical Aspects: On a high level, a start-up works like any other company. A group of employees work together to create a product that customers will buy. What distinguishes a start-up from other businesses, though, is the way a start-up goes about doing that.
Regular companies duplicate what has been done before. A prospective restaurant owner may franchise an existing restaurant. That is, they work from an existing template of how a business should work. A start-up, on the other hand, aims to create an entirely new template. In turn, this delivers a scale individual restaurant cannot touch. Which translates into many times more potential customers, instead of thousands.
This also points to another key factor that distinguishes start-ups from other companies, speed, and growth. Start-ups aim to build on ideas very quickly. They often do this through a process called iteration in which they continuously improve products through feedback and usage data.
Economic Aspects: Start-ups generally raise money via several rounds of funding, for example, there is a preliminary round known as bootstrapping, when the founders, their friends and family invest in the business. After that comes seed funding from so-called “angel investors,” high-net-worth individuals who invest in early-stage companies. Thereafter, there are Series A, B, C and D funding rounds, primarily led by venture capital firms, which invest tens to hundreds of millions of dollars into companies. Finally, a start-up may decide to become a public company and open itself up to outside money via an IPO, an acquisition by a special purpose acquisition company or a direct listing on a stock exchange. Anyone can invest in a public company, and the start-up founders and early backers can sell their stakes to realize a big return on investment.
India & Start-ups: As in 2021, there are over 50,000 start-ups in the country (officially recognized). More than 6,700 start-ups are in information technology (IT), around 4,400 in healthcare and over 2,100 in agriculture. These start-ups are changing the demographic character of business. India today is one of the biggest nations in the start-up ecosystem. Recognised Start-ups have contributed by creating nearly 6 lakhs jobs.
Despite the pandemic-led disruption, 11 start-ups turned unicorns in 2020. There are over 50 unicorns in India. A Unicorn is any start-up that reaches valuation of $1 billion.
Conclusion: The Tech savvy youth in India is not only turning entrepreneur but is also contributing towards job creation. There are those who from healthcare & agriculture who are creating a positive ecosystem in India through their innovations & capabilities. These men & women with their start-ups are eager to carve a niche in society.