Start-ups will soon be in money

Gaurav Vyas, 23, has been struggling to run his year-old start-up, an online firm that brings all the bakers together in the city. The main reason is that he has had a tough time getting investors and funds.

However, Budget 2014-15 has re-ignited his hopes. He is among thousands of others who feel ‘ achche din ’ has arrived for the Indian start-ups after Finance Minister Arun Jaitley announced a ₹10,000-crore fund to provide private equity and soft loans for start-ups.

The Government has finally realised the huge potential of the country’s growing yet ignored start-up space, according to Pragya Singh, Associate Vice-President (Retail) at consultancy firm Technopak Advisory.

“Promotion of start-ups and entrepreneurship will not only benefit the e-commerce sector but everyone involved in the value-chain such as vendors, suppliers, logistics service providers, Web-developers and content providers,” Singh added. According to experts, start-ups bring in a lot of technological innovation in the industry and most of the successful companies in the world have been small enterprises.

Sameer Shah, Co-Founder & COO, Bonzai Digital Pvt Ltd, a start-up, said the move came as a surprise and added that it will attract new entrepreneurs. At present, very few people in India fear to venture out with new ideas or innovation due to lack of funds, infrastructure, tax incentives and mentorship. It will also lead to easier bankruptcy exits for entrepreneurs, and thus, reduce mortality rates. The start-up mortality rate in India is as high as 92 per cent, according to industry reports.

Besides, the Government has also announced ₹100 crore (start-up village fund) for promoting skills of entrepreneurs in the rural India. Also, a nationwide incubation and acceleration infrastructure fund, ₹200 crore to encourage entrepreneurs from the backward classes, a massive focus with ₹500 crore allocation for start-ups involved in software development and a ₹100- crore Information and Technology Development Fund.

However, industry experts are not sure how the Government would be managing the equity investment and that it should create more incubators inside various colleges to create awareness among students as well as parents. Shobhit Bhatnagar, Co-Founder of TLABS, popular online course store for students, said the focus has to be on simplifying how entrepreneurs can start and sustain their business in the initial phases.

This should be more around making it easy to get a business registered, simplifying taxation and even shutting down a business. Aditi Shrivastava, Head, Intellecap Impact Investment Network (I3N), said the ₹10,000 crore fund could be most effective if it could create an inexpensive debt or mezzanine solution for start-ups.

“While some may argue that ₹10,000 crore is not a sizable corpus compared to the size of the Indian SME segment, we believe that it is a major uptick to the mere ₹200 crore of total reported angel investments in India in the last eight years,” Shrivastava said.

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