Delhi most preferred location for starting new ventures: Report

Venture debt firm InnoVen Capital has come out with a report that talks about trends and challenges along with opportunities that the start-up segment will witness this year.

Titled ‘India Startup Outlook Report 2016’, the report says that from a demographic angle, Delhi emerged as the most sought-after location for starting new ventures. Bengaluru and Mumbai came next as preferred start-up hubs.

An industry-wise analysis revealed that irrespective of funding stage, consumer internet and e-commerce were the most popular segments.

From a hiring perspective, 97 per cent start-ups felt they were likely to hire new employees where on an average 28 per cent would be on the technology front. The study shows that more than 5,000 jobs are expected to be created by about 130 start-ups in the next 12 months. Interestingly, the start-ups surveyed displayed significant gender diversity in their workforce.

It further added that 41 per cent of the VC-funded start-ups had women founders or CXO level executives, while this number stood at 31 per cent for boot-strapped ventures and at 29 per cent for ventures with angel funding.

Ajay Hattangdi, Group COO and CEO India said, “We are privileged to have a unique ring-side view into the venture ecosystem as it has matured over the years. By distilling that knowledge gained through the years into reports and research studies, InnoVen Capital hopes to share some of those insights with other fellow participants, many of who have contributed to the building and nurturing of the Indian start-up ecosystem. InnoVen Capital’s India Startup Outlook Report 2016 reveals a refreshingly optimistic and upbeat sentiment within the Indian start-up environment.”

The size of the domestic market and proximity to customers and suppliers are the top factors that make India’s business environment conducive to entrepreneurship. Forty-four per cent of the VC-backed companies believe that access to equity is one of the greatest opportunities for the sector.

Overall, 65 per cent of all companies felt the current business and political conditions are better than last year and 76 per cent expect next year to be even more favourable for start-ups.

In FY 2016, more than half the bootstrapped start-ups and 45 per cent of angel-funded start-ups expected to turn profitable, whereas only 22 per cent of the VC funded companies expected to turn profitable. On the funding side, around 130 companies are expected to raise $700 nillion in the next 12 months.

As far as challenges are concerned, taxation, work ethics and regulation topped the list. Seventy-four per cent of bootstrapped and angel-funded companies were not aware of Angel Tax in Section 56 of the Income Tax Act. More than 70 per cent of the respondents believed the Indian education system was not preparing future employees with the skills their business needed, it added.

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