RAKESH GUPTA

DISCUSSION ISSUES
 Why some countries do far better in coming-up with new
ventures or disruptive innovations than others?
 Why do some specific regions or cities are far more
successful in the above than many other regions within the
same country?
 Why in the last 10 years or so far many start-ups have come
up in India than in the past?
How Entrepreneurship Contribute

Global experience indicates that new businesses create far more jobs than
established ones

 Historically Indian economy was thriving with entrepreneurial spirit

accounting for 25% of world’s GDP some 350 years ago declining to 2% of
GDP in 1947 with a new low of 0.2% in early 1990’s

 India with its current demographics need many job creators than job seekers

 Start-up lead technological change & innovation to “Enhance Productivity”

“Entrepreneurship” is a PHENOMENON. Youth is re-imagining
India –1000s of new start-ups being launched with new ideas”

Entrepreneurship engine of growth in India, over the next decade,

has the potential to-
Create 2500 successful high growth venture.
Generate 10 million direct & 20-30 million indirect jobs.

Consequently, powering India’s economic progress with –

Inclusive economic development
Innovative products/services for India’s young population
 First Generation Entrepreneurs enable “Job Creation” like
Infosys, Bharti, Sun Pharma, Kotak, Mindtree, IndiaBulls, Yes
Bank, Edelweiss, Adani Enterprises, Naukri, Makemytrip…

JustDial, Flipkart, Bharat Matrimony, Shaadi, SnapDeal,

Redbus, Bookmyshow, Zomato, Olacabs, Inmobi, MuSigma,
Quikr…

 India an entrepreneurial nation where entrepreneurs struggle

to start and grow their businesses
CURRENT TRACK RECORD (MIXED BAG)

Though rate of new registration in India is low but India has the
2nd largest number of shadowy businesses after Indonesia
As per the Economic Survey of 2023-2024, 103,057 patents
were granted in India compared with 798,000 patents in China
Many significant roadblocks hold back and dampen entrepreneurial
activity. The eco-system for starting and running new ventures has many
gaps
India ranks lowly on many indicators like on innovation, entrepreneurial
eco-system and ease of doing business, which indicates the level of
difficulty in creating new businesses and growing them
BUT

Attracting investment flows and creating substantial wealth

 This cycle has been set in motion over past few years with Emergence of
first generation entrepreneurs, increasing availability of capital, and
strengthening of the ecosystem.

 India is rapidly emerging as leader in ‘frugal innovation’ with some

of the most innovative and entrepreneurial ventures emerging from
India

 Number of incubators in India has risen from 120 in the year 2012
to 1100 within a decade
 Ease of Doing Business in India
Parameters 2021 Rank 2019 Rank

Starting a Business 136 137

Dealing with Construction Permits 186 181

Getting Electricity 22 24

Registering Property 154 166

Getting Credit 25 22

Protecting Investors 14 17

Paying Taxes 161 121

Trading Across Borders 80 80

Enforcing Contracts 163 163

Resolving Insolvency 108 108

 Ease of Starting a Business (India)

Indicator India South Asia OECD

Procedures (number) 12 7 5

Time (days) 27.0 16.2 11.1

Cost (% of income per

capita) 47.3 19.8 3.6
Paid-in Min. Capital (%
of income per capita) 124.4 15.8 10.4
Time Spent on Tax Issues
(Hours) 252 219 147

Cost of Firing (Wages in

Weeks) 56 51 43
Procedure Time to Complete Associated Costs
Obtain director identification number (DIN)
online 1 day INR 100

Obtain digital signature certificate online 1 day INR 400 to INR 2,650
Reserve the company name with the Registrar of
Companies (ROC) online 2 days INR 1000

Pay stamp duties online, file all incorporation

forms and documents online and obtain the
certificate of incorporation 3-7 days INR 24,800

Make a seal 1 day INR 350

Visit an authorized franchise or agent appointed
by National Securities Depository Services
Limited (NSDL) or Unit Trust of India (UTI)
Investors Services Ltd to obtain a Permanent INR 85 for Fee and INR 5 for Application Form, (if
Account Number (PAN) 7 days not downloaded)

Obtain a tax account number for income taxes

deducted at source from the Assessing Office in
the Mumbai Income Tax Department 7 days, simultaneous with previous procedure INR 55
Register with Office of Inspector, Mumbai Shops INR 2,400 (registration fee) + 3 times registration
and Establishment Act 2 days, simultaneous with previous procedure fee for Trade Refuse Charges (INR 7,200)
INR 500 (Registration Fee) + INR 25 (Stamp Duty)
Register for VAT online 10 days, simultaneous with previous procedure for compulsory VAT registration

Register for profession tax 2 days, simultaneous with with previous procedure no charge
Register with Employees' Provident Fund
Organization 12 days, simultaneous with with previous procedure no charge

Register for medical insurance (ESIC) 9 day, simultaneous with with previous procedure no charge
Exit Options
 Importance of Closing a Company
 Everyday 2 start-ups are set-up in India but by the end of 3 years 1 out of
10 survive and entrepreneurs need to close a venture to move on
 As per Registrar of Companies, we have 13.6 lakh registered companies
in India out of which 5 lakh are dormant or defunct
 Non-closure lock the Director’s to start again whereas successful closure
saves one from repeated tax demands and need to file tax returns, keeps
books clear and save entrepreneurs from future lawsuits
 Govt. charges INR 5,000 for winding-up a registered private limited
company and it takes minimum of 18 months after shutting down
operations and INR 2-4 lakhs are liquidation charges and it takes
minimum of 36 months
 India lags on both entrepreneurship and innovation

Source: The Global Entrepreneurship Development Index (GEDI) 2012 Report, Center for Entrepreneurship and Public Policy
The Global Innovation Index 2011 Report, INSEAD
Entrepreneurial Ecosystem
 Role of Govt. & Regulatory Framework
 Finance
 Businesses as entrepreneurial hubs
 Entrepreneurial Culture
 Adequate Collaboration Forums
Catalytic Govt. Policy & Regulatory Framework
 Cut Down Bureaucratic red-tape and make doing business in
India much easier
 Facilitate Investment (Angel, VC & Impact Investing)
 Enhance Incubation Network
 Facilitate, deepen and fasten the learning curve by engaging
with international bodies and experiences
Access to Capital
 Remove hurdles that inhibit domestic fund raising
 Provide tax incentives to HNI’s, Corporates and institutions
that invest in early stage ventures
 Create fund of funds (FOF)
 Encourage financial institutions to develop debt offerings for
scaling-up ventures
 Deepen the availability of funds to tap smaller areas and
marginalized sections
Businesses as Entrepreneurial Hubs
 Tap Private sector players
 Encourage industry bodies to play active role
 Encourage M&A activity
 Creating an Entrepreneurial Culture
 Forge Links with Ent. Hubs like Silicon Valley/Tel Aviv for Knowledge
Sharing
 Encourage educational institutions to develop and upgrade existing
programmes and focus on innovation
 Promote strong connection between Industry & Academia
 Provide platforms for interaction between established industry players, start-
ups, mentors and investors
 Create a culture of innovation among educational institutions
 Make entry and exit less cumbersome
 Create an environment to promote more inclusive form of entrepreneurship
 The Entrepreneurial ecosystem

Policy and regulatory environment End consumers

Central State government • Size, growth and structure of
government market
• Consumption pattern and taste
• Fiscal Policy – tax, etc for innovative products and
• Regulatory regime covering entry, ideas
operation and exit
• IP protection, contract enforcement,
etc.

Investors
Demand for funds Supply of funds
•Quality and number of entrepreneurs Government
•Size of funding required
•Stage
Hard in evolution of the enterprise
infrastructure Culture supporting Educational institutions
•Existence and reach of entrepreneurship •Foster entrepreneurship
physical infrastructure- •Entrepreneurial and •Availability of adequate
roads, communication, innovation spirit, tolerance number and sufficiently
energy and utilities, for failure, media support skilled labour
economic/ industrial zones and coverage •Mentoring
etc.
 • Facilitate collaboration with overall ecosystem
- Funding of iLabs
Entrepreneurial - Participation in dialogue with all stakeholders to ensure consultative
ecosystem policy formation
• Facilitate effective provision of services by incubators
• Creation of accreditation frameworks for certifying start-ups
• Hard infrastructure development

• Procedural and regulatory reform for all stages of business

- Entry – single window clearance, information availability, industrial
Government and Entrepreneur clusters etc
- Operations – labour laws, IP laws etc
. regulatory
bodies - Exit mechanisms and modalities including paperwork and
restrictions
• Enabling venture capital funds, angel investors and business to
provide equity to entrepreneurs
- Fiscal policy initiatives
Capital - Regulatory reform affecting fund raising, operation & exit, especially
domestic capital raising
• Enabling banks and Fis to provide debt to entrepreneurs
- Regulatory reform for promoting credit to start-ups
- Creation of innovative products for providing non-collateralized debt
Political Factors Changing Policy Framework (New Start-up Policy)
More Focus on job creators than job seekers
Focus on changing mindset and overcoming cultural bottlenecks
Emerging & Growing Economy

Economic Factors Easier Access to of Risk Capital

Rising per capita disposable income and Increase in Double Income Families
Rising urbanization
Increasing Risk Appetite

Social Factors Fast Changing Socio-Cultural Factors

Young Population (Demographic Dividend)
Fast Expanding Educational Infrastructure
Increasing access to education

Technological Factors Increased internet penetration & Rise of e-commerce

Increasing Tele-density & Proliferation of smartphones
Increased Govt. Thrust on Digitization
Higher Adaptation and Diffusion of Technology
Start-Up Financing
Angel & Incubator Investment by Region (2024)
Region Rounds of Angel Rounds of Total
Investment Incubator
Investment

US 213 205 418

Europe 79 67 146
China 14 3 17
India 19 18 37
Israel 2 3 5
Canada 20 16 36
RECENT DEVELOPMENTS
 Replicate Kerala Government Model

Start-up Village for 1000 local start-ups

Governments to Encourage Adoption of Productivity Enhancement Tools

Leverage automation in services of mass nature : taxi booking, bus ticket, tourist
ticketing, e-governance…

State Finance Corporations to Invest in VCFs/AIFs

Seek a commitment of double the sum invested by SFCs be allocated by the fund
for the businesses from the state.
NASSCOM 10,000 Start-Ups
 Received 7,000 applications, shortlisted 332

 These 332 start-ups pitched B-PLANS to 50 Angels, V.C’s

 Over 100 made it to accelerator stage, received mentoring to

fine-tune their B-Plan and Scaling-up strategies

 Key bottle-necks identified were how to start and early stage

support system was found to be fragile
Return of Natives
 A broken system presents a land of opportunity

 Likely Reasons to return are Huge Market size, massive talent

pool, rich demographics and Digital opportunity

 Examples of start-ups; Healthkart. Exotel, Knowlarity, Savaari,

Voterite

 Close to 30 start-ups in Bangalore, 34 in Delhi-NCR and 23 in

Mumbai were started by returnees in 2013.
Growing Interest to Engage with Start-up Ecosystem

 Top Institutions and Firms across the world working to engage deeply
with start-up ecosystem in India.
 STANFORD’s IGNITE (7 Week) programme now offered in 5 cities
across the world including Bangalore
 Canada’s Ryerson University started their Accelerator Programme in
India, where they take 5-10% stake in exchange for $ 50,000
 Google starting their highly successful 5 day programme called
GOOGLE LAUCHPAD from Nov.3-7 in Bangalore.
 RELIANCE Industry partnering with MICROSOFT to incubate start-ups
with seed capital, mentoring and technology on the lines of YCombinator
 RECENT ANNOUNCEMENTS
 Govt. announced INR 10,000 cr. fund for early stage ventures
 Working on entrepreneur friendly legal bankruptcy
framework
 Plan to start network of Incubators and Accelerators to boost
innovation and new venture development
 INR 200 cr. fund for Dalit entrepreneurs managed by IFCI
 Many experts expect next decade to be golden era of
entrepreneurship in India
 FUTURE CHALLENGES
 Cultural shift, need to accept failure as a natural process of
entrepreneurship and view them as learning experience
 Need to enrich and strengthen the Eco-System to catalyze
the start-ups and scale-up
 Need to revisit the entire educational system to encourage
creative thinking, experimentation and innovate
 Identify and encourage high impact entrepreneurship
 Ease Process of Starting & Closing a Business

oCatch global headlines in May’2015 that India Improve its rank to

sub-100 from 179th Rank - Ease formation of a company by
leveraging India’s software competence for

oSingle Application with 24-hour Turnaround Time (SATTT) - Name

Search, DIN, Digital signatures, Incorporation certificate, and PAN.

oWhen the start-up decides the place of operation in SATTT -

Allocate Tax Account Number, register it under Shop &
Establishment and the MSME Act.
 Allow flow of Long-Term Institutional Capital for Start-ups

RBI to encourage VC/Start-up investments by Banks under

“priority sector lending” norms.

Start-up Equity Funding thru SEBI Approved VCF/AIF Category

I to be at par with priority sector lending norms.

Vibrancy of start-ups is comparable to agriculture/farming in

having a positive spillover effect on the economy.

Endowment Fund worldwide invest in VC/PEs.

 HOSTELFUND. COM: CATCH THEM
YOUNG

 HostelFund (HF) was founded by Ankur Jain in December 2019

based out of Gurugram. It was set-up to support student start-ups
through intense mentoring and helping them in getting funding at
an early stage. The venture idea was based on Ankur’s personal
experience as a student entrepreneur and the challenges he
faced during those days. He refined the idea during his regular
interactions with students who were keen to start their
entrepreneurial ventures.
HOSTELFUND. COM: CATCH THEM YOUNG
 The mentoring-heavy model and stiff filtering mechanism to shortlist
the mentees led to low conversion rate of mentee firms for HF thus
putting a question mark on the financial viability of the venture.

 HF needed to address the issue to improve their conversion rate to

make the venture financially viable. Ankur was seriously thinking
whether to continue with their present approach or needed to look
for other alternatives before deciding the way forward.