India is currently the third-largest startup ecosystem in the world. In recent years, startups have been widely recognized, and have proven to be the growth engines for the country’s economy and its people. From a record of approximately 42,000 active startups in India, 39,000 have created job opportunities. With technological and innovative developments, startups have a wide range of resources available that converge into useful products, impactful solutions and quality services.
A startup usually consists of a team of entrepreneurs, investors, manufacturers, incubators, accelerators, and stakeholders. Today, as a result of the support provided by the government, other investors, and various top-tier companies, the Indian startup ecosystem has seemed to flourish in the past two decades. Before that, due to less use of the Internet, connectivity was a challenge. Ever since the betterment in broadband penetration and an active internet connection, there has been a significant emergence of various startups.
STARTUPS: ECONOMIC GROWTH DRIVERS
With around 4,70,000 job positions created by startups, the Indian economy has observed progression. There are 38 unicorns in India (firms valued at over 1 billion). Out of these, 12 were added in the year 2020 despite the economic downfall because of the COVID 19 Pandemic.
Considering the potential of startups, the Indian government has set up Rs. 10,000 crore for Funds for Startups, which is operated by the Small Industries Development Bank of India. According to a survey by the Economic Times, these funds have given rise to a corpus of Rs. 31,598 crores; while investing 4,509.16 crores into 384 startups.
The government had exempted income tax for 319 startups till November 2020. Startup India launched an initiative in 2017 and offered 1,424 incubation offers to various startups. The Rs. 945 crore fund instated by the government is expected to benefit approximately 3,600 startups, especially in tier 2 and 3 cities.
State governments are also actively involved in supporting startups. ‘Elevate 100’ is a scheme launched by the government of Karnataka which provides grants to the first 100 winners. The Maharashtra government has also introduced schemes to provide financial assistance to startups. The first phase of this scheme is assumed to assist with Rs. 2 lakhs to Rs. 10 lakhs for 150 startups. The Mudra Yojana proposed by the government provides loans to startups to help them stabilize their company and business. Corporations usually engage with startups through corporate venture capitals, incubators and accelerators, and various competitions.
Investing in a startup comes with its risks, but with its combination of low overhead capital and high upside potential, investors see it as a cost-effective opportunity. ‘Google for startups’ is an initiative launched by Google, intended to support 20 startups. They will receive support for 3 months from various mentors in India.
Amazon India has launched a 250 million venture fund that aims to invest in startups that focus on innovation, technology, healthcare and agriculture.
India houses a market that supports the vast commercial potential for startups. With the growing economy and increase in purchasing power, different innovative solutions are under test in the market.
CHALLENGES
Despite the support from the government and various corporations, only a certain percentage of startups gain benefit from it. Financial assistance is the major challenge for numerous entrepreneurs. Securing investors and grants is the key. Many a time, startups dissolve because of a lack of funds.
It is crucial to pay equal attention to expanding and sustaining growth when the company takes off. Revenue generation can be a real challenge for startups, and not doing so can often lead to failure. The Indian markets appear with growth potential. With each new product, novelty and innovation become a challenge. Tracking existing products, trends and then developing an original idea becomes crucial.
The recurring effect of a saturated market is the heightened customer expectation. In such a scenario, getting a good mentor with enough knowledge about the market can be very useful. People are also impressed by good brands identities. Therefore, coming up with a unique brand strategy is also a challenge.
HOW CAN YOU DEVELOP A STARTUP?
Numerous startups have managed to secure a successful run in the market. Although success is measured through different factors, there are a few commonalities responsible for it.
PRIORITIZING
People often get overwhelmed with various tasks that a startup aims to achieve. It is crucial to take up only a certain amount of work and give it your sole focus. With dedication and precision comes growth.
REACHING OUT
Creating a network of investors, manufacturers, buyers is one of the most crucial aspects of building startups. It is also necessary to reach out to corporate companies through various pitch competitions to secure funds.
MARKET RESEARCH
A constant update about products and services launched in the markets helps one get an idea of consumer requirements. Designing a product according to the market strategy can make it more viable.
References:
https://economictimes.indiatimes.com/tech/startups/what-economic-survey-2020-21-says about-indias-startup-ecosystem/articleshow/80586774.cms