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  1. Challenges and opportunities for Indian start-ups; Key points to note

Challenges and opportunities for Indian start-ups; Key points to note

The government of India is leaving no stone unturned to provide start-ups with the best of opportunities to grow and shine in the market.

New Delhi | Published: January 27, 2017 2:59 PM
 The government of India is leaving no stone unturned to provide start-ups with the best of opportunities to grow and shine in the market.  (Reuters image) The government of India is leaving no stone unturned to provide start-ups with the best of opportunities to grow and shine in the market. (Reuters image)

Indian start-up industry is on the up-swing since last few years, with multiple global investors eyeing the India start-up space; it is slated to grow larger than before. The government of India is leaving no stone unturned to provide start-ups with the best of opportunities to grow and shine in the market. However, in spite of the numerous opportunities provided by the government, the road blocks are not few for the companies.

Challenges

Government Policies
If entrepreneurs are the planets in the solar system, then the government is the sun, the single largest facilitator. The government policies are slowly and steadily increasing, although, it must be noted that India still maintains a dismal ease of doing business raking as per the World Bank report. Due to a maze of laws and regulations, it takes more of an effort for an entrepreneur to start a business in India than most of the other places in the world, and after he /she succeeds in setting up a business, it takes even a greater effort to comply with sector, department, state and centre laws. The government has taken proactive measures for funding and developing the eco-system, however, we witnessed a slowdown in the start-up space, as there was a dip of almost 50% in the registration of new start-ups in 2016 as compared to 2015; this trend has proved that the policy change has not really given a push to aspirants.

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Talent
In start-ups employment is uncertain due to companies reaching scale and then downsizing for better efficiencies, the industry is saturated with such examples. However, this is a small problem as compared to finding the right skilled talent, and retaining the talent. Skilled talent is hesitant to join start-ups, as they have witnessed in the past mass firing and downsizing. Also, early stage or pre series-start-ups have lesser pay than their corporate peers. Most start-ups in a bid to outgrow, hire inadequate talent without processes, and finally end up on the losing side.

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Funding
Raising the capital has been a long drawn challenge for start-ups. Angel investment and seed investment is easier to find, as the amounts are smaller, it has gotten much tougher to go for later stage rounds, as companies burn too fast and do not look at unit economics. Raising funds has become more of a celebration; rather it should be of an entrepreneur making it to the start line of the race. Very limited funding is available in forms of larger cheques in India. In our eco system (India) we patronise the founder, and not the company, and sometimes the founder can be caught up in glamour of funding.  Entrepreneurs should set the goals for the next 5 years and should not be obsessed with raising the funds.

Opportunity

AP Innovation Society

India has the largest youth population, which is the largest driver for innovation, workforce, talent and future leaders.  India has its own challenges of education, health, infrastructure and the rising gap between India and Bharat. This presents big opportunity for start-ups to solve a variety of problems. India has the population of 1.3 billion people; the country’s middle class is growing along with the consumers. The large diversity in the India’s population makes a strong case for a rich services and products economy. Start-ups should look at banks; our banking system has reaped the maximum benefit of our population size.

Connectivity 

Indian telecom industry has nearly 100 crore subscribers, mobile connectivity has made inroads in the rural and urban population. Government of India’s digital push is going to improve connectivity and data to the next level. The race to cheapest data has started and disruption is certain. The cheap data has helps everyone to get their hands on it, start-ups will have an easier time to tap into markets, territories and even traditional businesses.

De-globalization 

Critics will argue that this will be a challenge, however, ever coin has two sides; it is a challenge for some, and opportunity for the others.

Brexit added fuel to the fire, while the new president of The USA has given early indications of lower corporate taxes, and destination taxes for US based corporations. Make in India, is also a part of this de globalised world, where we are promoting to make in India rather than anywhere else in the world. This is an opportunity for the Indian start-ups, more importantly, lesser brain drain, companies abroad will look to hire from India, and therefore greater talent pool will be available for start-ups. India is a more closed economy as compared to China, and we do have substantial exports to the US, but this will be unaffected, although de-globalisation could have adverse affect on larger corporations who will scale down operations and become more frugal, this would also present opportunities for start-up companies to fill the void.

In India, the opportunities for the start-ups are immense, but so are the challenges. It will take combined efforts from the government and the start-ups to overcome these challenges.

(The article has been written by Rohit Chokhani, Principal Founder, White Unicorn Ventures. All the views expressed are personal)

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