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STUDY ON IMPACT OF

ENTREPRENEURIAL
GOVERNMENT SCHEMES
ON
GROWTH OF START-UPS

Submitted by: Submitted To:


Devesh Sharma Dr. Nandini
Sharma
Semester IV
Introduction

Meaning of Startup:
A Startup is a new company which is:
In the first stage of operations
Based on a new idea can be product or service
Has limited funds
Requires Additional Funding From Venture Capitalists and Angel Investors
Important Terminology In The World of
Start-Ups
Venture Capital :
Money provided by venture capital firms to small, high-risk, startup companies with
major growth potential.

Venture capitalist:
An individual investor, working for a venture capital firm, that
chooses to invest in specific companies.
Incubator:
An organization that helps develop early stage companies, usually in
exchange for equity in the company.

Angel Investor:
Individual who provides a small amount of capital to a startup for a stake in the
company.

Debt Financing:
This is when a company raises money by selling bond, bills, or notes to an
investor with the promise that the debt will be repaid with interest.
Basic Requirement for Growth of
Start-ups

Financing or Fund Raising

Incubation, Mentoring and Technical Services

Industry Bodies, Facilitators and Networks

Enabling the Ecosystem: Government Policy and


Regulations
Government Schemes for Growth of
Start-Ups

Compliance regime based on self-certification. Labour laws no inspection for 3


years.

Startup India Hub: single point hub ( frie


nd, mentor, guide, assist startups through
their lifecycle with specific focus on aspe
cts like financing, feasibility, marketing
skill, etc.

Mobile app to be launched on April 1 2016: registration of startup company in one


day. Also portal for clearances, approvals and registration .
Fast-track mechanism for startup patent applications

Panel of legal facilitators for startups to file IP (patents, designs, trademarks)


costs borne by government

80% rebate on filing of patents applications by startups, as compared to other


companies

Relaxed norms of public-procurement for startups. No requirement of


turnover or experience, but no relaxation on quality
Faster exits for startups (Insolvency and Bankruptcy Bill), e.g. wind up in 90
days

Fund of funds initial corpus INR 2,500, later on 10,000 crore


Credit guarantee fund for startups

Tax exemption on capital gains for

Tax exemption to startups for 3 years to promote growth

Atal Innovation Mission: sector-specific incubators

Innovation Core Programs for school students in 5 lakh schools

Annual Incubator Grand Challenge to create world class incubators in


India

National and International Festivals to provide visibility


Objective of The Study
To fully understand the schemes and policies provided by
government for the growth of startups.

To understand how the government policies, affect the working


of startups.

To analyze the government policies towards startups and


entrepreneurs.

To understand the very definition of startups and its components.


To understand the significance of government schemes on the growth
of startups and new businesses.

Thus, the very objective of this study is to understand the impact of


government schemes on the growth of startups and government policies
affect the startup ecosystem.
Methodology

Meaning of Research:
Research is sincere, comprehensive, intellectual searching for facts and
their significance or inference with reference to the problem under study.
Research is systematic activity to achieve the truth.
It includes the identification of study area, the procedure for collecting
data, analyzing the data and finding the conclusion or truth based upon the
scientific procedure.
Research Methodology:
Research methodology is a systematic way to solve a problem.
It is a science of studying how research is to be carried out. Essentially, the procedures by which
researchers go about their work of describing, explaining and predicting phenomena are called
research methodology. It is also defined as the study of methods by which knowledge is gained.
Its aim is to give the work plan of research
Role of Data Collection in Research Methodology:
Data collection is the process to gather information about the relevant topic of
research, which is being done by researcher. Data collection is a term used to describe
a process of preparing and collecting data.
For studying the impact of entrepreneurial government schemes on growth of startups
I have chosen secondary data for conducting my research.
Secondary Data:
Secondary data are those data which have already been collected and analyzed by
some earlier agency for its own use, and later the same data are used by a different
agency.
The various sources of secondary data can be divided into two broad categories:
1. Published sources
2. Unpublished sources
Limitations of The Study

In this only secondary form of data collection could be used as collecting primary
data was difficult.

The study was limited to central government schemes.

The present study has relied largely on qualitative methodology of data collection
(though quantitative methodology was used to a limited extent) and is therefore
restrictive. Therefore, more of quantitative methodology of data collection should
be undertaken in future to provide wider perspective to the present study.
Analysis & Interpretation
On the basis of the study the analysis of this study is as follows:
India is the 3rd ranked global startup system and has become the fastest growing
ecosystem in the world and if this all goes well, next year by this time it should be the
second largest.

The total value of VC and PE deals in 2014 was $15.2 billion, with the largest
investments in consumer 12technology, real estate and banking/ financial
services/insurance.

In 2014, 43 startups were acquired; so far this year the number has been 41, with
startups themselves being the most acquisitive of the lot. Of the 41, merely two deals
were struck by large corporates, with Godrej and Mahindra & Mahindra as the buyers.
Angel investments is emerging but still very limited in India, making up only 7% of early-stage investment
compared to 75% in the US. Innoven's India Angel Report suggests that median angel round has grown from
Rs.52 lakhs to Rs.138 lakhs from 2014 to 2015.

With over $5 billion worth investment in 2015 and three to four startups emerging every day, India has paved
its way to secure the third position in the world in terms of the number of startups, 4200 and counting, a growth
of 40%, by the end of 2015.

As per the statistics given in the report, the number of active investors in the ecosystem has grown from 220 in
2014 to 490 in 2015, depicting a 2.3X growth. Further, 8 out of every 10 top VC/PE Firms in India are foreign,
and global investment in the Indian economy.

The boom in the startup ecosystem has generated employment for around 80,000 to 85,000 people in total.
More than 65% of the startups are located in NCR, Mumbai and Bangalore.

The stats on the demography of the ecosystem says that 72% of the founders are less than 35 years old making
India home to the youngest entrepreneurs in the world, with gender breakup of 91% male and 9% female.
Majority of the 1200 new startups are B2C, primarily present in 3 segments namely e-
commerce, consumer services and aggregators followed by hyperlocal, health-tech,
edu-tech and analytics.

More than 50 per cent of the 1,200 startups focus on e-com, consumer services and
aggregators; and female founders and co-founders in startup ecosystem is around
nine percent.

Sectors with most funding are:


Conclusion
This research was undertaken with the primary objective of finding the impact of
Entrepreneurial Government Schemes on Growth of Startups .
The boom in the Indian startup ecosystem has made a conspicuous impact on
certain critical areas such as education, healthcare, employment, agriculture etc.

India stands as one of the major technology hotbeds offering fascinating


opportunities for emerging companies to thrive and establish themselves in the
world with their innovative ideas.

India improved in the following parameters: starting a business, dealing with


construction permits, getting electricity, but dropped in parameters such as
accessing credit and paying taxes.
The Government policies and schemes with respect to startup sector have helped
but the policies could have been better.

The moral of the story, then, is that policy thinking needs to be reflective and
inclusive rather than simply being a spectacle for publicity. It needs more partners in
design to avoid the blunders that will probably be the fate of Startup India.
Recommendations
The complicated tax regime of India is a major problem for startups, with
each state levying their own sales tax and having separate procedures for
licenses and taxation, makes expanding across India a cumbersome process.
The proposed Goods and Services Tax (GST) common across the country,
therefore, holds substantial promise to ease taxation issues for business.

Provide education and skilling provided at universities, vocational training


institutes and other training programmes and initiatives to catch up with the
needs of the startup economy.
Make a policy environment that makes it easier for entrepreneurs to start,
run, scale and shut businesses.

Setting up of more incubators/accelerators to develop entrepreneurial skills


such as building a business around an idea, creating and testing a prototype
and understanding the market.

Encourage and facilitate crowd-funding for new ventures for the startup eco-
system to evolve beyond the guidelines and templates provided by just one
class of capital providers VCs.
Scope of Further Study
This study opens up new grounds for further research. Further studies
can address the following issues to have more insights on the subject.

Studies can be done to find out the effect of Government schemes


and policies on tech startups and e-commerce startups.

Further, studies can extend to other fields such as to study the


impact of government schemes and policies on small business,
medium scale businesses and large scale businesses.
THANKYOU