While welcoming Prime Minister Narendra Modi’s announcement on Saturday to celebrate January 16 as National Start-up Day, six years after the Start-up India Action Plan was launched by the government, stakeholders in the ecosystem say that more needs to be done at the policy level to unleash the next phase of growth in the sector.
“The Start-up India programme’s launch in 2016 was a turning point – that is when the promoter came to be known as the founder in the country and the word ‘entrepreneur’ entered the common lexicon.
"But now we need a Start-up India 2.0 now for the next phase of growth of the ecosystem”, said Siddarth Pai, managing partner of venture capital (VC) firm 3one4 Capital.
Pai says that Startup India 2.0 must look at promoting Startups headquartered in tier II,III & IV cities and solving the problems of Bharat.
“Startups invest heavily into their clusters through the capital they raise and solving local problems.
"Encouraging India’s unicorns to expand there will democratise growth and drive development in areas,” he said.
“As an entrepreneur, it is encouraging to see the efforts to build a strong and inclusive start-up culture fueled by innovation, technology and sound policies.
"This will encourage more startups to emerge in tier 2 and tier 3 towns and will play a key role in increasing our country’s GDP, said Mabel Chacko, co-founder and CEO of neobanking start-up Open.
However, she also has a long prescription for what more needs to be done – foreign direct investment (FDI) inflows and compliances need to be simplified and made efficient, share swaps still remain a complicated procedure that should be eased, grants and tax holidays for developing talent, and eligibility criteria for various schemes and regulatory regimes to be based on credibility and talent rather than factors like net-worth, among other things.
Gautam Chopra, founder and CEO of healthtech start-up BeatO, which was one of the winners of the National Start-up Awards 2021 declared on Saturday, says that the government was receptive to the ideas that start-ups proposed in their interactions on Saturday. Union Minister Piyush Goyal, PM Modi and top bureaucrats spoke to a group of more than 150 start-ups on the weekend about what more can be done to give a fillip to the sector.
“In the healthtech category, we asked for things such as simpler regulatory processes for approvals and assistance from government medical institutions like AIIMS with clinical trials.
"The Prime Minister took a keen interest in the ideas we floated,” he says.
One of the most important steps that the Start-up India programme took was to create a fund of funds with an approved corpus of Rs 10,000 crore for contribution to various Alternative Investment Funds (AIFs) registered with Sebi.
According to the government, the programme has led to investments of Rs 8,000 crore in start-ups through various AIFs, 543 companies have been supported through the scheme and commitments of over Rs 6,044 crore are in the pipeline as of December 6, 2021.
“Earlier, almost all of the capital comin into the Indian ecosystem was being managed by foreign fund managers.
"The Fund of Funds Scheme helped a lot of fund managers in the country with the seed capital to set up homegrown VC firms.
"In a way, fund managers have also been empowered like entrepreneurs,” said Pai.
With 42 unicorn start-ups being created last year and India racing to the milestone of one billion internet users, the country will soon make a century of unicorns, Prime Minister Narendra Modi said on Saturday.
“Your hard work, businesses, job creation and wealth creation are for the country’s benefit.
"I want to match shoulder to shoulder with you to transform the youth's enthusiasm into country's enthusiasm,” he told start-ups.
PM Modi announces January 16 as National Start-up Day to mark the success of Start-up India programme was launched on same day in 2016
Founders and investors say Start-up India programme has helped popularise entrepreneurship in the country, eased a few compliance processes
Fund of Funds scheme has enabled investments of Rs 8,000 crore in start-ups through AIFs
Stakeholders say greater policy push required in FDI regime, taxation, regulatory approvals to unleash the next phase of growth in the sector