Dr. Bharti Gupta
The Government of India’s flagship program, Startup India, was introduced on January 16, 2016, by Narendra Modi, the country’s prime minister. This was done with the intention of fostering a startup culture and creating a robust, inclusive ecosystem for entrepreneurship and innovation in India.
Startup means an entity, incorporated or registered in India not prior to five years, with annual turnover not exceeding INR 25 crore in any preceding financial year, working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. There are certain conditions for an entity to be called as startup. These are like –
an entity is not formed by splitting up, or reconstruction, of a business already in existence; an entity shall cease to be a Startup if its turnover for the previous financial years has exceeded INR 25 crore or it has completed 5 years from the date of incorporation/ registration; a Startup shall be eligible for tax benefits only after it has obtained certification from the Inter-Ministerial Board, setup for such purpose.
The Startup India Initiative has launched a number of projects with the goal of assisting entrepreneurs, creating a strong startup ecosystem, and changing India into a nation of job creators rather than job seekers. A specialised Startup India Team oversees these initiatives and reports to the Department for Promotion of Industry and Internal Trade (DPIIT). Eligible businesses gets designated as startups by the DPIIT, Ministry of Commerce and Industry, under the Startup India initiative.
In order to meet the objectives of the initiative, Government of India has announced Action Plan that addresses all aspects of the Startup ecosystem. The Prime Minister unveiled the Action Plan-2016 consisting of 19 Action Points that act as a guiding document for the startup initiative.
The Action Plan is divided across the following areas:
* Simplification and Handholding
*Funding Support and Incentives
* Industry-Academia Partnership and Incubation
* The Simplification and Handholding include the components:
* Compliance Regime based on Self-certification
* Startup India Hub
* Rolling out of Mobile App and Portal
* Legal Support and Fast-tracking Patent Examination at Lower Costs
* Relaxed Norms of Public Procurement for Startups
* Faster Exit for Startups
* The Funding Support and Incentives include the components
* Providing Funding Support through a Fund of Funds with a Corpus of INR 10,000 crore
* Credit Guarantee Fund for Startups
* Tax Exemption on Capital Gains
* Tax Exemption to Startups for 3 years
* Tax Exemption on Investments above Fair Market Value
* The Industry-Academia Partnership and Incubation includes the components:
Organizing Startup Fests for Showcasing Innovation and Providing a Collaboration Platform
* Launch of Atal Innovation Mission (AIM) with Self-Employment and Talent Utilization (SETU) Program
* Harnessing Private Sector Expertise for Incubator Setup
* Building Innovation Centres at National Institutes
* Setting up of 7 New Research Parks Modeled on the Research Park Setup at IIT Madras
* Promoting Startups in the Biotechnology Sector
* Launching of Innovation Focused Programs for Students
* Annual Incubator Grand Challenge
While discussing start up, it is pertinent to discuss the concept of a Unicorn. In the venture capital industry, the term unicorn refers to any startup that reaches the valuation of $1 billion. Aileen Lee, the founder of Cowboy Ventures, first used the word when she referred to the 39 firms with a valuation of more than $1 billion as unicorns. The phrase was first used to emphasise how uncommon such businesses are. Since then, the description of a unicorn startup has not altered.
Can a unicorn only be a startup? The answer is Yes. Only “startups” with an estimated value of above $1 billion are referred to as unicorns. Startups valued at more than $10 billion are categorised as “decacorn” companies (a super unicorn). Among the decacorns are Dropbox, SpaceX, and WeWork.
Being a unicorn is not easy, and each one today has a unique history and a unique set of characteristics that have benefited it. According to Razorpay.com, there are a few traits that all unicorns share, including:
* Disruptive innovation: Most unicorns have caused a disruption in the industry to which they belong. For instance, Uber transformed how people commuted. When travelling, Airbnb altered how people scheduled their accommodations, and Snapchat upended how people used social media, among other things.
* The ‘firsts’: It is seen that unicorns are mostly the starters in their industry. They change the way people do things and gradually create a necessity for themselves. They are also seen to keep innovation up and running to stay ahead of competitors which might later boom.
* High on tech: Another common trend across unicorns is that their business model runs on tech. Uber got their model accepted by crafting a friendly app. Airbnb made the world seem smaller by making the best of the world wide web. A recent report suggests that 87% of the unicorns products are software, 7% are hardware and the rest 6% are other products & services.
* Consumer-focused: 62% of the unicorns are B2C companies. Their goal is to simplify and make things easy for consumers and be a part of their day to day life. Keeping things affordable is another key highlight of these startups. Spotify, for example, made listening to music easier to the world.
* Privately owned: Most of the unicorns are privately owned which gets their valuation bigger when an established company invests in it.
A few unicorns startups in India include:
Flipkart: Founded in 2007 and listed under one of the largest e-commerce brands across India, Flipkart is a success story of two friends, Sachin Bansal and Binny Bansal. Amongst all the other e-commerce startups in India, Flipkart stands way ahead .
PayTM: Founded by Vijay Shekhar in 2010, PayTM is owned by One97 Communications, founded in 2010, when mobile had just entered the life of common man in India. Gradually One97 Communications moved from mobile top-up service to bus and train ticket booking, bill payment enabler to a full-fledged payment service provider for businesses and was named PayTM. With the current day valuation of around $2 billion, PayTM has certainly come a long way.
Razorpay: A Bangalore based fintech startup, founded by Harshil Mathur and Shashank Kumar, has recently secured $100 million in Series D funding led by GIC, Singapore’s sovereign wealth fund, along with Sequoia & existing investors Ribbit Capital, Tiger Global, Y-Combinator and Matrix Partners and entered the unicorn club. They started the company with a simple vision of helping every business accept digital payments and over the years, they have made huge strides towards making it a reality.
Pharm Easy: PharmEasy was founded by Dhaval Shah and Dharmil Sheth in 2015, and it provides a whole suite of services such as sample collections for diagnostic tests, teleconsultation, medicine deliveries, etc. It also provides a solution for pharmacies to use procurement combined with delivery and logistics support.
CRED: Founded by Kunal Shah in 2018, the Bangalore-based fintech startup entered the unicorn club at a whopping valuation of $2.2 Bn. CRED is a members-only club that rewards individuals for their timely credit card bill payments by providing them enticing offers and access to high-quality experiences. It is a platform that allows credit card users to manage multiple cards along with an analysis of their credit score as well.
Urban Company: Founded in 2014 by Abhiraj Bhal, Raghav Chandra, and Varun Khaitan – Urban Company is an all-in-one platform that helps users hire premium service professionals, from masseurs and beauticians to sofa cleaners, carpenters, and technicians. Urban Company has built a network of 40,000+ trained service professionals and has served over 5 million customers across major metropolitan cities around the world.
BharatPe: The company was founded in 2018 by Ashneer Grover and Shashvat Nakrani. BharatPe launched India’s first UPI QR code for merchants, and it has now expanded into other financial services. Currently serving over 50 lakh merchants across 35 cities in India, BharatPe is a leader in UPI offline transactions.
Mindtickle: Mindtickle provides a data-driven solution for sales readiness and enablement that accelerates revenue growth and brand loyalty. With Mindtickle, revenue and sales leaders can continually assess, diagnose and develop the knowledge, skills, and behaviors required to effectively engage buyers, accelerate sales, and drive growth.
There is no doubt that startups and the innovation ecosystem have given a new direction to the youth of India. The momentum with which the startup culture and innovation ecosystem are being carried with the support of a huge number of schemes and programs, the stepping stone that was initiated by Narender Modi in 2016 is going to make India self-reliant for sure and very soon.
(The author is Startup Coordinator, Institute Innovation Council, Central University of Jammu)