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BW Businessworld

Waning Enthusiasm

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The Modi government had come to power on the promise of change, interpreted by the country as ‘things will improve’. The startup eco-system – entrepreneurs, investors, accelerators, incubators, service providers, etc. – too was excited with the promise of change. And while we have seen the government declare its intent to move in the right direction, I think the enthusiasm and excitement about ‘change is around the corner’ has waned down a bit. 
For the entrepreneurial world, it is encouraging that the words ‘entrepreneurship’ and ‘startups’ made it to the government vocabulary. The FM mentioned it in his budget speech, and is a regular part of the discourse on government business policies for generating employment. The government did suggest that it would be startup friendly. 
But, as many would agree across sectors, converting intent into action has been slow. Perhaps the government is putting together the foundation on which to build strong initiatives on. And if so, it will help to know the intended road map. 
The introduction of a single, integrated, electronic form instead of 5-6 forms previously required to set up a company will certainly make it easier for aspiring entrepreneurs to start new ventures. How that gets implemented on the ground will be crucial. The acid test will be if entrepreneurs do not have to engage intermediaries like accountants and/or lawyers to set up a company, as they usuallydo in order to navigate the complexity of the current process and forms.  
‘Make in India’ and ‘Smart Cities’ programmes promise to create opportunities for new businesses. But details around that are sketchy, and efforts to make these initiatives actionable have been limited and sporadic. A structured approach and plan on how the government can facilitate or make it easier for startups to access opportunities under these initiative will be useful. For example, under the ‘Smart Cities’ program, if there is a group that is tasked with reviewing products and/or services of startups and assessing their suitability for Smart Cities, it will make it easier for startups to understand the opportunities, design solutions for those opportunities, access resources to strengthen those solutions, and find enablers [accelerators, investors, mentors, etc.] to benefit from those opportunities. 
Overall, the government’s engagement with the startup world has to go up. Current levels of engagement have been too few and far between. Relevant ministries have to make an effort to understand the world of entrepreneurship and startups, and better align with the aspirations so that they can help aspiring entrepreneurs leverage opportunities that they wish to pursue. 
What is also worrying is that the government is looking at entrepreneurship through a very narrow filter i.e. that of the startup world as defined by VCs and angel investors. VCs and angel investors participate only in ventures that can scale exponentially. However, entrepreneurship needs to be seen, especially by the government, as a much wider concept than just tech focused, scalable, VC fundable startups. (At a recent event one of the ministers said that India has 3000+ startups. And my contention is that we perhaps have 3 million startups. The 3000 number that the minister indicated was perhaps the number suggested by one of the tech industry bodies in their report. And that number may be right for that industry body’s area of focus, but certainly is a rounding off error in my view if entrepreneurship were to be considered as ‘starting a business’ rather than starting a ‘Tech-focused, VC fundable, scalable venture’).
Three specific suggestions 
  • Appoint a Minister of State for entrepreneurship – this one move will give a boost to entrepreneurship, including creating the infrastructure and resources for entrepreneurship to go beyond the 5-6 cities that it currently is concentrated in.
  • Provide tax incentives for individuals to invest in startups as an asset class. We need to expand the pool of angel investors to 25000 – 30,0000 individuals, up from the paltry 200- 300 angel investors that we have in the country today. Expanding the pool of angel investors will increase the pool of startups as more entrepreneurs will find the resources to start a start up. 
  • Include a contingent of entrepreneurs in the Republic Day Parade. This one move will give entrepreneurship the respect that it deserves, and will give parents the confidence to allow their child to give up a job at IBM to pursue a startup. 
The author,  Prajakt Raut, founder of Delhi-based incubator The Hub for Startups and tech startup Applyifi.  

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