Startups are the engines of exponential growth that thrive on the power of innovation. Many of the present day corporates began as startups once till they became shining examples of entrepreneurial spirit. The start-up segment is a key element in India's dream of turning into a $5 trillion economy.
But as every coin has two sides, the startup ecosystem also has a flip side. While we take pride in being the third largest ecosystem for startups in the world, 90-95% of Indian startups fail within the first couple of years. Wondering what leads to such a huge number of failures? Well! Let us tell you that it is not innovation and talent but fund and resource crunch.
While we talk about the success stories of startups and emerging unicorns, many begin in conducive circumstances - getting the right environment to grow. However, we often miss talking about the disadvantaged ones, who don't get even the basic resources to execute their ideas and use the maximum potential of their talent.
Two Key Areas That Need Attention
Suitable funding
Many Indian startups are facing a severe fund crunch. Funding in Indian startups declined by 40% in the April-June quarter due to geopolitical tensions triggered by Russia's invasion of Ukraine, slide in tech stock valuations and inflation, according to a report by PwC India. However, such ups and downs are part of the entrepreneurial cycle.
Education and Skill Upgradation
Education, reskilling, and skill upgradation of the Indian workforce are important for transitioning beyond existing capabilities and achieving demographic dividend. It needs to be understood that apart from the domestic policy environment, the global environment and technological aspects are also changing. A shock emanating from any of these changes would be harder on a newbie.
What has the Government done for Startups?
India has emerged as a 'hotspot' for startups. In the year 2021 alone, Indian startups have raised over $23 billion, are involved in over 1,000 deals and 33 Indian startups entered the coveted 'Unicorn Club'. Overall, the country has over 100 unicorns.
Despite this growth, we cannot ignore the fact that these successful startups belong to the 5% advantage startup category. Therefore, the government is equally serious about its weaker children i.e. the 95% disadvantaged startups.
To elevate the disadvantaged startup groups, the central government has launched 50 plus schemes and initiatives supporting startups in the country since 2014. While some schemes ensure direct fund support to the startups, other initiatives include establishing and enhancing the incubation centers at leading institutions like IITs and IIMs.
From launching the Startup India scheme in 2014 to allocating Rs 283.5 crore for Startup India Seed Fund Scheme in budget 2022, the Indian government has launched over 50 schemes for startups in different sectors.
This is not it, some ministries are dedicatedly working to boost the startup ecosystem in India. For example, the Ministry Of Electronics and Information Technology (MeitY) with schemes like Support for International Patent Protection in Electronics & Information Technology, Software Technology Park, and Multiplier Grants, etc is working for the sector.
The Ministry Of Agriculture And Farmers Welfare with NewGen Innovation and Entrepreneurship Development Centre promotes entrepreneurial culture in academic institutions. The Ministry Of Micro, Small And Medium Enterprises (MSME) with Credit Guarantee to strengthen the credit delivery system, NITI Aayog with Atal Incubation Centres, Scale-up Support to Establishing Incubation Centres and 1000 Atal Tinkering Laboratories are aggressively working to help the disadvantaged startup groups.
Infact, the Ministry of Skill Development and Entrepreneurship launched the Udaan Training Programme For Unemployed Youth Of J&K in 2012 with an aim to provide employment-oriented training to the youth of J&K. The Ministry of Heavy Industries & Public Enterprises launched Enhancement of Competitiveness in the Indian Capital Goods Sector in 2015 which is headed by Department of Heavy Industries (DHI).
The Ministry of New and Renewable Energy (MNRE) also introduced schemes like National Clean Energy Fund (NCEF) Refinance, IREDA Scheme For Discounting Energy Bills, and Bridge Loan Against MNRE Capital Subsidy.
Here is a comprehensive list highlighting the policies introduced by the government and its departments over the last few years to support startups across the country.
Top Startup Seed Funding Programmes by the Government Of India
India has identified the need to develop innovation and incubation centers to foster a mindset of innovation and entrepreneurship through academic institutions in its large student community. The growing number of schemes supporting incubators at IITs, IIMS and MEity and the continued inclination of young executives towards starting their own ventures is also boosting the entrepreneurship and early stage startup ecosystem in India.
The future of the Indian startup economy totally relies on the infrastructure it gets. The startup ecosystem is largely shaped by the incubation and innovation centers. Incubation center is a collaborative program which is dedicatedly designed to help new ventures test, improve and succeed.
These centers help young entrepreneurs solve the possible problems and overcome the common challenges by providing them the right workspace, infrastructure, seed funding, monitoring, feedback and training as and when required.
The primary function of an incubator center is to provide the right environment to the entrepreneurs to grow their business. Hence, it wouldn't be wrong to say that the incubation and innovation centers are the nerve.