The Centre’s Startup India programme has just completed two years. In this period, 16 states have framed startup policies, and hundreds of ventures have benefited from simpler processes and funding.
Last year, when 25-year-old Kaushik Mudda was filing for patents for a unique printing machine that he had created with his batchmate from RV College of Engineering in Bengaluru, he expected complex procedures, delays, and a huge payment.
Surprisingly, Mudda faced none of it. He said reaching out to patent facilitators and getting patents would normally cost Rs 1 lakh. But they paid only Rs 1,000. “It was so affordable. It has also become easy to register for IPs (intellectual property),” says the co-founder of Ethereal Machines.
Rebate on patent costs is one of the many measures that are part of Startup India, the national governmental project to promote digital entrepreneurship. While some may wonder whether governments can play a useful role in building the startup ecosystem, more and more are finding that it can.
The Startup India programme has just completed two years. During this period, 16 states have formulated startup policies to make it easier for people to start a venture. Several have set out the ambitious goal of becoming the top startup destination by 2020.
States have established or helped to establish accelerators and incubators, and provided tax exemptions and financing options. While Karnataka, Telangana, and Maharashtra, which house the top startup cities of today (Bengaluru, Hyderabad and Mumbai/Pune), have framed policies, so have others like Goa, Bihar, Chhattisgarh, Jharkhand, and Himachal Pradesh. Haryana and Orissa have been late into the game, but their enthusiasm seems to be making up for it.
Amiya Kumar Samantaray, founder of Phoenix Robotics, a startup in the internet-of-things (IoT) space, can see a visible change in his city, Bhubaneswar, since the time he started in 2015. “There was no policy then. We initially got no support at all. We were relying on and being incubated at NIT Rourkela. I used to visit all the government departments and was scared about how to go through the various processes (for registration, etc),” says Kumar.
The Orissa government framed a startup policy last year. Kumar says it’s much easier now for anyone starting up as all the information is on the government’s website and all the processes can be completed online. Phoenix Robotics too has benefited from the policy — it receives a monthly allowance of Rs 20,000. And encouraged by such benefits, NIT, which used to breed one or two entrepreneurs a few years ago, is now producing at least 20 every year.
The Gujarat government launched a startup policy in 2015. The government conducts multiple events through the year to facilitate networking between entrepreneurs and investors. Some 33 educational institutions have been recognised as nodal institutes (NI) under the policy, and startups are required to file applications with these NIs.
“Every startup can get upto a maximum of Rs 21.2 lakh through various benefits subject to approval. Over 152 startups have been approved and Rs 16.62 crore has been disbursed till date,” said R B Barhatt, deputy commissioner of industries, Gandhinagar.
Several startups have been beneficiaries of GVFL Limited, a fund where the Gujarat government is an anchor investor. Pankit Desai, co-founder of SEQURETEK, a security startup, said, “For a government fund, they have been very professional. Besides being a non-intrusive investor, they have opened several doors for us.”
Although states have access to the central fund-of-funds of Rs 10,000 crore allocated under the Startup India programme, each state is creating its own fund of funds. Assistance is provided in the form of seed funds, interest-free loans, or monthly sustenance allowance.
Priyank Kharge, IT minister in the Karnataka government, said the government has disbursed Rs 50 crore out of its state fund of Rs 400 crore. The government has funded close to 250 startups.
Kerala’s startup hubs are spread across the state — in Kochi, Thiruvananthapuram, and Kozhikode — and the state provides a variety of funding options. Over 650 tech startups have been supported under the policy till date, says Saji Gopinath, CEO, Kerala Startup Mission.
SHOULD FOCUS SHIFT FROM FUNDING?
Some startups say they are barely aware of their state’s policy and that their interaction with the government is minimal. “There are only a few startups that are aware of the Haryana startup policy. Also, many startups find that they are not eligible to avail the incentives,” says Rahul Hari co-founder of Satvakart, a Gurgaon-based e-commerce platform.
Some also feel there is enough capital in the market and that a government fund would not add much value. “The government should instead focus on making processes simpler for setting up a business, on the lines of Singapore,” says Rajnish Kumar, co-founder and CTO, Ixigo.
Samantaray says the governmental funds tend to encourage superficial entrepreneurs, who get into entrepreneurship just to get access to easy money. “What is more essential is mentorship and guidance, and hand-holding the serious ones to the next stage,” he says.
TAKING HELP FROM INDUSTRY
T-Hub, the largest incubator and co-working space in India, set up in collaboration with the Telangana government in Hyderabad, is planning to do just that — focus on the later stage startups. T-Hub has helped incubate more than 200 startups. These startups are not given direct funds but are helped to reach out to the right investors.
Srinivas Kollipara, co-founder and COO of T-Hub, says they decided to move to later-stage companies six months ago. “We are working with corporates and looking at real problems to solve. We have done programmes for Intel, Qualcomm, and Samsung. We have a committee, which is a combination of corporate guys, domain experts, and investors, to look into the startups and their ideas,” he says.
Karnataka’s Kharge agrees that’s the way to go. He says his government consults with industry experts and audit firms like KPMG and PwC to validate startups. And he is now focused on producing more entrepreneurs in smaller towns like Belgaum, Hubli, and Dharwad, where private capital might be less enthusiastic about going to.