India’s startup challenges and realities. You have a choice: either bring your own dreams to life or contribute to someone else’s. It’s a familiar idea, right?
The Surge of Startups
Recently, many new businesses have popped up in the corporate world. Lots of people with a business mindset prefer being the leaders of their own startups rather than working for someone else. However, there’s more to this story.
The Swift Rise and Fall
While many startups are created, a significant number also close down relatively quickly, often faster than it took to set them up. This happens for various reasons: not enough money or fresh ideas, difficulties in managing the company, hiring employees who aren’t very productive, and poor management strategies.
Government Support and Uncertainties
To prevent startup failures and encourage more people to start their own businesses, the Indian Government launched the Startup India campaign. This campaign provides incentives like tax exemptions, changes in patent regulations, and support programs to help startups grow and bring innovative ideas to the forefront, aiming to turn the country into a hub of innovation and startups.
Challenges Faced: Entrepreneurial Hurdles
But in reality, the success of the Startup India campaign seems uncertain. A survey by the Entrepreneurship Development Institute of India found that only a small percentage of Indian adults (among the lowest globally) own their businesses, and the number engaged in early-stage entrepreneurial activity is also relatively low (11%). The rate at which businesses shut down (26.4%) is one of the highest globally.
Global Comparison and Expectations
Comparing entrepreneurial activity with other BRICS nations, India has a relatively low percentage of established business ownership, with Brazil leading at 17%, followed by China (8%), India and Russia (5%), and South Africa (3%).
Ambitions and Realities of Early-Stage Entrepreneurs
A striking finding from the survey is that over half of those involved in early-stage entrepreneurial activities have low growth expectations and no plans to expand their employee base. Only a small fraction (5%) are considering hiring more than five employees, while most aim to recruit between 1 to 5 employees.
Deterrents and Hesitations
Despite government support, these statistics highlight that either talented individuals aren’t keen on joining the startup ecosystem due to the fear of failure or aren’t interested in expanding their business or employee base due to associated risks. Concerns about corruption, bureaucratic hurdles from the government, and excessive formalities are key reasons deterring potential entrepreneurs.
Revisiting Governmental Strategies
India’s startup challenges and realities. Clearly, the government needs to reassess startup-related laws and programs to support and encourage talented individuals to take the plunge into entrepreneurship. It’s crucial to educate the entire nation about the incentives offered by the government to inspire more business-minded people to join the startup ecosystem and make the most of the support available. This way, they can become successful startup entrepreneurs, ultimately fulfilling the goal of transforming the nation into a thriving hub of startups and innovative companies.
Close to 3 decades' experience in advising on M&A, Joint ventures, Private Equity, Venture Capital, Startups, Technology transfer, External Commercial Borrowings, Corporate / Commercial contracts, Due Diligence for acquisitions, Entry Strategy for international ventures, Corporate Structuring, Regulatory Approvals, Corporate / Commercial Advisory, Commercial litigation, IPR. Collaborating with law firms across the Globe for reciprocal business referrals on a non-exclusive basis under 'Global Business Lawyers' League (www.gbll.in).