Startup-Sutra-2: How government can help?
A startup starts and expands, depending upon two entities: Consumer and Government. While consumer forms the base of service initiation or product launch and maintenance, the government plays a pivotal role in supporting a new firm to get proper platform and adequate ecosystem to start and grow with time. It is like a gardener, who takes care of saplings and provides proper nourishment and environment to grow and bore fruits in future.
In this article will talk about how a government can play a role in today’s generation startups:
India is a hub of eight unicorns (companies having a “bank balance” of more than a billion dollar) and several rising companies which are here to stay, grow and provide benefits to consumers and gain revenues for themselves. It becomes important for the government to believe in these firms and put some of their time and money into them, to gain returns and to provide platforms.
Why Bangalore is the hub of startups?
Bangalore is the hub of five out of eight unicorns of India and many other upcoming startups.
The reasons are:
- The availability of multiple angel investors and venture capitalist (VCs)
- Amazing and cheap infrastructure, with amazing number of technocrat, who are job ready from the word go
- Healthy numbers of meets, technical events, which provide the opportunity to early adopters to invent, experiment and innovate and showcase their work to existing communities
- All the resources are readily available and if not can be brought in with little expenditure and time consumption.
So, here government can play a vital role. It can create such hubs around the main financial centres of India, New Delhi, Gurgaon, Mumbai, Pune, Noida, Gujarat, West Bengal and Tamil Nadu. Here the crowd has potential to grow and requires a platform to express themselves. This will save their money and time which is spent to commute to places where startup events take place and ideas and resources are showcased. Provision of discounts and rate cuts on loans and office spaces should be on top priority of government. This will help government too. This will provide good returns in future and the dream of smart and sophisticated cities can be painted to the canvas of India, which looks little hazy right now.
IPO- Initial Public Offering:
Recently Infibeam went for the early IPO at Rs 450 crores, which is good news for upcoming startups who are wishing to go for IPO. This company is comparatively new and still has not break even and making losses. The only and the biggest risk associated with an early IPO is, if a company fails to generate revenue despite of positive market sentiments or closes despite of promise it showed earlier; great amount of money can be lost. But, if the B-plan works and the company rise and deliver it’s a pool of cash to dive in. Indian IPO rules regulated by SEBI are quite stringent. Two of the broad requirements are a specific amount of money in the piggy bank and no loss making company. While NASDAQ regulations provide a nice platform for startups to go for IPO, despite of loss making, but showing promise in future. Indian government and SEBI can come up with some leniency for companies wishing to go for IPO or early IPO, and at least unicorn companies and upcoming Unicorns can be given a chance to go for IPO in India. This will improve India market sentiments only and country’s money will stay in country only, rather than getting into FOREX market.
Ease of Business:
India is considered as a tough place to do business. Recently government has taken certain steps to clear this image. Shri Narendra Modi is campaigning about India as an economy to reckon with and how easy the rules can be to set up a business and work. Few incubation centres have been set up, but still lot of things to be done.
- Government should bring in easy taxation policies for startups, so that resources can be put in developing good product and services rather than calculating and saving taxes
- The brands known for developing entrepreneurs (IITs/IIMs and other institutes) should not be killed i.e. limited institutes should be opened with quality education, incubation centres, infrastructure and opportunities
- R&D centres can be opened, which can help individuals or group to research what consumer demands and to work on it
- Risk taking: Failure should not be taken as end of the road, but as the beginning of an entrepreneurial journey. Let people fall, stand and experiment again
- The laws pertaining investment and taxation on investment should be made clear and easy so that instead of self financing, government can help investors to invest in budding companies wholeheartedly.
I can go on and on...
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