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SUKESH R 15MBAP054-- I Year MBA-- KAHE

Startups in India
Introduction
In recent years, the Indian startup ecosystem has really taken off and come into its
owndriven by factors such as massive funding, consolidation activities, evolving
technology and an burgeoning domestic market. With the gen-next cool trend to start working
on new and innovative ideas, India is all set to outperform all other nations on the world stage
in the years to come. Setting up of small businesses by these young entrepreneurs is definitely
going to boost the Indian economy in the near future. The numbers are tellingfrom 3,100
startups in 2015 to a projection of more than 11,500 by 2020, this is certainly not a passing
trend. Its a revolution. And its going to change the way the markets are working today in
India.

Startup Nation
Startup India A clamour that is being heard across the world like never before.
Everywhere you go today, you cant miss hearing or reading about how India is the next big
startup nation! On 15th August 2015, our honourable Prime Minister Mr. Narendra Modi
stood at the Red Fort and made a call to Startup India, Stand up India. His words were
echoing the sentiments of todays India- the flame had already been ignited in the minds of
India to create awesome products and companies which will change the world! The Prime
Ministers call was reassurance that the government is understanding and supporting the
sentiments in our minds. India is also said to enjoy demographic dividend and it is
anticipated that by 2020 India will be a home to 112 million working population falling in the
age bracket of 20-24 years as compared to that of 94 million workers of China. This
demographic dividend will definitely boost the startup culture in the country.
Initially, India was considered as the market for providing cheap labor to the world
and for export of Indian services in the field of IT. Due to this India has witnessed low
product development and innovation in the past. But, still it is not too late and the culture of
startups has started in India in the recent past. It has already started bearing fruits and is all
geared up to benefit the Indian economy in the long run.

Startup Investment
2015 was year of a risk capital bonanza for Indian startups. Between January and
December 2015, risk capital worth $9 billion was invested in Indian startups across 1,005
plus deals. To put this in perspective: between 2010 and 2015, Indian startups raised $18
billion. In 2014, total deal value stood at about $5 billion and volumes at over 300 deals. The
first two quarters of the calendar year as well as the last quarter saw similar amounts being
invested: $1.7 billion each in Q1 and Q4 and $1.8 billion in Q2. However, Q3 was the
blockbuster quarter in terms of the amount of investments, with deals worth $3.8 billion.
A majority of the deals fall in the online and mobile categories. This is not surprising
considering the number of Internet users in India has crossed the 350 million mark, growing
50 per centover the last year, according to a study by the Internet and Mobile Association of
India (IAMAI) and IMRB International. Between 2010 and 2014, the infusion of Venture
SUKESH R 15MBAP054-- I Year MBA-- KAHE

Capital and Private Equity increased from $13 million to $1,818 million. Angel investment
too has multiplied almost 8 times from $4.2 million to $32.2 million.

Rise of Startups
The Indian middle class story saw a huge shift in early 1990 with the introduction of
reforms and the increasing integration of Indian economy into the global market. The
economic reforms coupled with globalization saw a huge mind shift among the Indian middle
class. The rise of Indian IT Industry in the late 90s not only gave rise to an increase in
average income levels in the country but also created a well-traveled global Indian. The 1991
reforms, globalization and rise of IT industry in India have, among a number of other factors,
been largely responsible for the rise of entrepreneurship in India.
India, a country of 1.25 billion people, is home to the worlds second largest
population. Indias population base is expected to serve as a huge asset for the country in the
next few decades. India is poised to become the worlds youngest country by 2020, with an
average age of 29 years, and account for around 28% of the worlds workforce. Empowered
with unique demographic advantages and guided efforts, analysts are predicting that India
will be poised to position itself among developed economies within the next 1015 years.
Indias demographics presents a huge opportunity for any business trying to create a
dominant position in the global market. Any product developed for the Indian market
becomes available to a huge amount of population that is earning and can afford to pay for
the product or service. India therefore is the next land of hug opportunity and any company
that wants to be successful in the next decade will have to create a presence in India. It
therefore comes as no surprise when Google looks to India for the next 1 billion opportunity
and Facebook tries to get Indians onboard through their Internet.org initiative. Indias
infrastructure which is largely said to be in a nascent stage is now presenting a huge
opportunity. Internet penetration in India remain low at 19.2 % in spite of which India
remains the third-largest population of Internet-equipped inhabitants across the world with
243 million people online. The country is expected to see 500 million internet users by 2017
including 314 million mobile internet user. The nascent and unorganized state of
infrastructure within various segment of the Indian industry and the opportunity presented
by Indias population makes each and every sector in India very attractive right now.
Entrepreneurs in India have identified these opportunities and are trying to digitize/ organize
various sectors.
'Start-up India is synonymous with Stand-up India' was the sentence that resonated with
some of the top CEOs and over budding entrepreneurs that attended the Prime Minister's
unveiling of the action plan around Startup India.
While we have all anxiously awaited these announcements, here's a look at some of the major
announcements:

- Tax exemptions to start-ups for 3 years and no tax on capital gains. Tax exemptions on
investments above the FMV.

While these tax holidays are a welcome step in the right direction, Indian entrepreneurs will
SUKESH R 15MBAP054-- I Year MBA-- KAHE

eagerly await clarity on the existing tax regime, particularly with respect to indirect taxes viz.
VAT, Service Tax, etc. amidst reports of service tax evasion by few online travel portals.
Less Government interference, no inspection for 3 years for labour, environmental clearances
and other compliances - start-ups to follow a self-certification model for compliance. Launch
of a mobile app that will allow companies to register in a day. Single window clearance for
clearances, approvals, registrations, etc.

Government Steps in
Start-Up India Initiative: Indian Prime Minister Mr. Narendra Modi has announced the
Start-Up India initiative in his Independence Day address in August 2015.The Department of
Industrial Policy and Promotion (DIPP) is spearheading the initiative and is expected to start
working closely with banks to kick-start the governments Start-Up India initiative in both
rural and urban India.
SETU Fund: The setting up of the SETU (Self-Employment and Talent Utilization) fund has
been hugely welcomed by the startup community. Under this fund, the government will
be launching an incubation center in order to create opportunities for self-employment and
new jobs particularly in technology-driven areas. The center has allocated Rs 1000 crore for
this purpose.
MUDRA Bank: Several entrepreneurs in the MSME sector have often complained about
lack of or difficulty in getting finances to run their business. Often, while applying for loans,
these companies are asked for large collaterals by the banks, which made their business
unsustainable.
Government Funds: There are various government and semi-governmental funds, grants
and other initiatives to help startups.
Smart Cities And Digital India Opportunity

Conclusion
73% entrepreneurs in India are young founders falling under the age of 36 years (53%
founders in the age group of 26 to 35 years, 22% in the age group of 36 to 45 years, 20%
entrepreneurs younger than 25 years and about 5 % entrepreneurs more than 45 years in age)
52 % founders come with a post graduate degree. According to the NASSCOM Startup
Report 2015, India is the 3rd largest startup ecosystem globally after USA, UK, Israel and
Canada. The technology product startups inception rate in India is growing at 14% Y-o-Y. In
2014, the country had 3100 startups and is expected to see 11500+ startups by the year 2020.
In 2014, startup ecosystem employed about 65000+ people. This number is expected to rise
to 250,000 in 2020. So india Will become No 1 Economy in short span of time with the rise
of startups.