Indian startups- How they effect the economy

By- Guided By-
Mohit Jaswani Dr. Surinder Singh Nehra
INDIAN STARTUPS
HOW THEY EFFECT THE ECONOMY

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INDIAN STARTUPS
How They Effect The Economy
Content
1) Introduction 2
i) What is a Startup…………………………………………………………………………………………………………………..02
ii) Why so Popular…………………………………………………………………………………………………………………….04
2) Composition of Indian Startups 5
i) Comparison………………………………………………………………………………………………………………………..…07
3) Stages of Startups 8
4) Funding 9
i) Startup Financing Lifecycle……………………………………………………………………………………………………10
ii) Incubators and Funding Patterns………………………………………………………………………………………….11
iii) Top Investors………………………………………………………………………………………………………………………..12
iv) Role of large business……………………………………………………………………………………………………………14
v) Top Startup Deals 2011-15……………………………………………………………………………………………………15
vi) Foreign Investment……………………………………………………………………………………………………….………16
5) Government’s Role 17
i) Digital India…………………………………………………………………………………………………………………………..17
ii) Make In India………………………………………………………………………………………………………………………..18
iii) Startup India…………………………………………………………………………………………………………………………19
iv) Other Schemes……………………………………………………………………………………………………………………..21
v) Government around the world……………………………………………………………………………………………..23
6) Challenges 24
i) Success Ratio………………………………………………………………………………………………………………………..28
7) Overview-AUSTRALIAN Startup Economy 30
i) Actions for growth………………………………………………………………………………………………………………..32
8) Case Study 34
i) Srjna……………………………………………………………………………………………………………………………………..34
ii) Hostelers………………………………………………………………………………………………………………………………38
9) Future 41
i) Employment and Rural Development……………………………………………………………………………………41
ii) Boosting Economic Growth…………………………………………………………………………………………………..42
10) References 44

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INDIAN STARTUPS
What is a STARTUP?
“The biggest risk is not taking any risk... In a world that changing really quickly, the
only strategy that is guaranteed to fail is not taking risks.”
– Mark Zuckerberg
(Co-Founder & CEO, Facebook)
A startup is a young company that is just beginning to develop. Startups are usually small and
initially financed and operated by a handful of founders or one individual. These companies offer
a product or service that is not currently being offered elsewhere in the market, or that the
founders believe is being offered in an inferior manner.
The impact young talented entrepreneurs are making on Indian Economy is nothing but positive,
extremely positive. Besides creating more jobs for it 1.25 billion population, these have given
India’s lazy economy a sudden boost and a great chance to circulate more money within the
internal economy as well as drive money from outside. From being a cheap labor market, India is
suddenly the new hot investment destination for investors. A recent report by the industry body
National Association of Software and Services Companies (NASSCOM) found that India is now the
third largest startup hub in the world, with more than 3000 new companies. Over the next five
years, that number is expected to grow to 11,500. It is being termed a “gold rush.” If the growth
is continued at the same pace then it is expected that Indian tech startups will generate almost
2.5 lakh jobs in the next five years.
In the last five years, the economy has witnessed a significant rise in the number of start-up
companies, which is still growing. In fact over $6.4 billion has been invested into Indian startups
in the first three-quarters of last year.
Witnessing this tremendous growth, government of India came up with many new policies and
schemes. They officially even defined the term ‘startup’, On April 17, 2015, the Ministry of
Commerce and Industry released a notification to define ‘startups’. There were many points that
were consistent from the speech given by Prime Minister Narendra Modi during the unveiling of
the ‘Startup India, Standup India’ policy.
2015 2025
Total no. of Startup (~) 10,000 1,00,000
Employment generation (‘000) n/a 3,500
Expected contribution (US$ b) n/a 500
Global startup ranking 3rd (Behind the US and the UK) Aims to be No. 1

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INDIAN STARTUPS
According to the government notification, an entity will be identified as a startup.
1. Till up to five years from the date of incorporation.
2. If its turnover does not exceed 25 crores in the last five financial years.
3. It is working towards innovation, development, deployment, and commercialization of new
products, processes, or services driven by technology or intellectual property.
A corporation, entity or a business is termed as a start-up if
 The entity is registered under Companies Act, 2013
 It is registered under section 59 of Partnership Act, 1932, as a partnership firm
 Or registered under Limited Liability Partnership Act, 2002, as a limited liability
partnership.
India is amongst the top five countries in the world in terms of startups.
UK 7,990+
Canada 6,100+
India 10,000+
US 83,000+
China 10,000+

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INDIAN STARTUPS
Why so POPULAR?
Startups have been the flavor of the season over the last few years for the Indian markets. This
has resulted into the emergence of a number of home grown unicorns across the country. One
of the major contributors leading to this development has been the mega funding that has been
ploughed into most of these unicorns between the period 2007 and 2015. This has been in line
with the global trend dominating the space. Even the aspiring unicorns have had a decent run
during this period, where managing to find investors is usually considered a tough task. The
trends of investments suggest that investors want to enter as an early investor, even before the
start of the firm.
India is quickly becoming a leading global startup hub. Rising numbers of entrepreneurs,
incubators, international and local VCs, and multinational corporations are turbocharging the
development of a burgeoning tech scene. In fact, the number of startups in India is expected to
nearly quadruple from 3,100 in 2014 to over 11,500 by 2020.
Just few years back, it was the scene that if you tell someone that you have left a high paying job
to start your own ‘Startup’, then chances were high that they may term you as fool. But things
are not the same any more, the younger generation now wants to fail, precisely
Try & Fail, only because they want to LEARN.
As per a recent UN report, despite having less population
than China, India has world’s largest youth population
with 356 million youths. The youths today have moved on
from getting a ‘decent job’ culture, its passé. They have
embraced the ‘Startup Culture’.
Startup culture has received a lot of attention lately —
people are looking for ways to improve the overall
experience at work and some are even champions of
seamlessly integrating work into their life. People don’t have
absolute power to demand a higher salary or more vacation
days but they do have high expectations. They’re interested in
opportunities to connect with others who will help achieve their goals and find greater
satisfaction in the process. By defining our startup culture, we can commit to better supporting
the work itself, improve operations, make a more valuable contribution, and gain greater
personal satisfaction. The overall impact of the startup culture can’t be summed up as just
positive economic growth it is combined with social improvement as well by creating more jobs
or doing something good for the society.
2015 202
STARTUP
STRATEGY
DEVELOP
SECURITY
IDEAFUNDING
COST
EFFECTIVE
MARKET
RESEARCH

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INDIAN STARTUPS
Indian startup industry COMPOSITION
Total startups
10,000 (approx.)
Startups % Share New startups annually
4,300 | 5,700 43% | 57% 800 | N.A
Sector concentration
E-commerce - 33% Engineering - 17%
B2B - 24% Construction- 13%
Consumer internet - 12% Agri products- 11%
Mobile apps - 10% Textile - 8%
SaaS - 8% Printing & packaging – 8%
Other – 13% Transport & logistics - 6%
Outsourcing & support – 5%
Other – 32%
Non-Technology
based startups
Technology based
startups

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INDIAN STARTUPS
In recent years, the Indian startup ecosystem has really taken off and come into its own—driven
by factors such as massive funding, consolidation activities, evolving technology and an
burgeoning domestic market.
The numbers are telling—from 3,100 startups in 2014 to a projection of more than 11,500 by
2020, this is certainly not a passing trend. It’s a revolution. And it’s going to change the way the
markets are working today in India. With over $5 billion worth investment in 2015 and three to
four startups emerging every day, India has paved its way to secure the third position in the
world in terms of the number of startups, 4200 and counting, a growth of 40%, by the end of
2015.
 The average valuation of an Indian startup is $2.3 million as compared to $4.2 million of
an American one.
 43 percent of product/digital organizations are focusing on the global market and 28
percent continue to be technology hotspots.
 With a 59 percent of B2C, 37 percent of B2B, and 4 percent of B2C/ B2B startups, this
ecosystem has a lot of ground to cover in terms of securing funding.
 Total funding in 2015 has grown by ~125% over 2014. Similarly, the number of accelerators
grew by 40% from ~80 in 2014 to ~110 in 2015.
 Average no. of new tech startups have moved from 480 in 2010 to 800 in 2015. Expected
to increase to 2,000 in 2020.
 Employment for around 80,000 to 85,000 people in total. More than 65% of the startups
are located in NCR, Mumbai and Bangalore.
 The stats on the demography of the ecosystem says that 72% of the founders are less
than 35 years old making India home to the youngest entrepreneurs in the world, with
gender breakup of 91% male and 9% female.
 Majority of the 1200 new startups are B2C, primarily present in 3 segments namely
eCommerce, consumer services and aggregators followed by hyperlocal, health-tech,
edu-tech and analytics.

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INDIAN STARTUPS
COMPARISION
India China Israel Singapore Japan US
Total no. of 10,000 10,000 4,750 N.A. N.A. 83,000
startups (~)
Tech-based 4,300 3,400 4,000 N.A. N.A. 48,500
startups
Non-tech based 5,700 6,600 750 N.A. N.A. 34,500
startups
Set up a new 30 – 60 30 13 2 10 4
business (Days)
Corporate tax 34% 25% 26% 17% (100% tax 34% 39%
rate exemption for
startups)
No. of Tax 33 9 TBD TBD TBD 11
payments by
businesses (p.a.)
Bank lending rate 10.3% 5.6% 3.9% 5.4% 1.2% 3.3%
R&D spending 0.85% 1.90% 4.20% n/a 3.40 2.80%
% of GDP (Est.
2014)

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INDIAN STARTUPS
Pre-
Startup
Startup Growth
Validation
The service or product discovered
hits the market, looking for the first
clients ready to pay for it
Maintenance
Maximizing benefits and facing
problems derived from the global
dimension that the business has
achieved
Sale or Renewal
The decision to sell the startup to a
giant or acquire huge resources
that the brand will need to
continue growing
Efficiency
The entrepreneur begins to define
his/her business model and looks
for ways to increase customer base
Scale
Pushing the growth of the business
aggressively while increasing its
capacity to grow in a sustainable
manner
Stages of Startups

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INDIAN STARTUPS
•High Net Worth
Individuals invest their
own money and time in
startups
•Angel Groups are a
collection of investors
that assess deals together
but invest individually
•Micro-VCs are small
pooled funds with
diversified investments
•Targeted at startups that
can already demonstrate,
amongst many things,
their revenue base and
future exit plans
Startup Funding in India
Venture capital invests in both stages of company based on the following criteria:
Early stage: Includes first or second round of institutional investments into companies:
 Average of less than five years old
 Not a part of big corporates
 Investment amount <US$ 20 mn
Growth Stage: Usually third or fourth round of funding
 First or second round of investments for firms with 5-10 years age
 Spinouts/carve outs from big corporates
 Investment amount <US$ 20 mn
Funding for the sector exists but is in short supply.
•Accelerators are short-
term mentor-driven
programs to create
investor ready
businesses
•Incubators work with
co-located businesses
over the longer term to
secure customers &
funding
Accelerators & Incubators
Angels & Micro VCs
Early Stage VC
INCUBATIONIDEATION COMMERCIALIZATION

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INDIAN STARTUPS
Startup Financing Lifecycle
 Funding by Angel investors/ Seed funds
o Early stage startups rely on angel investors and seed funding
o Invest solely into the entrepreneur with an idea
o Does not encumber the entrepreneur with any corporate governance formalities
 Venture Capital
o Used to scale the company’s business model
o Comes from larger institutional funds
o Focus is on building the sales force and establishing a global presence
 Public Markets
o Late stage startups can feel the need to expand more aggressively or actively
innovate the product
o Private equity funds together with public markets provide large amounts of
liquidity to late stage startups

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INDIAN STARTUPS
Possible impact of startup incubators
Startup incubators are companies that assist new startups in their initial phase of development
by providing various services. Incubators share both tangible and intangible resources such as
equipment, office space, services such as accounting, computing and legal services. They also
assist startups in raising startup capital and perform various networking activities to reduce the
financial burdens and resource issue. Incubators help entrepreneurs in building sustainable
business environment while benefitting the broader corporate communities.
 According to NASSOCM report, there is a 40 percent growth in the number of incubators
to reach to approximately 110 in 2015 as against around 80 in 2014.
 Approximately 50 percent of total incubators are set up in non-metro cities i.e. outside
NCR, Bengaluru and Mumbai to offer.
 Growing number of educational institutes have started setting up incubator programmes
independently or jointly. Shri Ram College of Commerce, New Delhi for example has set
an incubator to help their student in their own startups, VESIT College of engineering has
set up an incubation centre with the same objective.
 Big corporates are also setting up incubator programmes to help startups. Tata Group
launched T-Hub, Google, Microsoft Ventures etc.
 Tata has come up with country’s largest technology incubator center ‘T-Hub’ in
Hyderabad.
 Google has come up with a Launchpad accelerator programme for specific to mobile
startups in India, Brazil and Indonesia with training and developmental support and upto
US$ 50,000 in equity-free funding.
Funding Patterns
The general trend is that the seed/angel rounds s are getting bigger year after year, and large
Series A is becoming more common. Investors are willing to fund companies with no revenue but
they should have users and traction. While companies are attracting angel and series A at pre
revenue stage, series B gets tougher as only few business models will continue to show the
ability to execute and scale up. There will be serious concerns of raising additional rounds of

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INDIAN STARTUPS
funding beyond Series A & B if the fundamentals are not in place which will ultimately lead to
consolidation, shut down and retrenchment.
Of the total 600 starts up in 2015, more than are 450 have received seed/angel funding and the
others have received either series A/Series B.
Not many startups get more than US$ 50 mn (up to the Series B funding)investment in India, in
2015, only 4 startups companies (Foodpanda, Ecomexpress, Little Internet, Netmeds) have
received a funding above US$ 50 mn.
We observed angel/seed rounds to be as low as US$ 10000 and they went up to US$ 5-6 mn.
Series A ranges between US$ 1 mn and US$ 50 mn while Series B ranges between US$ 3 mn to
more than US$ 100 mn.
Top Investors 2011-15
Investors such as Accel Partners, Blume Ventures, Tiger Global, Kaalari Capital, SAIF Partners,
Sequoia Capital, IDG Ventures, Helion Ventures, Kae Capital, Nexus Ventures and the Indian
Angel and Mumbai Angel Network dominate the start-up investment space.
Growing interest in India globally has led to foreign companies and funds like Tiger Global (New
York), DST Global (Russia), Alibaba (China), Softbank (Japan) deploying funds to the new
generation entrepreneurs.
Last couple of years saw a new class of investors which were attracted to this asset class.
Corporate honchos like Mr. Ratan Tata’s, Mr. Narayanamurthy and Mr. Aziz Premji’s interest in
the consumer tech space is very encouraging and benefitting, as firstly it lends the much needed
credibility to a start-up business for it to not just attract other investors but it also strengthens
their customer and vendor relationships. Corporate czars are expected to have a long term
horizon for their start-up investments which will give the companies the required space and
opportunity to grow without undue pressure on early exits. Corporate houses Companies are
now setting aside funds to invest in high-risk, early-stage tech start-ups like Reliance, Wipro,
Infosys, RPG, Jindal etc. are setting up their own venture capital arm. Another key reason for this
interest by large corporates and corporate honchos is to engage with start-ups in different
sectors to identify innovative work, technology and ideas.

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INDIAN STARTUPS

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INDIAN STARTUPS
Role of large business
Big corporates generally focuses on innovation, performance excellence and risk management in
order to compete in the dynamic global business environment. Issues related to tightening of
research and development budgets, increasing digital disruption and organizational bureaucracy
make it difficult for large companies to innovate on their own.
Rising number of corporates are looking in search of diverse information, creative people and
processes at the smaller companies or star-ups:
 Many corporates are now shifting their focus from investments into their own research
and development to investments in multiple source of innovation, focusing in particular
on technology based startups
-- Nandan Nilekani is investing US$ 1-2 mn in startups in many sectors including
telecom,aerospace, publishing, logistics etc.
-- Ratan Tata recently invested an undisclosed sum in Tracxn, a Bengaluru-based startup
intelligence firm
 Corporates collaborate with other small firms including startups by investing fully or
partially to access to their pool of talent, assets and capabilities.
 Big firms often look at smaller companies as they are more agile, with less bureaucracy
and fewer approvals required to develop innovative products.
Startups in India have managed to get funding from various informal channels including
corporate, angel/seed or VC funding. There are a few startups with innovative business ideas
which have managed to raise funds through “Crowdfunding”, where a large number of investors
contribute capital through various channels including internet, mail-orders, events etc. For
example, startups such as Ketto, BitGiving and Wishberry have raised money through this
concept. Over the recent years, “Crowdfunding” as a concept has gained popularity globally,
however, in India, it is still at a nascent stage and is expected to pick up as a regular funding
channel with the increase in awareness.

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INDIAN STARTUPS
Top Startup Deals: 2011-2015
Year City Investor Investee Startup Sector Startup Sub Deal value (in
Sector US$ mn)
2015 Gurgaon Warburg Pincus Ecom Express Pvt Logistics Ecom Logistics 132.70
Ltd
2015 Gurgaon Unnamed investors and Rocket Pisces EServices Consumer Food Tech 110.00
Internet AG Private Limited -
Foodpanda.com
2015 Gurgaon
Rocket Internet and Goldman
Sachs Pisces EServices Consumer Food Tech 100.00
Private Limited -
Foodpanda.com
2014 Mumbai SoftBank Corp Housing.com - Consumer Real Estate 90.00
Locon Solutions
Private Limited
2014 Kanpur Tiger Global and Bharti Softbank Hike Technologies Consumer Apps and Tech 65.00
Holdings Pte. Ltd. Private Limited
2014 Gurgaon Falcon Edge Capital and Rocket Pisces EServices Consumer Food Tech 60.00
Internet AG Private Limited -
Foodpanda.com
2015 Bangalore Tiger Global and SAIF Partners & Little Internet Pvt Consumer Discovery 50.00
Angel investors Ltd –Little platforms

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INDIAN STARTUPS
Foreign Investment
The view of Indian startups from abroad is rosy for these early-stage investors who see a mix of
homegrown innovation that addresses local problems, and a big market to boot. Which is why,
when Mumbai-based startup Repaireasy was looking for funding, it found support from angel
investors not just at home but also as far away as Australia. Rs 60 lakh in a funding round that
saw Repaireasy raise about Rs 1.85 crore.
The flow of money is a big plus for Indian startups. Additionally, participation by foreigners also
helps Indian startup players gain access to their networks abroad.
What’s pulling Foreign HNI to Indian Startups
• Media coverage of startups is at an all-time high, creating international awareness.
• Government Programmes such as Startup India have helped position the country as one
of the hottest startup destination.
• Local Angel networks helping foreign investors with due diligence on Indian Startups.
• Angel Investments on the rise in India. Ample of opportunities to co-invest with Indian
HNIs who are mostly taking the lead in such investments.

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INDIAN STARTUPS
GOVERNMENT’S ROLE
Indian government aims to build an ecosystem that promotes entrepreneurship at the startup
level and has taken a number of initiatives to ensure that the startup businesses get appropriate
support like:
1. Digital India
2. Make In India
3. Startup India
Digital India
This is an initiative led by the Indian government to ensure that government services are made
available to every citizen through online platform. In July 2015, the PM announced the Digital
India initiative that aims to connect rural areas by developing their digital infrastructure. This
translates into a huge business opportunity for startups. E-Commerce companies in India are
planning to break into India’s rural market as a part of the government’s Digital India initiative.
According to NASSCOM startup report 2015, every year more than 800 tech startups are being
set up in India. By 2020, a projected 11,500 tech-startups are going to emerge and will employ
around 250,000 people.
A Cisco Newsroom report on Digital India Initiative states: PM Modi’s Digital India initiative has
brought a new dimension to the local economy – from new jobs to more innovation and a
booming startup community – the opportunity in India has never been better. With roughly
4,200 startups, eight of which are valued at over $1 billion, India’s numbers are now directly
behind that of the US and the UK. And three to four new Indian startups are emerging every day.
Fueling this dynamic startup scene is a cultural shift that inspires all employees to think big, take
risks, and innovate fast to capitalize on market trends – a mindset that is new to much of the
Indian business community. Cisco has invested 240 million USD allocation to promote the growth
of early-stage and growth stage companies and has supported 25 startups through direct and
indirect investments. Other companies like Google and Intel are also working to provide
mentorship, training, and financial backing to the startup ecosystem. It is said that almost all
global giants such as Walmart, Goldman Sachs, Target, Thomson Reuters are eyeing towards
Indian startups to tap the huge business opportunity.

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INDIAN STARTUPS
Make In India
As stated in the official website, the main objective of "Make in India" is to encourage
investment and foster innovation in the country. In order to achieve these goals, the government
has simplified the business registration process as well as the rules that govern the
process. Now, entrepreneurs are able to start a company in India using eBiz portal 24/7. Even,
simple licensing application can be done through self-certification or third part certification
system.
With the integrated online portal and less paperwork system, entrepreneurs do not have to
worry about the administration burden and are able to focus more on running the companies. In
addition to an easier registration process, entrepreneurs have more options to invest in India as
more sectors are included in the "Make in India" campaign.
Also, under this campaign, the government creates corridors such as the industrial corridors and
economic corridors. Locating your company in a correct corridor will enhance the business
environment and supports for your company.
Likely benefits of Make In India:
 Growth of manufacturing sector which will influence nominal and per capita GDP
positively.
 One of the main purposes of make in India crusade, is to provide job opportunities for as
many citizens of India as possible. Increase in employment rate which will influence the
purchasing power of a common man positively.
 Export-oriented growth model will improve India's BOP and help in accumulating foreign
exchange reserves.
 Increase in foreign investment will bring technical expertise and creative skills along with
foreign capital.
 With myriad of countries coming forth by the make In India crusade, India will be given
with the opportunity to make use of the latest technology these countries bring along.
This clearly meets most of the aspirations of a young entrepreneur. The new de-licensing and
deregulation measures will surely reduce complexity and significantly increase speed and
transparency. The digitalization of the procedures will make everything hassle free. Development
of smart cities and industrial corridors will ensure that ideas get transformed into products. Skill
development program will provide the necessary workforce to the entrepreneur.

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INDIAN STARTUPS
Apart from this the government has also designed policies and goals for specific industries. Area
based incentives (SEZs), state based incentives, export incentives (under foreign trade policy) and
relaxation on FDI caps are the highlights of the program. The roadmap for each sector has been
laid separately as well.
Startup India
Startup India is a flagship initiative of the Government of India, intended to build a strong
ecosystem for nurturing innovation and Startups in the country. This will drive sustainable
economic growth and generate large scale employment opportunities. The Government,
through this initiative aims to empower Startups to grow through innovation and design.
In order to meet the objectives of the initiative, Government of India announced an Action Plan
that addresses all aspects of the Startup ecosystem. With this Action Plan, the Government
hopes to accelerate spreading of the Startup movement from digital/ technology sector to a
wide array of sectors including agriculture, manufacturing, social sector, healthcare, education,
etc. and from existing tier 1 cities to tier 2 and tier 3 cities including semi-urban and rural areas.
The Action Plan is divided across the following areas:
 Simplification and Handholding
 Funding Support and Incentives
 Industry-Academia Partnership and Incubation
Start Up India Benefits – Major Announcement By Government
 Start Ups will get Tax exemptions for three years and concessions on capital gains tax.
 Compliance regime based on self-certification and no regulatory inspection for three
years. This fiscal exemption shall facilitate growth of business and meet the working
capital requirements during the initial years of operations. The exemption shall be
available subject to non-distribution of dividend by the Startup.
 Total of 10,000 crore Rs. Special Fund to back startups in next four years. 2500 Crore Rs
Per Year
 Startup India Hub Will Be created – a single point of contact for interactions with the
government.

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 Government shall encourage setting up of;
-- 35 new incubators in existing institutions. Funding support of 40% (subject to a
maximum of INR 10 crore) shall be provided by Central Government for establishment of
new incubators for which 40% funding by the respective State Government and 20%
funding by the private sector has been committed. The incubator shall be managed and
operated by the private sector.
-- 35 new private sector incubators. A grant of 50% (subject to a maximum of INR 10
crore) shall be provided by Central Government for incubators established by private
sector in existing institutions. The incubator shall be managed and operated by the
private sector.
 In case of Exit – 90 days for a startup to close down its business. This will promote
entrepreneurs to experiment with new and innovative ideas, without having the fear of
facing a complex and long-drawn exit process where their capital remain interminably
stuck.
 A fast-track system for patent examination at lower costs is being conceptualized by the
central government. 80 per cent reduction in patent filing fee and faster application
mechanism to file a patent. The system will promote awareness and adoption of the
Intellectual Property Rights (IPRs) by the start-up foundations. The scheme for Startup
Intellectual Property Protection (SIPP) shall facilitate filing of Patents, Trademarks and
Designs by innovative Startups.
 No requirement of turnover or experience, but no relaxation in quality.
 A mobile app launched on April 1 to register startups in one day only and by filing one
form. Startups often suffer from the uncertainty regarding the exact regulatory
requirements to set up its operations. In order to ensure that such information is readily
available, it is intended that a checklist of required licenses covering labour licensing,
environmental clearances etc. be made available.
 5 lakh schools and 10 lakh students to be involved in core innovation programmes.

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Other Schemes
Atal Innovation Mission (AIM) for promotion of research and development. Many New
Innovation Center, Research Center and Institutes will be established.
The main components proposed to be undertaken as part of the mission include:
Entrepreneurship promotion:
• Establishment of sector specific Incubators
• Establishment of 500 Tinkering Labs
• Pre-incubation training to potential entrepreneurs in various technology areas in collaboration
with various academic institutions having expertise in the field
• Strengthening of incubation facilities in existing incubators and mentoring of Startups
• Seed funding to potentially successful and high growth Startups
MUDRA Scheme: On 6th January 2016, the Union Cabinet has given approval to the following
proposals:
 The cabinet has approved the creation of a Credit Guarantee Fund for MUDRA loans
-- It is expected that the fund will guarantee loans of over INR 1,00,000 cr to micro and
small businesses in the first instance
-- According to the finance minister, the MUNDRA scheme is expected to provide benefits
to 1.73 cr. People
-- The fund will guaranteeing loans sanctioned under Pradhan Mantri Mudra Yojana w.e.f.
08th April’15
 The cabinet also given its go ahead to convert MUDRA Ltd. into MUDRA Small Industries
Development Bank of India (SIDBI) Bank as a wholly owned subsidiary of SIDBI
Additionally, the government has set a target to provide a total loan of INR 1.22 Lakh cr. to
promote new entrepreneurs and fund the unfunded businesses with the help of banks.
India Aspiration Fund: The finance minister also announced the India Aspiration Fund to
encourage the startup ecosystem and allocated INR 400 cr. to various venture funds. He also
launched another program called SMILE (SIDBI Make in India Loan for Small Enterprises) with an
allocation of INR 10,000 cr. The objective of the scheme is to offer soft loans in the form of
quasi-equity and term loans on soft terms to MSMEs.

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INDIAN STARTUPS
Startup Exchange: The SEBI announced a new set of listing norms for startups, including e-
Commerce ventures, planning to raise funding from listing on stock exchanges. These new norms
will provide relaxations in disclosure related requirements, takeover and Alternative Investment
Fund regulations for IT, data analytics, intellectual property, bio-technology or nano-technology
companies.
Self-utilisation and Talent Utilisation (SETU): The government is planning to set up a mechanism
called SETU, under the newly formed NITI Aayog, to provide technical assistance and incubation
to startups. In 2015 Union Budget, Finance Minister, Arun Jaitley, has set aside INR 1,000 crore
for support startups.
Launching of Innovation Focused Programs for Students
In order to promote research and innovation among young students, the Government shall
implement the following measures:
1. Innovation Core- Innovation Core program shall be initiated to target school kids with
an outreach to 10 lakh innovations from 5 lakh schools. One lakh innovations would be
targeted and the top 10,000 innovations would be provided prototyping support. Of these
10,000 innovations, the best 100 would be shortlisted and showcased at the Annual Festival
of Innovations in the Rashtrapati Bhavan.
2. NIDHI- A Grand Challenge program (“National Initiative for Developing and Harnessing
Innovations) shall be instituted through Innovation and Entrepreneurship Development
Centres (IEDCs) to support and award INR 10 lakhs to 20 student innovations from IEDCs.
3. Uchhattar Avishkar Yojana- A joint MHRD-DST scheme which has earmarked INR 250
crore per annum towards fostering “very high quality” research amongst IIT students. The
funding towards this research will be 50% contribution from MHRD, 25% from DST and 25%
from industry. This format has been devised to ensure that the research and funding gets
utilized bearing in mind its relevance to the industry. Each project may amount to INR 5
crore only. This scheme will initially apply to IITs only.

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INDIAN STARTUPS
The US Small Business Administration launched RFP -EZ in
January 2013 to make it easier for startups to discover and
compete for opportunities and for contracting officers to create
statements of work. The best part is that RFP-EZ is built entirely
as an open source platform. The source code is available for free
on GitHub for developers and governments who are looking to
build an online procurement marketplace.
The Canadian Government provides
comprehensive walkthroughs on selling to the
government, including the contracting process,
procurement directories and bid preparation.
There are almost a dozen webinars and seminars
each week on these topics
Countries with a well implemented e-
procurement systems have relatively higher small
business participation. Korea’s sophisticated e-
procurement system KONEPS supports 41,000
public entities, 191,000 registered suppliers and
over $50 billion in activity. KONEPS is an
integrated platform for e-tendering, e-purchasing
and e-contract management. While it costs
millions to maintain each year, the savings to
governments and suppliers are estimated to be
$6 billion USD.
In 2013 the NSW Department of Transport had PwC
conduct an open Innovation process ( appHothouse)
to select a number of startups to develop real time
bus and rail mobile applications for consumers. This
accelerated process allowed startups and developers
access to public sector IT roles. In under 6 months, 6
real time transport applications were released and
downloaded more than 1 million times.
Governments around the world

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INDIAN STARTUPS
CHALLENGES
Sustainablity
Technology
Regulatory
Culture and
Awareness
Financial
Social
Challenges
World Bank’s Report: Doing Business 2016
• India is ranked 130th out of 189 economies on the ease of doing business, 133rd on the
ease of trading across borders and 157th on the ease of paying taxes.
• India is ranked 155th in case of starting a business
• On an average, Indian businesses need to make 33 tax payments annually with around
243 hours spent to prepare and pay taxes in a year
• In contrast, China requires just nine tax payments annually, while the US doesn’t trouble
its taxpayers more than 11 times annually for tax payments
• Among South Asian economies, India made the biggest improvement in business
regulation, increasing its distance to frontier score

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INDIAN STARTUPS
Culture and Awareness
 The Indian culture has conditioned people to look down upon failure. For failures,
opinions do come by but encouragement rarely so. Entrepreneurship is often about
failing and learning from those failures and starting all over again. People need to start
accepting failures and allow second chances.
 Most common questions for anyone to become an entrepreneur
-- What to do: problem related to creating a business idea, finding business opportunity or
having a vision
-- Why to do: issues related to reward/incentive analysis, risk evaluation or any other
benefits
-- How to do: issues related to legalities and requirements such as clearances, licenses,
approvals required. Issues related to resource availability including finances, technology and
manpower supply
 Most people think that having a domain name, setting up a website, moving to social
media are complex, costly and time consuming
 People are conscious about risk and rewards, and India is referred to as a price sensitive
market
People at large are unaware about how they can contribute to economic growth, generate
employment, contribute to social development
Social Issues
 Mentorship/Guidance: Most founders of failed startups feel that the lack of proper
guidance and mentorship is a major reason behind their failure. An important factor
behind failures and slow growth of some organisations is the lack of quality mentorship,
especially in terms of industry knowledge/support.
 Market structure: Indian markets are largely unorganized and fragmented that create a
roadblock for a startup to succeed
 Consumer behavior: Behavior of Indian consumer changes in every 30-50km that makes
it really difficult for a startup to create business or market strategy for their products or
services. Most startups generally get stuck in stagnancy and gradually shut down.
 Location: An important problem faced by startups is related to location of their business.
India is a place of varied culture and taste and thus every product might not be
welcomed equally in every region.

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INDIAN STARTUPS
Technology
 Technology infrastructure
-- Appropriate IT-infrastructure has become a need for Indian businesses given the
growing number of consumers online
-- It is absolutely vital for new startups to train their employees for handling critical
customer information such as that of credit card numbers and related data
 Cyber security
-- Most startups have a B2B business model. This is where cyber risk may rise as they are
not aware of potential risks that might exist for their startup business
-- No back-up plan to keep the startup company running when an accident destroys some
key equipment in their data centre.
Financial Issues
 Operational finance:
-- Most startups are self/family funded with limited workforce which makes it difficult to
maintain records both financial and operational.
-- Flawed business models and lack of innovative revenue strategies have led to the
failure of many startups and they are forced to shut down operations
-- Overcoming unnecessary business steps to manage business operations
 Funding/Capital Deficiencies:
-- Capital and access to capital has been a perennial problem for startups
-- Government and private sector investors have set aside funds through investment
channels but they are not available for all forms of business. The biggest problem for
such organisations has been to attract investors and gain their trust with regard to their
mode of operations
-- In the initial phase of operations, startups do not get funding from banks given no
credit history of the firm. In addition, there is limited number of credit rating firms for
small and medium sized enterprise.
-- Despite having raised good investments, startups struggle to survive the competition.
Startups are unable to mitigate the gap between burn rate and revenue.

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INDIAN STARTUPS
 Cash flow management
-- Effective cash management is an important factor to achieve objectives both short term
and long term. Cash is still a preferred option for payments owing to the fact that electronic
payment has not achieved complete penetration to Tier 2 and Tier 3 cities
-- Gap between burn rate and revenue: Given rising competition from peers both from big as
well as small, it becomes imperative for startups to scale up the business and require
external funding for the sustainability/growth in the market.
-- Evolution on the basis of funding: Mega funding and mega announcements have become a
thing of the past, post consolidation on a large scale across the sector over the few years.
Both the investor and the entrepreneur are now more consciously focusing on innovation,
capital efficiency and client/customer satisfaction, a view which is bound to impact the
funding scenario hence-forth.
Sustainability Issues
 The level of knowledge that business advisers have about ecological issues and their
willingness to discuss this with their clients is important in creating business ventures.
 Lack of information - provision of more information directly to business founders could
help in the adoption of more sustainable business practices.
 Not aware of potential that might exist for their startup business.
 Role of public funding in promoting sustainable enterprises is often overlooked.
Regulatory Issues
 Multi window clearances: Budding entrepreneurs have to make multiple trips to
government offices to register and seek clearances. Urgent need to scrap multiple
regulatory clearances
 Taxation issue:
-- Taxes like octroi, VAT, excise create problems for entrepreneurs while starting up a
business. NASSCOM has batted for the exemption of both direct and indirect taxes for all
startups in India
-- Taxation is a barrier for technology adoption and proves to be an immense hurdle for
budding entrepreneurs -- With taxation out of the way, startups will be able to stem the
cash outflow.

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INDIAN STARTUPS
Success Ratio
25%
36%
44%
50%
55%
60%
63%
66%
69% 71%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Percent Failed
Industry
Percent Still Operating After 4
Years
Finance Insurance and Real Estate 58 %
Education and Health 56 %
Agriculture 56 %
Services 55 %
Wholesale 54 %
Mining 51 %
Manufacturing 49 %
Construction 47 %
Retail 47 %
Transportation, Communication and Utilities 45 %
Information 37 %

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INDIAN STARTUPS
Major Cause Percentage
of Failures
Specific Pitfalls
1 Incompetence 46 % Emotional Pricing
Living too high for the business
Nonpayment of taxes
No knowledge of pricing
Lack of planning
No knowledge of financing
No experience in record-keeping
2 Unbalanced Experience or
Lack of Managerial Experience
30 % Poor credit granting practices
Expansion too rapid
Inadequate borrowing practices
3 Lack of Experiences in line of
goods or services
11 % Carry inadequate inventory
No knowledge of suppliers
Wasted advertising budget
4 Neglect, fraud, disaster 1 %

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INDIAN STARTUPS
Overview- AUSTRALIAN Startup Economy
 The Australian tech sector is currently small, with great potential for growth. In 2012,
there were 1,500 tech startups in Australia with key hubs in Sydney and Melbourne.
 The Australian tech startup sector has the potential to contribute $109 billion or 4% of
GDP to the Australian economy and 540,000 jobs by 2033 with a concerted effort from
entrepreneurs, educators, the government and corporate Australia.
 More than 3 out of 4 tech startups are targeting the Information Media and
Telecommunications sector – but significant opportunities exist throughout the
Australian economy.
 Australian tech startups are supported by a rapidly expanding ecosystem with strong
recent growth in incubators, accelerators and angel groups. Entrepreneurs today have
access to a wide network of support.
 Australia needs to accelerate the use of technology in industry to ensure we maintain our
global economic position. The Internet and computing power are allowing technology
companies to disrupt the global economy, leading to a redistribution of industry revenues
(and wealth) across geographic borders.
SNAPSHOT 2013
 Approximately 1,500 tech
startups with hubs in Sydney and
Melbourne
 Approximately 2,000 founders
 Rapidly expanding support
ecosystem
 Open dataset developed and
available for reuse on
www.startupaus.org

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INDIAN STARTUPS
The growth of the Australian technology sector is essential to the future success of the economy.
Australia needs to accelerate the use of technology in industry to ensure we maintain our global
economic position. The Internet and computing power are allowing technology companies to
disrupt the global economy. Startups have great potential because:
• Can reach ~2 billion potential
consumers at low cost using
global distribution platforms on
the Internet (e.g. iTunes, Google
Drive, eBay, 99designs,
Freelancer, Airtasker).
• Have high labour productivity
(revenue per employee), and
lower capital requirements than
industry incumbents providing a
competitive advantage in price.
• Can offer a better ‘customer
experience’ in many industries
they through the use of the
Internet as a delivery channel and
through automation of processes
using computing technology.
The disruption of industries by
technology companies is leading to a
redistribution of industry revenues (and
wealth) across geographic borders. Wealth is becoming concentrated in regions which can
address large/global markets.
The challenge for startups is overcoming current procurement processes of governments and
large corporations to compete with established tech companies for a piece of the multi-billion
dollar pie. Total Australian Government procurement contracts added upto ~$41 billion in FY12
Of this, 39% ($16 billion) of contracts were awarded to Small and Medium Enterprises (0-199
employees). A much smaller portion would be attributed to small businesses only (0-19
employees).

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INDIAN STARTUPS
ACTIONS FOR GROWTH
 Australia already has one of the most favorable environments for entrepreneurship.
There is no better time to be an entrepreneur.
 International comparisons show that entrepreneurship can thrive with the right culture
and perceptions, regardless of regulatory conditions.
Culture is the key to accelerating the growth of a tech
community. Australia’s tech startup community
needs to continue to build a culture to promote
increases in:
o Participation in the sector (1,600 new
founders are needed for 2014 and 1,840 in
2015).
o Success rate of startups (more than 1% of
startups reaching $200m in annual revenue).
o Serial entrepreneurship and mentorship
(knowledge transfer and retention).
o Rate of growth of firms (startups reach $200m
revenue faster).
o Angel funding from successful entrepreneurs
(larger pool of funds for startups).
 More entrepreneurs with the right skills.
Australia needs to rapidly increase the number of
tech entrepreneurs to ~43,000 by 2033. Australia
already has a high rate of converting people
interested in entrepreneurship into founders. We just
need more people interested.
o In the short term, focus on getting the existing
workforce interested in entrepreneurship.
o In the longer term, encourage more
Australians to study computer science and this education needs to start early.
 By international standards Australian governments are relatively supportive. R&D tax
credits and the Innovation Investment Fund contribute positively to the sector.
Government is unlikely to be the catalyst for growth.
 Open up markets to Australian tech startups.
The domestic market for Australian startups is relatively small with a population of only
23 million. Compare this with the sizeable population of the US (314 million) and the UK
(63 million).
Table: Tax Initiative around the world

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INDIAN STARTUPS
Culture really counts
Entrepreneurial activity is heavily influenced by
the cultural environment surrounding
entrepreneurs. Ecosystems where people see
opportunities to start a business, where people
believe in the skills and knowledge they hold,
and where entrepreneurial successes are highly
visible in the media are good indicators of the
population’s entrepreneurial intentions and
total early-stage entrepreneurial activity.
Countries where people are not plagued by the
fear of failure, which can prevent them from
starting a business, consistently outperform
others in terms of early-stage entrepreneurial
activity. Whether it’s the nature of the
economic climate which has sparked fear of
failure (e.g. Greece) or the ingrained culture of
relatively higher risk aversion (e.g. Japan), fear
of failure can be a real impediment to
entrepreneurial activity.
Stable, simple and conducive regulatory environments
are often the first and exclusive focus of those who try
to accelerate the growth of startup ecosystems.
However the data shows that contrary to conventional
wisdom, entrepreneurial activity can flourish regardless
of the regulatory environment. The ease of doing
business is actually lower in countries with high levels of
early-stage entrepreneurial activity. Similarly, the time
and procedures required to start a business do not
appear to inhibit entrepreneurial activity. However,
regulation may have a greater impact on tech startup
entrepreneurialism than it does on other types, as tech
startups are inherently more dependent upon finely
tuned regulatory systems such as content regulation or
intellectual property.
India has one of the best regulatory
environments for entrepreneurship, and an
engaged and strengthening culture of
inclusion and openness with new mindset
and policies coming out. However, we have
a considerably higher ‘fear of failure’ rate
than many other innovative countries (e.g.
US & Canada) which is constraining the
growth of our startups.
International comparisons show that entrepreneurship can thrive with the right culture and
perceptions, regardless of regulatory conditions.
Fear of Failure counts
Entrepreneurship can thrive
despite unfavourable
regulatory conditions

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INDIAN STARTUPS
CASE STUDY
1. SRJNA
Founders: Sharad Bansal, Om Prakash, Kapil Arya, Vivek Pathak
Founded In: 2014
About: SRJNA is a Jaipur, Rajasthan based Startup. It’s a hybrid education model using real &
virtual teaching aids to impart 5D classroom experiential learning and smart online assessment
platform with deep analytics for K-10 students, teachers and parents.
Seed funded by Rajasthan Angel Investor Network, SRJNA has been incubated at Startup Oasis,
mentored by CIIE-IIM Ahmedabad, University of California - Berkely and recognized by IITs, IIMs,
XLRI, Department of Science and Technology (DST) and Rajasthan Education Initiative (REI). We
have empowered 25000+ students, 500+ teachers and 80+ schools in Delhi NCR, Rajasthan,
Punjab, Haryana & Gujrat.
Interview- SHARAD BANSAL (Co-Founder & CEO)
1. Getting graduated from one of the India’s most reputed college, from where you could
have bagged a great, secured job in the commercial market, what inspired you to open
your own company?
- It all started in 3rd year, we opted for a project on Indian Education System. Regarding
that we spoke to our classmates, seniors and professors, almost of all them mentioned
that they are not satisfied with the basics of school education system and that’s why
students don’t do that well in research in colleges.
We even spoke to many students, teachers and principals of different school, lately we
came up with a model. Professors and principals loved it, one thing led to another and we
got our first client when we were in 4th year.
20-21 you know at this age you could always take risks. So it just clicked, we spoke to
each other, all of us were very excited about it and today here we are.
2. What is SRJNA and what is its Vision?
- In long run, we want to create a force of young people in coming generation that will be
creative and innovative.

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INDIAN STARTUPS
We believe in “Learning by Doing”. We have models that enables you to learn the things
by experiencing it. We have developed different teaching methodologies and tools for
teachers to use in classroom for subjects like Physics, Mathematics, and Chemistry etc.
3. Education sector, for new products in India has been one of the most controversial and
risky sectors, may be because the change is not that flexible in this sector, why instead
you choose this sector?
- I would not say its risky, but its effect is very different, the impact is realized I a longer
time. We provide you better education, it takes time to realize it, may be a day later or
after exams or when you are a grownup. Its takes time to make you satisfied that’s why
its bit challenging.
But what excites us here is, the impact is late but its huge.
4. Why did you choose Jaipur to open your head office instead of Bangalore Delhi or
Mumbai?
- I would say the scenarios made us choose Jaipur. 3 out of 4 of our co-founder are from
Rajasthan, we got our first client in Jaipur, and facilities of incubation center and Startup
Oasis were in Jaipur. And the most important thing what you get in Rs 1,50,000 in Delhi,
you get same in Rs 50,000 in Jaipur.
5. Where do you see Jaipur going?
- Requirements of Startups- Clients, a prosperous ecosystem and customers, and here in
Jaipur all three of these have upgraded in last 2-3 years and are still upgrading at a fast
pace. Things are changing, people are willing to spend for better services and products.
There are many colleges, so you get interns and employees as well, the co-working space
is improving, you get all the facilities and I mentioned earlier, you get it cheap. I have
think, Jaipur has all the potential to be the next startup hub of India.
6. As a CEO, how do you see India as a market to open a startup?
- We are the 3rd largest economy and developing. As a company, to expand you need to
come to a market with lots of possibilities and scope. And India, as we see, have a huge
population that includes a major portion of youths, living standards have increased,
government is doing a hell lot of work to improve the economy and India is connecting
well with the rest of the world. So all in all it’s a huge, profitable, rich market full of
possibilities.
7. How difficult is to get funded here in India?
- Ok first of all I would like to mention, the common belief in India, the key to success is
getting funded, is not true. At my time, I spoke to many VC’s, alumni and friends, they
suggested that one should not go directly for funding if want to start own business

36
INDIAN STARTUPS
because when an investor comes in, they expect a total different level of growth, they
may want some changes and obviously revenue which may not be possible at initial
stage. So one need to understand that key to success is not always funding.
And at this moment getting funded is not so difficult if your product is good. There are
many millionaires and billionaires in India ready to put their money. Even many
American, Japanese, Singapore investors are there now, huge market giants are ready to
invest. So I would say its not that difficult as it used to be.
8. Now a days there are many foreign investors who are investing in the local startups, how
good is this for us and what reason do you see behind this?
- Obviously, if the market is huge and profitable, at this pace of globalization, Investors will
be there. For them it’s a huge opportunity, having dollars, they can easily expand in
Indian Rupees. And yeah its good for entrepreneurs as well, getting money is always
good.
But I think we should hold our nerves here, I have seen in many cases, when you get a
foreign investor things don’t go well, as they here to make money not exactly to solve
problems.so I think it should be taken if you are thinking to scaling your product to
foreign market, it should not come on the stack of your company’s future prosperity.
9. If you can Share some details about the investments that you have fetch for the business
till now.
- Initially we started with our private funds, savings you can say. Then we raised a funding
of $65K from Puneet Mittal (CEO, Pratham Software), Rajneesh Bhandari (President, TiE
Rajasthan), Mahavir Pratap Sharma (President, RAIN), and three other RAIN members
along with two independent undisclosed angels.
10. How much according to u the initiatives of government like, make in india or startup India
campaign, are helpful for new entrepreneurs?
- The first and the foremost thing is that government is speaking about it in a very positive
manner, that makes people believe that entrepreneurship is a respectable thing to do, its
not just ‘jawani ka josh’ types, so that’s helpful.
And deffinetly all these initiatives help a lot, its money saving, time saving as now we can
self declare our business with just an app, all the data you need is available, there are
new incubator centers out there. It also makes a nice image of the market for foreign
investors as they see how much government is working for the growth of startups. So all
of these, yes definitely eases the whole process.
11. How do you think fiscal and monetary policies, like tax rates or interest rates of India are
for startups? Are there any special benefits?

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INDIAN STARTUPS
- Yes there are many policies, like if you are a verified and approved startup, you get
relaxations on service tax and income tax, obviously with certain guidelines. Even the
investor gets benefits like they don’t have to pay any tax while dealing with startups
unless and untill they are selling it.
12. Any other steps do you think our government can take to boost the startup culture in the
country?
- Its more about execution, they are up with many great plans already but they are slow
paced. And they can be more accountable, one should be able to see how they spending
the whole amount announced for any project or initiative. So yeah these are basic things
they should work on.
13. The success rate has been not so good of startups, what do you think is the reason
behind this?
- The major problem here is the replication of the successful models of US or Japan here in
India. The good idea varies according to the place it is executed in. One should come up
with new ideas and business according to the market, replication just dont work.
And the other thing is, competition is so ruthless, there are multiple companies working
on same sort of model, so if one has to succeed, others have to shut down.
14. How do you think, the new startup culture can solve the long lasting problem of
unemployment in our country?
- Its difficult to predict at this point, because startups are exactly not the ones which
produce jobs in bulk, its almost a 4-5 member team initially. But if everything goes right
in future, according to reports startups have a huge scope to produce a fair amount of
employment in the country.
And its not only about unemployment, they are organizing the unorganized departments,
people like cab drivers, craftsmen etc are doing better for themselves. They were already
employed but now they are earning better and it has become stable.
15. The economy has shown boom because of new startups in the market, do you think this
growth is sustainable?
- The boom at this moment can be because of the investments coming from the foreign
market, the increment of cash flow in the market and may be because of the hundreds of
new startups coming in. So yeah in the future the rate of growth may not be the same
but for sure the rate of growth will be positive and beneficial.
16. Any advice if you want to give to the new entrepreneurs?
- Be grounded, be passionate, be patient and work hard.

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INDIAN STARTUPS
2. HOSTELERS
Founders: Ashish Garg, Mohish Maheshwari, Deepak Dubey
About: Hostelers is a Kota, Rajasthan based Startup. They aim to provide people a ‘Home Away
from Home’. Its mission is to make fellow hostelers journey hassle-free and amiable. Through a
comprehensive listing of PGs/Hostels and Mess/Tiffin centers, their platform provides people the
‘Home’ they desire and the food they dreamed of while moving to a new city, at a reasonable
price by engaging them directly with the owners of such entities.
With a plethora of options aided by extensive information, updated photographs and an efficient
feedback & review system, they aim to assist people in their lookout for the 'I’m at Home'
feeling.
Interview- DEEPAK DUBEY (Co-Founder & CEO)
1. Getting graduated from one of the India’s most reputed college, from where you could
have bagged a great, secured job in the commercial market, what inspired you to open
your own company.
- I had already done internship at Oyo Rooms in my third year of college when it was
startup. My college senior is one of the key member in Oyo team. So I saw Oyo
running at his apartment. And I saw and worked with Ritesh, who was even younger
to me. So I was pretty amazed to see start-up environment and liked it. You can say I
got inspiration from there.
2. What was Hostelers and what was its Vision?
- At Hostelers- We aimed to provide people a ‘Home Away from Home’. Our mission
was to make fellow hostelers journey hassle-free and amiable. Through a
comprehensive listing of PGs/Hostels and Mess/Tiffin centers, our platform provided
people the ‘Home’ they desire and the food they dreamed of while moving to a new
city, at a reasonable price by engaging them directly with the owners of such entities.
With a plethora of options aided by extensive information, updated photographs and
an efficient feedback & review system, we aimed to assist people in their lookout for
the 'I’m at Home' feeling.

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INDIAN STARTUPS
3. In broader perspective, Real estate, for new company in India has been one of the risky
sectors, may be because the enormous competition in this sector, why instead you
choose this sector?
- In real estate segment there were big players at that time like Housing.com,
Commonfloor etc. We chose this sector because we knew still there is enough space
in this segment for better services. Since we all three founders had ourselves faced
this problem in Kota while studying so we didn’t think of competitors when we
started.
4. What problems you face to run a startup?
- Startup journey wasn’t easy, first of all we weren’t experienced much but that was
something I consider good for startup as you think everything is possible. Problems
were from financial to operational challenges etc. One thing we knew was we were in
a gold mine since Kota market has mass people that too in a very small city. We were
always talking to some investor to raise money, and with some we went till final stage
too. The main problem which I think was real estate segment is not same in every
city, it functions differently in different cities. So it was very tough for us to scale up in
different cities. We were functioning from the best place, can say mecca and medina
of PG i.e. Kota. The moment we think of another city we had to again look at our
model.
5. How major role does the competitors played in this sector, if you can mention any
examples?
- We were first in Kota, there were some other players in different cities but there
wasn’t a big player. All were facing the same issue that I had stated earlier.
6. Why did you choose Kota to open your head office instead of Bangalore Delhi or
Mumbai?
- Already mentioned Kota is like mecca and medina of PG and Hostels. And my other
two partners were from Kota itself so it was even economical for us too.
7. As a CEO, how do see India as a market to open a startup?
- India is not same like foreign market. Even big companies like Amazon, Uber did
major changes to sustain here. Still I think over the time, market will become more
mature.
8. What was your business model and how was it different from your competitors?
- We initially for three months were free listing platform. After that we started revenue
sharing with owners.

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INDIAN STARTUPS
9. How difficult is to get funded here in India?
- There is never difficulty if your idea is scalable and profitable in years. Good thing
about us was that we never had approached to any investor. They used to approach
us and then we used to take forward from there. So I think if you are doing something
substantial investors will themselves approach you.
10. If you can Share some details about the investments that you fetched for the business.
- Entire startup journey we were completely bootstrapped. With some investors we
had gone to final stage but we had ended the deal because we thought we can go
more and they were asking for more shares. With the last investor everything was
finalized and then two things happened we ourselves had lost belief on model and its
scalability and secondly multiple suicides started happening in Kota.
11. How much according to u the initiatives of government like, make in India or startup
India campaign, are helpful for new entrepreneurs?
- I think still initiatives of government are on papers. When they would be
implemented then only it can be benefit for entrepreneurs.
12. Any other steps do you think our government can take to boost the startup culture in
the country?
- Reforming the entire education system. We all are taught to work under someone
but never taught how to open something of our own.
13. The success rate has been not so good of startups, what do you think is the the reason
behind this?
- 90% of Startups fail. I think main reason is because of genuine and good mentors.
14. One thing if any particular that you think gone wrong?
- One think which we and many entrepreneurs think that funding could solve our
problem. But later we realized that money can’t solve all the problems we have to get
work done without that, that what startup is about. We really lacked a good mentor
who could guide us properly.
15. The economy has shown boom because of new startups in the market, do you think
this growth is sustainable?
- Over the time bubble will burst and only sustainable startups will survive. This has
even started.
16. Any advice if you want to give to the new entrepreneurs?
- Don’t think of failure and what people will say. Take risk and fail early.

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INDIAN STARTUPS
FUTURE
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.
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.
Employment Opportunities
India needs 10 million jobs a year and global data shows that it is startups, not large enterprises
that create net new jobs in any country. Startups are also the centers of innovation and are a
great way to enhance employment creation in the economy.
However, more important aspect is the technological enhancement they bring to the country.
Startups involve dealing with new technology which generally lies at the highest end of value
addition chain. India is a home to almost 3100 startups starting per year standing just behind the
US, UK, and Israel according to the NASSCOM report of 2015.
If the growth continues in the same pace then it is expected that Indian tech startups will
generate almost 2.5 lakh jobs in the next five years. 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.
Rural Development
Rural development is more than ever before linked to entrepreneurship. Institutions and
individuals promoting rural development now see entrepreneurship as a strategic development
intervention that could accelerate the rural development process. Furthermore, institutions and
individuals seem to agree on the urgent need to promote rural enterprises: development

42
INDIAN STARTUPS
agencies see rural entrepreneurship as an enormous employment potential; politicians see it as
the key strategy to prevent rural unrest; farmers see it as an instrument for improving farm
earnings; and women see it as an employment possibility near their homes which provides
autonomy, independence and a reduced need for social support. To all these groups, however,
entrepreneurship stands as a vehicle to improve the quality of life for individuals, families and
communities and to sustain a healthy economy and environment.
The entrepreneurial orientation to rural development accepts entrepreneurship as the central
force of economic growth and development, without it other factors of development will be
wasted or frittered away. However, the acceptance of entrepreneurship as a central
development force by itself will not lead to rural development and the advancement of rural
enterprises. What is needed in addition is an environment enabling entrepreneurship in rural
areas. The existence of such an environment largely depends on policies promoting rural
entrepreneurship. The effectiveness of such policies in turn depends on a conceptual framework
about entrepreneurship, i.e., what it is and where it comes from.
Boosting Economic Growth
Tech startups are leading the growth of startup era and it is ready to boost revenue generated by
IT-BPM sector by almost 12-14 per cent for the current fiscal year as well. It is anticipated that
the e-commerce market of India will grow by more than 50% within the next five years. India
witnessed the largest infusion of capital from overseas through venture capital funds in the year
2014 in the indigenous startups. After the inception of new government in the center, an
optimistic view has been developed around the growth story of Indian economy. This
government has also started working towards improving India’s rank in World Bank ease of doing
business in which India is currently ranked at 142 positions. This will definitely boost the startups
of the country. Foreign investors have started looking towards India as a favorable investment
destination. Indian startups are proving to be the major tool for diverting a huge chunk of foreign
wealth into the Indian economy.
Developed nations are now looking towards fast growing and emerging nations such as India to
tap the huge untapped potential in these markets. In the recent years, different countries are
taking different initiatives to link up their businesses with the Indian startups. For Example:
Business council of India in United Kingdom (UKIBC) is hosting startups of India in UK. Similarly,
Swissnex, an agency of Switzerland is conducting market research in India with the help of its
entrepreneurs to identify suitable business opportunities for them. On the same lines, Zone
Startups based in Toronto Canada is also conducting research to understand Indian taste, culture
and requirements that they can fulfill. It is said that almost all global giants such as Walmart,

43
INDIAN STARTUPS
Goldman Sachs, Target, Thomson Reuters are eyeing towards Indian startups to tap the huge
business opportunity.
Venture capital funds from abroad and angel investors are proving to be a big boon for Indian
startup story. Indian startups such as Flipkart, Olacabs, Snapdeal, Hike, Shopclues, Freecharge,
Inmobi etc. receive various rounds of follow-on financing as well either from their existing
investors or from any new investor.
There is a huge demand for Indian software engineers around the world. Any startup owner in
any country sets an eye to hire talent from India, since it reduces their cost by almost 25% and at
the same time it provides a very good employment opportunity for the developer.
Startups are flourishing in India not only in the field of internet but in various other fields as well.
Educational tech startups are a new hot bee among various investors since it is anticipated that
the complete educational system will be digitized in the near future. Similarly, startups are also
eyeing big data for analytics, healthcare, beauty and fitness, biotechnology and other areas as
well. Several startups have also ventured into food delivery service as well. Examples include
Mast Kalandar in Mumbai and Bangalore, Eatlo, Freshmenu, TinyOwl etc. These have generated
employment opportunities in large number for unorganized sections of the society in the form of
delivery persons. At the same time, it has increased convenience for consumers as well.
Young entrepreneurs are also exploring opportunities in the field of development of gateways
for mobile or online payment. It is a well-known fact that India is all set to become the second
largest market for smartphones by 2016 after United States. It is mainly going to happen due to
increase of affordable smartphones in the country. This sector witnessed almost 50% growth in
the year 2014 only. Due to this, it is anticipated that the number of people using online
transactions will also increase at the same pace, presenting huge opportunities for Indian
startups. Startups such as Paytm, Inmobi, freecharge etc. have already started covering this
market.
Indian government is also taking several steps to build an environment which is suitable for
startups, since small businesses can play a very important role to develop and boost Indian
economy in the future. Considering the importance of role that the Indian startups are all set to
play in the growth of Indian economy, the amount of income and the huge number of jobs that
can be created by facilitating startups, even the market regulator Securities and Exchange Board
of India (SEBI) has also relaxed some rules to facilitate the flow of funds from the market to the
startups.
Hence, taking into consideration all the above developments, it can be concluded that
indigenous startups will not only make the lives of the people easier through their affordable and
convenient services but will also act as a major booster for the development and the progress of
the Indian economy.

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INDIAN STARTUPS
References
http://startupindia.gov.in/
http://www.forbes.com/
www.srjna.in
www.hostelers.in
https://www.entrepreneur.com/
www.yourstory.com
Jstor
Economical n political weekly
http://www.fao.org/
www.startupaus.org
PwC analysis
http://www.mbaskool.com/
http://www.business.com/
http://blog.ediindia.ac.in/
http://www.investopedia.com
http://thenextweb.com/in
http://www.statisticbrain.com
www.profitbooks.net/startup-india/
http://legaladda.myonlineca.in/
grant_thronton.in

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INDIAN STARTUPS
THANK YOU
THANK YOU

Indian startups- How they effect the economy

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