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Launched on 16th January, 2016, the Startup India Initiative has rolled out several programs with the objective of supporting entrepreneurs, building a robust startup ecosystem and transforming India into a country of job creators instead of job seekers. These programs are managed by a dedicated Startup India Team, which reports to the Department for Industrial Policy and Promotion (DPIIT).
ABOUT “STARTUP INDIA”
Definitions of Startups
A startup is a young company that is beginning to develop and grow, is in the first stages of operation, and is usually financed by an individual or small group of individuals
A startup is defined as a business that:
• Working towards innovation, development or improvement or of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.
• New and existence for not more than 10 years
• Revenue of up to INR 100 cr.
• Not formed through splitting or restructuring AND RECOGNISED by DPIIT ( Department for Promotion of Industry and Internal Trade)
StartupIndia Scheme
StartupIndia is flagship scheme of the Govt of India, operated by DPIIT ( Department for Promotion of Industry and Internal Trade) under Ministry of Commerce and Industry. Launched on 16th January, 2016, the Startup India Initiative has rolled out several programs with the objective of supporting entrepreneurs, building a robust startup ecosystem and transforming India into a country of job creators instead of job seekers
In order to meet the objectives of the initiative, Government of India is announcing this 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
Eligibility to Apply for StartupIndia Recognition or DPIIT Startup Certificate
ONLY below entity is eligible
Private Limited Company , OPC, LLP and Registered Partnership can Apply for Startup Recognition subject to fulfilment of below conditions –
- Working towards innovation, development or improvement or of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.
- Whose turnover not exceeds Rs 100 crores in any Financial Year since incorporation/registration.
- Entity should not formed by splitting up or reconstruction of an existing business
- Ensure Entity was neither incorporated/registered as a subsidiary of any Indian or foreign entity nor is a subsidiary of any Indian or foreign entity.
- Company shall not be more than 10 years old.
Benefits of StartupIndia Recognition (DPIIT) Certificate
- Easy Public Procurements:- Startups are exempted from otherwise stringent selection criteria such as Prior Experience, Prior Turnover and Earnest Money Deposits in Central Govt. and PSU Tenders.
- GeM Startup Runway:- DPIIT Recognized startups can view the GeM Startup Runway on their GeM dashboard, where they can spread awareness about their product by completing a form that describes their product as well as intended buyers and uses (Ministries/Departments).
- 3 years Income Tax Exemption Benefits:- recognised Startup can Apply for this benefits separately with DPIIT subject to meet other criteria.
- Govt. Funding Opportunity under startup Scheme
- IPR Govt. Fee Concession - 50% rebate in Trademark fee and 80% in Patent.
- Self Certifications and compliance under 9 environmental & labour laws.
- Participate in various Govt. financial assistance scheme in innovative solutions
- Networking with other startups
- Easy Winding up in 90 days under insolvency & Bankruptcy code 2016.
For more about Startup Indian visit www.startupindia.gov.in
What is Startup India Hub?
Startup India Hub is a one-stop platform for all stakeholders in the Startup ecosystem to interact amongst each other, exchange knowledge and form succesful partnerships in a highly dynamic environment.
How do Investors add value to Startups?
Investors particularly venture capitalists (VCs) add value to startups in a lot of ways:
1. Stakeholder Management: Investors manage the company board and leadership to facilitate smooth operations of the startup. In addition, their functional experience and domain knowledge of working and investing with startups imparts vision and direction to the company.
2. Raising Funds: Investors are best guides for the startup to raise subsequent rounds of funding on the basis of stage, maturity, sector focus etc. and aid in networking and connection for the founders to pitch their business to other investors.
3. Recruiting Talent: Sourcing high-quality and best-fit human capital is critical for startups, especially when it comes to recruiting senior executives to manage and drive business goals. VCs, with their extensive network can help bridge the talent gap by recruiting the right set of people at the right time.
4. Marketing: VCs assist with marketing strategy for your product/service.
5. M&A Activity: VCs have their eyes and ears open to merger and acquisition opportunities in the local entrepreneurial ecosystem to enable greater value addition to the business through inorganic growth.
6. Organizational Restructuring: As a young startup matures to an established company, VCs help with the right organizational structuring and introduce processes to increase capital efficiency, lower costs and scale efficiently.
Why do Investors invest in Startups?
Investing in startups is a risky proposition, but the low requirement for overhead capital combined with high upside potential, makes it lucrative for investors to put their bets on startups.
The Thomson Reuters Venture Capital Research Index replicated the performance of venture capital industry in 2012 and found that overall venture capital has returned at an annual rate of 20% since 1996 – far outperforming modest returns of 7.5% and 5.9% from public equities and bonds respectively.
I have an innovative idea that I want to pursue as a Startup. What guidance can Startup India provide me?
Startup India Learning Program is a free online entrepreneurship program by Startup India. The aim is to help entrepreneurs get their ideas and ventures to the next level through structured learning. The program covers lessons on key areas of starting up by 40+ top founders of India in an extensive 4-Week Program.
Interested individuals can enrol for this free course at https://www.startupindia.gov.in/content/sih/en/learning-and-development_v2.html.
For more courses, please visit https://www.startupindia.gov.in/content/sih/en/reources/l-d-listing.html.
Further, incubators across India are providing guidance to budding startups. There is a list of incubators listed on the Startup India portal for your reference.
My entity does not have a PAN. Would I be allowed to register it as a ‘Startup’ on the Startup India portal?
Yes, an entity without a PAN can be registered as a Startup on our website. However, it is advised that a valid PAN of the entity is provided at the time of registration
Would a One Person Company (OPC) be eligible to avail benefits under the Startup India initiative?
Yes. One Person Companies are eligible to avail benefits under the Startup India initiative.
Can a foreigner enter into partnership under the LLP Act and get that LLP registered with Startup India?
Yes, a foreign national can enter into partnership under the LLP Act and get that LLP registered on our website. It can even get recognised by the DIPP.
Can I provide two mobile numbers in the registration form?
Only one mobile number and one landline number of the authorized representative of the entity can be provided at the time of registration. The portal and the mobile app would be sending an OTP on the mobile number provided by the user to complete the authentication and registration process.
What are the documents required by Startups to get recognized under the Startup India initiative?
The process of recognition as a ‘Startup’ is through an online application made over the mobile app/portal at https://www.startupindia.gov.in/content/sih/en/startupgov/startup-recognition-page.html.
You will need to upload the incorporation/registration certificate and explain how your startup is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.
What is the time-frame for obtaining certificate of recognition as a ‘Startup’ in case an entity already exists?
The certificate of recognition is issued typically within 2 working days upon successful submission of the application.
If my startup gets recognised, would I obtain a certificate for it? If yes, would I be able to download the certificate?
Yes, if your startup gets recognised, you would be able to download a system generated verifiable certificate of recognition.
I have an innovative idea that I want to pursue as a Startup. What guidance can Startup India provide me?
Startup India Learning Program is a free online entrepreneurship program by Startup India. The aim is to help entrepreneurs get their ideas and ventures to the next level through structured learning. The program covers lessons on key areas of starting up by 40+ top founders of India in an extensive 4-Week Program.
Interested individuals can enrol for this free course at https://www.startupindia.gov.in/content/sih/en/learning-and-development_v2.html.
For more courses, please visit https://www.startupindia.gov.in/content/sih/en/reources/l-d-listing.html.
Further, incubators across India are providing guidance to budding startups. There is a list of incubators listed on the Startup India portal for your reference.
What factors are considered by the Investors to invest in startups?
Different investors use different criteria to judge an investment. The importance of these factors would wary depending on the stage of investment, sector of startup, management team etc. Listed below are typical investment criteria used by investors:
1. Market Landscape: Refers to the addressable market which the startup is catering to.
Factors: Market size, obtainable market-share, adoption rate, historical and forecasted growth rates, macroeconomic drivers, demand supply
2. Scalability and Sustainability: Startups should showcase the potential upscale in the near future, a sustainable and stable business plan.
Factors: Barriers to entry, imitation costs, growth rate, expansion plans
3. Objective and Problem Solving: The offering of the startup should be differentiated to solve a unique customer problem or to meet customer need. Ideas or products that are patented showcase deemed potential in the startups.
4. Customers & Suppliers: Laying out your customers and suppliers, helps investors understand your business better.
Factors: Customer relationships, stickiness to the product, vendor terms, existing vendors
5. Competitive Analysis: A true picture of competition and other players in the market working on similar things should be highlighted. There can never be an apple to apple comparison, but highlighting the service or product offerings of similar players in the industry is important
Factors: Number of players in the market, market share, obtainable share in the near future, product mapping to highlight similarities or differences between competitor offerings
6. Sales and Marketing: No matter how good your product or service maybe, but if does not find any end use, there is no good.
Factors: Sales forecast, targeted audiences, marketing plan for the target, conversion and retention ratio etc.
7. Financial Assessment: A detailed business model that showcases the cash inflows over the years, investments required, key milestones, break-even point and growth rates should be made out well. Assumptions used at this stage should also be reasonable and clearly mentioned.
See sample valuation template here (to be sourced under templates section)
8. Exit Avenues: A startup showcasing potential future acquirers or alliance partners becomes a valuable decision parameter for the investor
9. Management and Team: The execution and passion of founder and the management team to drive the company are equally crucial in addition to the all the factors mentioned above
