Every year, around the time when the Union Budget is announced, the startup ecosystem in India is on tenterhooks. It was no different this year. Startups across sectors had high expectations from the government. Resolving the angel tax issue, setting up startup hubs, tax exemptions and facilitating credit were some of their common expectations. Women investors and entrepreneurs, too, expected the government to encourage women to become self-employed through the STEP (Support to Training and Employment Programme for Women) scheme. They also wanted the government to bring in more women into the workforce, and promote financial inclusion of women entrepreneurs by providing a conducive regulatory environment for women entrepreneurs.
Though startups received a major boost from the Union Budget 2019, including relief from the dreaded angel tax, India’s entrepreneurial community believes more can be done to sustain the innovation ecosystem. In their opinion, it’s not only the government but also other key ecosystem stakeholders that must spur innovation in the country.
How the government can support startups
Avanish Mundhra, the founder of Hyderabad-based Cantilever Labs, is of the view that the government should connect startups to the end-users, especially if they are institutional by nature. He suggests that the government can designate a Startup Day on a monthly basis for entrepreneurs to showcase their products and services, and network within the ecosystem. He rues the prevalent red- tapism that poses roadblocks for startups. Recalling the waiting period of nine months that it took his startup to navigate through the bureaucratic corridors before securing an appointment with the powers that be, Avinash sums it up thus: “This is the time it takes for a baby to be born and a startup to die!”
India’s innovative potential can be realised only if the government introduces new policy initiatives to catapult India’s DeepTech sector into the big league. Proactive reforms, such as providing technology and quality infrastructure, including free office space, to startups, will promote public-private partnerships.
Entrepreneurs want the government to focus on making the policy framework less rigid that could stymie the growth of startups. The government shouldn’t bog down startups with excessive legal paperwork and other administrative requirements that might drive away international investors.
What do startups seek from the private sector?
One of the biggest takeaways for startups from the industry is the much-needed job creation in various industries. That corporates are making efforts to stay on top of the innovation game, is not lost on the startup community. Buoyed by the risk-taking abilities of even large traditional organisations, startups are forging meaningful collaboration with corporates through corporate innovation programs and other channels.
Private sector involvement in bolstering the innovation ecosystem can be seen in the number of incubators and accelerators offering infrastructural support, networking, mentoring and other benefits to entrepreneurs. Further, to encourage companies trying to scale, they must have access to funding.
Why academia is crucial for the startup story
The Indian startup story wouldn’t be complete without support from academia. Universities have historically been the breeding ground for innovative ideas. Research labs have created an enabling environment that attracts the industry to partner with universities for discovering the next big idea. For instance, premier technology institutions like IIT-Madras (Indian Institute of Technology) and IIT-Delhi have always been at the forefront of innovation. IIT-M, the incubation cell of IIT Madras, has incubated 200 DeepTech startups since its launch in 2013, filed over 100 patents and generated over 3000 jobs for the economy.
Increasingly, the startup community flocks to leading universities across the nation, hoping the strategic partnership will yield them powerful benefits.
- Among the factors startups seek in academia is the university’s location. While Stanford has become synonymous with Silicon Valley, in India, too, premier management institutes like the IIMs (Indian Institute of Management) have forged close industry ties within their cities to give startups and students a powerful advantage. For example, IIM-Bangalore taps into the favourable entrepreneurial climate of the city that has emerged as a global startup hub.
- Startup founders also look for incubation cells within the university system to offer an entrepreneurial platform to students. Academic incubators use cutting-edge technology to find innovative solutions to varied problems and give unparalleled access to mentors and funding.
- Entrepreneurs are often born in research labs as is evidenced by the number of unicorn founders and venture capitalists who have graduated from MIT, Stanford and Harvard, among other prestigious universities. Startups in India seek global standards in lab design and research — a key factor when they scout for partnerships with universities. Quality research spaces maximise collaboration between industry and the academia and foster a climate for major breakthroughs.
It is only when the innovation agenda is strengthened that startups would be able to realise their true potential and effectively contribute to economic development. To a great extent, a healthy startup ecosystem can be sustained only when there is a mix of stakeholders playing their role to push innovation forward.