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India's Startup Ecosystem and Entrepreneurial Toolbox

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India's Startup Ecosystem & Entrepreneurial Toolbox

**Special thanks to the previous work of Arnaud Bonzom for the inspiration for these reports

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India's Startup Ecosystem and Entrepreneurial Toolbox

  1. 1. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX By Sreedhar Venugopal 2016 Project conceived and supervised by Joshua Flannery
  2. 2. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX CONTENTS Recent news..............................................................................................................................................................................................................................................1 Startup Ecosystem in India......................................................................................................................................................................................................................2 Facts and Figures......................................................................................................................................................................................................................................3 Global Ranks .........................................................................................................................................................................................................................................4 Most Problematic factors for doing business ......................................................................................................................................................................................5 Startup Companies and their Stages of Funding...............................................................................................................................................................................6 Startup Accelerators & Incubators .......................................................................................................................................................................................................7 NCR, Bangalore and Mumbai account for over 93% of total investments .................................................................................................................................8 Start-up India Action Plan.......................................................................................................................................................................................................................9 Simplification and Handholding......................................................................................................................................................................................................10 Funding Support and Incentives .....................................................................................................................................................................................................11 Industry-Academia Partnership and Incubation..........................................................................................................................................................................12 Funding: Valuation.................................................................................................................................................................................................................................14 Funding: Mergers and Acquisitions.....................................................................................................................................................................................................15 Funding: Start-up Exits............................................................................................................................................................................................................................16 Setting up in India...................................................................................................................................................................................................................................17 Australian Companies in India.............................................................................................................................................................................................................18 Visa............................................................................................................................................................................................................................................................19 Conference Visa.................................................................................................................................................................................................................................19 Business Visa.........................................................................................................................................................................................................................................20 Employment Visa................................................................................................................................................................................................................................21 References and Resources ..................................................................................................................................................................................................................24
  3. 3. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 1 RECENT NEWS*  Recent statistics released by the Central Statistics Office reveal that the India’s GDP growth rate has accelerated from 7.2% to 7.9% in the fourth quarter of 2015-16, with an average growth of 7.6% retaining its place as the world’s fastest growing major economy.  At 277 million users as in 2015, India surpasses the US to become the second largest internet user, second only to China.  As part of India-Australia Nuclear Cooperation Agreement, Australia will soon begin exporting Uranium to India.  The Australia-India Comprehensive Economic Cooperation Agreement is at an advanced stage and will encourage investment and growth in trade of services and goods by reducing barriers, increasing transparency and enhancing investment protections. *June 2016
  4. 4. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 2 STARTUP ECOSYSTEM IN INDIA On January 16th, 2016, the Prime Minister of India, Mr. Narendra Modi launched the “Start-up India” initiative. This initiative aims at fostering entrepreneurship and promoting innovation by creating an ecosystem that is conducive for growth of start-ups.  3rd largest Global Startup Ecosystem  More than 4200 startup companies  110 Incubator/Accelerators, up by 40 % since 2014  8/10 of the top VC/PE firms in India are foreign  ~$5 B total funding in 2015  Additional $1.5 B government funding over next four years
  5. 5. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 3 FACTS AND FIGURES  Official languages : Hindi, English  Population (billions) : 1.276  GDP (nominal) (US$ trillions) : 2.182 (7th) *  GDP (PPP) (US$ trillions) : 8.027 (3rd) *  GDP (PPP) share of world total (%) : 6.84  GDP Growth Rate (%) : 7.9 (11th)  World Bank estimates that India will be the world’s fastest growing major economy until at least 2018.  According to the Economist Intelligence Unit, Bangalore, Mumbai, Chennai and New Delhi were amongst the top 10 cheapest cities in the world. *According to IMF 2015; PPP – Purchasing Power Parity
  6. 6. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 4 GLOBAL RANKS  3rd in Market Size  6th in Strength of investor protection  13th in Venture capital availability  23rd in Gross national savings (% GDP)  26th in Buyer Sophistication  29th in Ease of access to loans
  7. 7. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 5 MOST PROBLEMATIC FACTORS FOR DOING BUSINESS
  8. 8. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 6 STARTUP COMPANIES AND THEIR STAGES OF FUNDING Seed Stage $0.5 Mn $0.5 Mn $0.5 Mn $0.5 Mn Early Stage $3.5 Mn $10 Mn $2.5 Mn $2 Mn Growth Stage $6 Mn $16 Mn $15 Mn $12 Mn Expansion Stage $50 Mn $133 Mn $100 Mn $50 Mn
  9. 9. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 7 STARTUP ACCELERATORS & INCUBATORS Name Location Founded Focus Area Funding Notable Startups GSF Bangalore/ Mumbai/NCR 2015 Internet and Mobile $30k to 60k Pokkt, Silverpush, Playcez Catalyzer Hyderabad 2014 Technology, Social Enterprises and Non-Profits $7.5k to 15k Health Start Hyderabad 2014 Healthcare $100k Gympik.com, ObiNo Target Accelerator Bangalore 2014 Marketing, Mobile, Big Data analytics and Merchandising and Supply Chain Technologies. $30k Unbxd, muHive, Konotor Zone Startups Mumbai 2014 Mobile, internet and digital media startups $50k – $750k Sismatik, Nimble Freemont Partners Mumbai 2012 Mobile, Internet & Cloud up to $75k Natural Mantra Kyron Accelerator Bangalore 2012 Web and Apps up to $20k Dronna, Scandid Microsoft Accelerator Bangalore 2012 Cloud, Internet and Mobile using Microsoft technologies Undisclos ed Explara, Frrole, Nowfloats TLabs Accelerator Noida 2012 Internet & Mobile Startups up to $50k Dataweave, Musicfellas, Bluegape Venture Nursery Mumbai 2012 Media & Entertainment, Retail, e-Commerce, Consumer Tech, Education up to $75k Oravel, Klip, InterviewMaster The Startup Centre Chennai 2011 Technology, Social Enterprises and Non-Profits $15k Eventifier
  10. 10. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 8 NCR, BANGALORE AND MUMBAI ACCOUNT FOR OVER 93% OF TOTAL INVESTMENTS
  11. 11. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 9 START-UP INDIA ACTION PLAN Unveiled by the Prime Minister of India, Mr. Narendra Modi, the Start-up India Action Plan1 is intended to build a strong ecosystem for nurturing innovation and start-ups in the country that will drive sustainable economic growth and generate large scale employment opportunities. It is divided into 3 major areas:  Simplification and Handholding  Funding Support and Incentives  Industry-Academia Partnership and Incubation
  12. 12. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 10 SIMPLIFICATION AND HANDHOLDING  Compliance Regime based on Self-Certification: Reduces regulatory burden on startups allowing them to focus on core business  Startup India Hub: Create a single point of contact for entire Start-up ecosystem along with enabling knowledge exchange and access to funding  Rolling-out of Mobile App and Portal: Single platform to interact with the government and regulatory institutions for nosiness needs and information exchange.  Legal Support and Fast-tracking Patent Examination at Lower Costs: Promote awareness and adoption of Intellectual Property Rights (IPR)  Relaxed Norms of Public Procurement for Startups: Provide equal platform for start-ups vis-à-vis the experienced companies in public procurement  Faster Exit for Startups: Make it easier for start-ups to wind up operations
  13. 13. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 11 FUNDING SUPPORT AND INCENTIVES  Providing Funding Support through a Fund of Funds with a Corpus of INR 10,000 crore (~ US$1.5 Bn): For the development and growth of innovation driven enterprises.  Credit Guarantee Fund for Startups: Catalyse entrepreneurships by providing credit to innovators across all sections of society.  Tax Exemption on Capital Gains: Promote investments by mobilizing capital gains arising from sale of capital assets.  Tax Exemption for Startups for 3 years: Promote the growth of start-ups and address working capital requirements.  Tax Exemption on Investments above Fair Market Value: Encourage seed-capital investment in start-ups.
  14. 14. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 12 INDUSTRY-ACADEMIA PARTNERSHIP AND INCUBATION  Organising Startup Fests for Showcasing Innovation and Providing a Collaboration Platform: To provide national and international visibility.  Launch of Atal Innovation Mission (AIM) with Self-Employment and Talent Utilisation (SETU) Program: To serve as a platform for promotion of Innovations Hubs, Grand Challenges, Start-up businesses and other self-employment activities.  Harnessing Private Sector Expertise for Incubator Setup: Policy and framework to ensure the professional management of Government sponsored/funded incubators.  Building Innovation Centres at National Institutes: To propel successful innovation through augmentation of incubation and R&D efforts.  Setting up of 7 New Research Parks modeled on the Research Park Setup at IIT Madras: Propel innovation through incubation and join R&D efforts between academia & industry.
  15. 15. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 13  Promoting Startups in the Biotechnology Sector: To foster and facilitate bio-entrepreneurship.  Launching of Innovation Focused Programs for Students: To foster a culture of innovation in the field of Science and Technology amongst students.  Annual Incubator Grand Challenge: To support the creation of world class incubators.
  16. 16. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 14 FUNDING: VALUATION Valuations have consistently been on the rise2. Indian start-ups have shown growth without external funding such as:  BrowserStack – Does cross-browser product testing 520K+ registered users and 25K+ paying customers  Logistimo – Cloud based supply chain management $250K revenue and 1000% annual growth  SignEasy – Mobile-first e-signature solution ~3Mn app downloads and among the “Top 10 grossing Apps”
  17. 17. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 15 FUNDING: MERGERS AND ACQUISITIONS Indian start-ups have successfully executed over 65 M&As in 2015 and are on an acquisition spree. Trends in mergers and acquisitions include:  Accelerate consolidation  Diversify business offerings  Expand customer base  Acquire technical expertise Acquisitions are:  MakeMyTrip (IC) acquires Mygola (IS)  Snapdeal (IS) acquires Freecharge (IS)  Twitter (OC) acquires Zipdial (IS)  Exotel (IS) acquires Croak.it!(OS) * I – India; O – Overseas; S – Start-up; C – Corporate.
  18. 18. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 16 FUNDING: START-UP EXITS  The year 2014-15 has seen major start-up exits with instill confidence in the investor community.  Exit valuations are expected to rise as new SEBI policies come into effect which include: o Being listed on the Institutional Trading Platform, o Reducing lock-in periods for investors from 3 years for IPOs to 6 months o Diluting disclosure standards.  Another factor for the increase is the revival of equity markets from the sense of gloom in the global economy.
  19. 19. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 17 SETTING UP IN INDIA Australian Trade Commission3 (Austrade) advises Australian companies to:  Adopt an appropriate legal and tax structure from inception.  Use a qualified legal and tax firm with a presence in India to review all contracts.  Conduct a legal, financial and technical due diligence on any potential partner to minimise risk.  Seek legal advice on protecting their intellectual property. There could be potential violations of intellectual property and copyrights.  Allow adequate time for finalising partners. Companies in India prefer to establish a strong relationship before finalising a deal.  Be prepared for tough negotiations and to work through any legal issues. Be firm, polite and creative, but be prepared to say no, if the situation demands.
  20. 20. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 18 AUSTRALIAN COMPANIES IN INDIA  GRG International – payment distribution system for the NREGA*  Cochlear – bionic ear technology  ResMed – sleep disorder diagnosis and treatment  Linfox – transport firm dealing with logistics *NREGA – National Rural Employment Guarantee Act
  21. 21. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 19 VISA Three types of visas are available to Australian citizens wishing to visit India for business purposes. They are the Conference visa, Business visa and Employment visa. VFS Global4 provides the following details. CONFERENCE VISA Eligibility: A Conference Visa is available to those that would like to visit India for international conferences, or on certain subjects, may be issued to delegates provided they have an invitation to a conference/seminar/workshop being organized in India by a Ministry or Department of the Government of India, State Governments, Public Sector Undertakings, central Educational Institutions, Public Funded University or an organization owned and controlled by the Government of India or State Government, UN or its specialized agencies and reputed NGOs. If the conference/seminar/workshop is being organized in India by private companies, you should apply for the shortest duration Business Visa available. If approved, a three-month single entry Business visa will be granted. Duration and Validity: The visa duration starts on the day of issuance, and not on the day of entry into India. The Conference Visa is a 3-month single entry visa.
  22. 22. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 20 BUSINESS VISA Eligibility: A Business Visa is strictly given to those who would like to make a business related trip to India such as making sales or establishing contact on behalf of a company outside of India. An applicant going for employment in projects/contract in India needs to apply for an Employment Visa, and not a Business Visa. If the applicant does not meet the requirements of any other visa types, he/she should apply for an Entry Visa. Spouse and dependent family members accompanying the applicant must apply for an Entry Visa (NOT Tourist Visa). Their visa duration would end according to the visa period of the principal visa holder. The Business Visa applicant must receive the visa prior to applying for accompanying spouse and dependent family members. Duration and Validity: A Business visa may be valid for either 6 months or one year with multiple entries. However, the period of stay in India for each visit is limited to six months. To be eligible for a 5-year Business Visa you must be the Director/CEO/Chairman of the company or have a Joint Venture document available to support your application. The visa duration starts on the day of issuance, and not on the day of entry into India.
  23. 23. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 21 EMPLOYMENT VISA Eligibility: Who can Apply? Employment visas are issued to Australian passport holders or Australian residents (provided the period of residence in Australia is for more than 2 years and subject to the conditions hereunder:  The applicant is a highly skilled/skilled and qualified professional or person who is being engaged or appointed by a company, organization, industry, etc. in India on contract or employment basis at a senior level, skilled position such as technical expert, senior executive, or in a managerial position, etc.  Employment Visa would not be considered for jobs for which large number of qualified Indians is available. Furthermore, Employment Visa application would not be considered at all for routine, ordinary or secretarial/clerical jobs.  The salary of the applicant proposed to be employed should not be less than US$ 25,000 per annum.  The applicant should be coming for employment in companies registered in India.  The applicant will have to comply with all other requirements like payment of tax liabilities etc.
  24. 24. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 22  The applicant must submit proof of his/her employment or contract or engagement by the company/organization, etc. in India.  The applicant must submit documentary proof of his educational qualifications and professional expertise. Other categories of applicants eligible for Employment visa: The following categories of applicants may also be eligible for Employment visa subject to the fulfilment of the general conditions mentioned above.  Applicant coming to India as consultant on contract for whom the Indian company pays a fixed remuneration, (may not be in the form of monthly salary).  Foreign artists engaged to conduct regular performances for the duration of the employment contract given by Hotels, Clubs, other organizations.  Self-employed foreign nationals coming to India for providing engineering, medical, accounting, legal or such other highly skilled services in their capacity as independent consultants.  Foreign language teachers/interpreters, Specialist Chefs and Foreign nationals visiting India for voluntary work with NGOs.
  25. 25. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 23 Duration and Validity:  A foreign technician/expert coming to India in pursuance of a bilateral agreement between the Government of India and a foreign government, or in pursuance of a collaboration agreement that has been approved by the Government of India, may be granted an Employment visa for the duration of the agreement, or for a period of five years, whichever is less with multiple entry facilities.  A foreigner coming to India for employment not covered above may be granted Employment visa with a validity up to two years or the term of assignment, whichever is less with multiple entry facility.  In the case of highly skilled/skilled foreign personnel being employed in the IT software and IT enabled sectors, the Missions/Posts may grant visa with validity up to 3 years or the term of assignment, whichever is less with multiple entry facility.  In case of Employment Visa issued for a period of 180 days or less, registration is not required with FRRO/FRO. However, if the Employment visa is valid for a period of more than 180 days, Employment-visa holder must register with the FRRO/FRO concerned within 14 days of arrival. Further extension could be given by authorities in India.
  26. 26. INDIA’S STARTUP ECOSYSTEM & ENTREPRENEURIAL TOOLBOX 24 REFERENCES AND RESOURCES 1. Start-up India Action Plan. (2016). 1st ed. [ebook] Government of India. Available at: http://startupindia.gov.in/actionplan.php 2. Start-up India – Momentous Rise of the Indian Start-up Ecosystem. (2016). 1st ed. [ebook] New Delhi: NASSCOM. Available at: http://10000startups.com/downloads.php?f=Startup-Report-2015.pdf 3. Austrade.gov.au. (2016). Austrade, Australian Government - Austrade. [online] Available at: http://www.austrade.gov.au/ 4. Vfsglobal.com. (2016). India Visa Information - Australia - Visa Information. [online] Available at: http://www.vfsglobal.com/india/australia/visa_services/visa_information.html. 5. Ventureburn. (2015). 20 startup accelerators in India we should all know about. [online] Available at: http://ventureburn.com/2015/03/20-startup-accelerators-india-know/

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