These Industry Veterans Share Keys To Start-up Success Indian businesses need to make 33 tax payments annually with around 243 hours spent to prepare and pay taxes

By Baishali Mukherjee

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Today India features amongst the top five countries globally in terms of start-ups. US tops the list with more than 83,000+ startups, India and China come second with more than 10,000, UK is with 7,900 plus and Canada at present has 6,100 plus start-ups.

D.S. Rawat Secretary General ASSOCHAM, in the report - Startups India - An Overview – said, "In recent years, the Indian start-up ecosystem has taken off and has matured. Driven by factors such as availability of funding, consolidation activities by a number of firms, evolving technology space and a burgeoning demand within the domestic market have led to the emergence of start-ups".

Going by Rawat, by 2020 there will be 11,500 firms grown from the 3,100 startups in 2014. Rawat calls this trend revolutionary, as he feels it's going to change the way the markets are working today in India. "Between 2010 and 2014, the infusion of VC and PE increased from US$ 13 mn to US$ 1,818 mn. Angel investment too has multiplied almost eight times from US$ 4.2 mn to US$ 32.2 mn," he added.

However, what has raised concern amongst all stakeholders is the sustenance and survival of these new businesses. According to 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. "The country is ranked 155th in case of starting a business. The report says that 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," illustrates the report.

Get The Ground Reality Check Done

According to Debasish Dutta, Managing Partner & Director (Projects), Orange Corp, Global, most of the young generation today are well acquainted with different "apps" which are said to make our lives earlier and better. Companies which run business through these apps have grown to become "Unicorn" (Valued over US $ 1 Billion) and there are several hundred which have very decent revenue generation and enjoy high valuations from investors.

"What we don't see here is the success rate in the competition and if we really take a close look the success rate will be seen as less than 2%. Yes, what you just read is correct and should be an eye opener to all budding entrepreneurs dreaming of having a successful start-up without having the ground reality check done," he explained.

As a venture capital company, Dutta receives several investment proposals from start-up companies from around the world which are rejected mainly for the following reasons:

  • Business model which is a copy of model of other similar successful Companies without understanding of the time gap.
  • Improper roadmap and trying to camouflage essential factors.
  • Improper management team which lacks coordination among themselves.
  • Undisciplined approach.
  • Myth that there is a venture capital company eagerly waiting to offer funds to every start-up.

Be A Self-Learner

The industry veteran maintained that the global scenario of venture capital funding is going through a paradigm shift.

"What was comparatively easier in earlier years will be tougher going forward and start-up companies have to go through much stringent evaluation process for getting their business funded. Just few years back, it was around 5 companies which were getting funded among 1000 contenders. The fig in the recent years is 3 among 3000 contenders," notified Dutta who believes there is no school as of now which can teach a comprehensive way of handling a start-up company.

However, he advised to become a self-learner and try to gather that best of the information what you can have. "You will be able to have your own notes on business success and failure reasons and it is always good to learn from the mistake of others," concluded Dutta.

Stakeholder To Build Better Ecosystem

Asoke K. Laha, founder, Interra IT, identifies bigger and graver issues affecting new businesses. According to him unorganised Indian market, dearth of robust policies, infrastructure and exposure are issues that lead to failures of start-ups.

"There should be immediate updating of regulations. Awareness building is another area that needs focused efforts from every stakeholder. Creating proper infrastructure in order to mentor start-ups is also integral for their growth and survival," he shared.

Time has come for all stakeholders including government, corporate houses, education establishments and others to come together and build an encouraging ecosystem for Indian start-ups.

"More access to information would help start-up founders espouse of better and more sustainable business customs. Being unaware of the future prospects of the start-ups, also results in wastage of time, energy and other resources. Importance of public-funding in supporting sustainable business ventures is also often ignored," opined Laxman Jaiswal, Chairman cum Managing Director, Ascon Infrastructure (India) Limited.

Good news is that the Indian Ministry of Commerce is now all set to build an online portal for information sharing which will help incubators/accelerators, angel investors, VC funds and government departments, function better. Similar such initiatives are also expected to be rolled out soon.

Baishali Mukherjee

Former Freelancer

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