Startup Street: The State Of India’s Startups And SMEs
This week on Startup Street, eight charts explain the state of India’s startups and small businesses. Diversified IB Group set up a venture capital fund to make equity investments in India’s poultry startups. And billionaire Elon Musk is hopeful that his startup Boring Co will soon have a live tunnel.
Eight Charts That Show The Pulse of India’s Startups
“A forgettable year.”
That’s what 2019 was for India’s startups and small and medium enterprises, according to a report by LocalCircles, based on their survey of more than 35,000 such businesses.
Here’s what they found.
One in every five startups or small businesses is concerned about survival in the coming year. This was not a concern in 2019, when corruption and raising funds were the biggest challenges.
Through 2019, while companies like Delhivery, BigBasket, Rivigo, Icertis and Dream11, entered the Unicorn club, ventures like Shopclues lost that $1-billion status and several including Tapzo and Wooplr shut shop.
The percentage of startups and SMEs with no hiring plans or with plans to reduce their workforce increased—to 21 percent from 17 percent. 46 percent of all surveyed ventures said they plan to hire one to five workers while only 18 percent said they look to hire more than six.
India passed a new maternity benefit law in 2017 granting 26 weeks of paid leave to women employees instead of the previous 12 weeks.
49 percent of startups and SMEs surveyed said that this has resulted in them hiring either fewer women or no women at all over the last one year.
Only 18 percent said they hired more women than before.
When asked whether the Prime Minister Narendra Modi’s Startup India Mission has made any difference to them, the verdict was 50-50.
Half of the businesses said no, while the rest said it did or that they weren’t sure. However, this is an improvement from last year when 82 percent of those surveyed said the schemes were of no help to them.
The sentiment on contribution from local governments also improved in 2019.
Only 22 percent of all startups and SMEs said the government was able to solve the contentious angel tax issue.
Angel tax is levied when a privately held company raises funds at a rate higher than its fair valuation. At the moment, India levies a 30 percent angel tax. In the post-election Union budget this year, Finance Minister Nirmala Sitharman announced some relief, saying startups and investors who file the needed declarations will not face additional scrutiny.
60 percent of India’s startups or SMEs are not looking to relocate abroad in search of a better tax regime, according to the survey. 11 percent are considering this “very seriously”.
Nearly 60 percent of the businesses surveyed plan on continuing to grow while 34 percent plan to either shut shop or sell.
IB Group Sets Up VC For Poultry Startups
IB Group, a poultry, livestock feed, oil and and dairy company, set aside Rs 200 crore for startups in the sector to stay in touch with newer technology.
Through the venture capital fund ‘Parivartan Gen Nxt’, the group will provide 25 percent loan-free equity investment for a period of three years. It will also provide free farm management training for investors who grow their business through the investment scheme, the company said.
The practice of investing in and nurturing startups within a company’s sector is not new. Large companies all over the world, from Google Inc to India’s Tata Motors Ltd. and Wipro Ltd., have similar funds.
Bahadur Ali, managing director at IB Group, said in the statement that the investment scheme will create an entrepreneurial environment for Indian “agripreneures” by providing them modern technology used in the U.S. and Europe in India.
(With inputs from PTI)
Elon Musk’s Hope For His First Boring Tunnel
Elon Musk’s ambitious project of a tunnel transportation system will “hopefully” go live in 2020. The billionaire chief executive officer of Tesla Inc. said this in a series of tweets on Friday.
The Las Vegas tunnel is the company’s only major project so far other than a mile-long test tunnel in Hawthorne, California. Pit construction and other preliminary work on the Las Vegas project began in September.
He even conducted a Twitter poll.