SPECIMEN OF PROJECT WORK

Project Title: Challenges for New Venture Planning

A project submitted in partial fulfillment of the

Requirements for the
Degree of

B.Com (Hon’s.) 2017-2020

By

TULSI
College Roll No – BCFIN17617
Registration No – KU1718136
University Roll No – 181605443199

UNDER THE SUPERVISION OF

Dr. Aftab Alam Ansari

Faculty of Commerce
Karim City College, Jamshedpur - 831001

2020

1|Page
 Karim City College
Faculty of commerce, Jamshedpur

CERTIFICATE OF APPROVAL

This project entitled “Challenges for New Venture

Planning” Is hereby approved as a creditable commerce

study carried out and presented in a satisfactory manner to

narrate its acceptance as prerequisite to the Degree for

Bachelor of commerce (B.Com Hons.) which is being

submitted.

PROJECT SUPERVISOR EXTERNAL EXAMINER

2|Page
 ACKNOWLEDGEMENT

Working on this project entitled Challenges for New Venture

Planning. Was a source of immense knowledge to me I would like to
express my sincare gratitude to my project supervisor Dr. Aftab Alam
Ansari for his guidance and valuable support, inspiring discussions and
constant supervision throughout the course of this work.

I am also thankful to my Honorable Principal Dr. Mohammad Reyaz for

his inspiration. I am also thankful to our H.O.D. Dr. Aftab Alam Ansari
for his help during my project work.

I acknowledge with a deep sense of gratitude, the encouragement and

interpretations received from our faculty members and colleagues. I would also
like to thank my parents for their love and support.

Name: TULSI

College Roll No : BCFIN17617

Registration No : KU1718136

University Roll No: 181605443199

3|Page
 CONTENTS
Page No.

1. List of Tables 4pc

2. List of Figures 4pc

3. Chapter 1. INTRODUCTION 6-18

4. Chapter 2. LITERATURE REVIEW 19-29

5. Chapter 3 METHOD 30-41

6. Chapter 4. RESULTS & DISCUSSION 42

7. Chapter 5. SUMMARY AND CONCLUSION 43

8. Reference 44

4|Page
1. INTRODUCTION (Specimen)
In introduction, following contents should be covered.
1. Background
2. Justify the choice of the topic and to state clearly the
objectives
3. Scheme of chapterisation

2. Literature review

3. Methods

A. Research Design
B. Secondary data collection method
C. Sampling design
D. Statistical tools used

4. Results & Discussion

Discriminately selected data compared the results and
interpretations to other studies citing references form the analysis

Must try to justify. How the results have contributed to the existing
knowledge and profession practice

5. Summary and conclusions

6. References

5|Page
 Chapter 1
Introduction
A startup venture could be defined as a new business that is in the initial stages of operation,
beginning to grow and is typically financed by an individual or small group of individuals. It
is a young entrepreneurial, scalable business model built on technology and innovation
wherein the founders develop a product or service for which they foresee demand through
disruption of existing or by creating entirely new markets. Startups are nothing but an idea
that manifests into a commercial undertaking.
Grant Thornton (2016) define startup business as an organization which is
• Incorporated for three years or less
• At a funding stage of Series B or less(B Series means second round of funding)
• An entrepreneurial venture/a partnership or a temporary business organisation
• Engages in development, production or distribution of new products/services or
processes
• Revenue of up to INR 25 cr.
• Not formed through splitting or restructuring
• Employing 50 people or less
Department of Industrial Policy and Promotion (DIPP) define a startup as an entity
incorporated or registered in India with following parameters:

• Established not prior to seven years, (for Biotechnology Startups not prior to ten
years)
• With annual turnover not exceeding INR 25Cr in any preceding financial year, and
• Working towards innovation, development or improvement of products or processes
or services,
• It is a scalable business model with a high potential of employment generation or
wealth creation
It is to be noted that such entity is not formed by splitting up, or reconstruction, of a business
already in existence. Also, an entity shall cease to be a startup if its turnover for the previous

6|Page
financial years has exceeded INR 25cr or it has completed 7 years (biotechnology startups 10
years) from the date of incorporation/ registration(‘Startup India’, 2017)

Indian marketing is getting treasure for startups because tremendous opportunities available
for their development. The startups usually tiny and initially financed through own funds
rather than taking loans from outsiders. Startups build unique products or services in the
market. They understand the common problems in the market. There are couple of examples
are available where startups come out of the real problems faced in the market like Redbus,
Ola cabs, Flipkart, Paytm makemytrip, these companies are regular application on the
fingertips of the public. The growth and development of any country on the establishment of
industries. The Indian market is headed by Entrepreneurs’ hub where there is a lot of
resources available; the government is also giving preference for startups. According to The
Ministry of Commerce and Industry released a notification on April 1st, 2015 to define a
startup, an entity will be identified as a startup 1. Till up to five years from the date of
incorporation. 2. If its turnover does not exceed 25 crores in the last five financial years. 3. It
is working towards innovation, development, deployment, and commercialization of new
products, processes, or services driven by technology or intellectual property.”

1. Government initiatives
Indian government is serious in promoting entrepreneurship at the startup level and has taken
a number of initiatives to ensure appropriate support. In this aspect it is relevant to mention
‘Make in India’ campaign introduced in September’14 to attract foreign investments and
encourage domestic companies to participate in the manufacturing sector. The government
increased the foreign direct investment (FDI) limits for most of the sectors and strengthened
intellectual property rights (IPRs) protection to instill confidence in the startups.In order to
make the country as number one destination for startups, Government of India (GoI) has
introduced a new campaign called ‘Standup India’ in 2015 aimed at promoting
entrepreneurship among women and to help startups with bank funding. Another
commendable and far reaching initiative is ‘Digital India’ introduced in 2015 to ensure
government services are made available to every citizen through online platform that aims to
connect rural areas by developing their digital infrastructure which translates into a huge
business opportunity for startups.

7|Page
2. The startup scenario in india

It is to be noted that every year more than 800 technology startups are being set up in India.
By 2020, it is estimated that around 11,500 tech-startups are going to be established with
employment potential of around 250,000 technical people (NASSCOM, 2015). It is
admirable to note that India is amongst the top five countries in the world in terms of startups
with 10,000+ led by US with 83,000+ comprising 43% tech-based firms with 9% managed
by women entrepreneurs. The number of incubators also has crossed 100 in 2014-15 to give
boost to the startup saga (Grant Thornton, 2015).Sector wise, the distribution of Indian
businesses is:
Table:1 Break-up of Indian Startup Businesses
Technology Based Non-Technology Based
E-Commerce - 33% Engineering- 17%
B2B - 24% Construction-13%
Internet - 12% Agri- products- 11%
Mobile apps - 10% Textile - 8%
SaaS - 8% Printing & packaging – 8%
Other – 13% Transport & logistics- 6%
Outsourcing & support -5%
Others-32%
Source: Startups India- An Overview, Grant Thornton, 2015

3. The startup ecosystem

Along with government initiatives, there is a definite movement in startup arena in India due
to penetration of IT and internet. Many startups are coming up in service sector including
education, legal, retail, insurance and health. With customers becoming aware of the benefits
and convenience, the popularity and viability of startups is no more a difficult proposition for
an entrepreneur.
A number of venture capitalists and angel investors are aggressive and gung-ho on Indian
startups as they see lot of potential with few expected to become unicorns (high valued

8|Page
companies) bringing in good returns. On the contrary, there are examples of few startups that
failed and eventually closed their businesses due to various issues and challenges.

India being a large country with over 130Cr population, boasts of high demographic
dividends due to large number of young people. According to the latest UN report India with
356 million 10-24 year-olds have the largest concentration of youth population who are going
to be the driving force behind innovation and creation with commensurate demand and
consumption of goods and services (Mittal, 2014). India has a unique set of problems due to
multicultural and multilingual regions that need innovations to find solutions to health,
education, infrastructure, sanitation and for population at the ‘bottom-of-the-pyramid’ space.
Each problem provides a unique opportunity for startups to create a business around it. India's
tele-density reached 76.55 percent with a subscriber base of 95.76Cr bringing in convenience
and reach to consumer segments including Tier-2 and 3 towns (TRAI,2017).This increased
mobile penetration has given a fillip to Indian economy with E-commerce garnering
increased share. Further, GoI’s digital push is going to improve connectivity and data to
higher levels bringing in more software applications to find solutions for day-to-day issues.
The reduction in data charges will also help start-ups to tap into new markets and even
disrupt traditional businesses.

4. Issues and challenges of startups

A successful start-up cannot start a business just with passion and an idea. A high level of
leadership skills with clear understanding of market, excellent communication skills, maturity
to see things in right perspective along with the ability to take calculated risks are required
on the part of the entrepreneur(Aggarwal,2017). Lack of awareness, multiple clearances,
unorganised market, poor infrastructure in Tier 2 /3 cities, lack of mentoring , stringent exit
policies, corruption/red tape, technological risk, regulatory obstacles and lack of reforms
keeping pace with the fast evolving market changes are some of the challenges as per Rashmi
Guptey, Principal (Legal) of Lightbox India Advisors Private Limited.
Some of the major issues and challenges are discussed below:
1) Financial Resources
Availability of finance is critical for the startups and is always a problem to get sufficient
amounts (Mittal, 2014; Truong, 2016). A number of finance options ranging from family

9|Page
members, friends, loans, grants, angel funding, venture capitalists, crowdfunding etc are
available. The requirement starts increasing as the business progresses. Scaling of business
requires timely infusion of capital. Proper cash management is critical for the success of the
startups (Skok, 2016;Pandita,2017). A recent report paints a gloomy picture with 85% of
new company’s reportedly underfunded indicating potential failure .

2) Revenue Generation
Several startups fail due to poor revenue generation as the business grows. As the operations
increase, expenses grow with reduced revenues forcing startups to concentrate on the funding
aspect, thus, diluting the focus on the fundamentals of business. Hence, revenue generation is
critical, warranting efficient management of burn rate which in common parlance is the rate
at which startups spend money in the initial stages. The challenge is not to generate enough
capital but also to expand and sustain the growth.

3) Team Members
To find and hire the right kind of talent for the business with skills to match growing
customer expectations are one of the biggest challenges (Truong,2016). Apart from
founder(s), startups normally start with a team consisting of trusted members with
complementary skill sets. Usually, each member is specialized in a specific area of
operations. Assembling a good team is the first major requirement, failure to have one
sometimes could break the startup (Skok, 2016). According to a survey, 23 percent startups
failed because members did not work as a team. Chirag Garg, CEO, HyperDell, feels
that bringing in affordable talent at the right time is a challenge. As per Nitin Sharma,
Principal & Founding member, Lightbox India Advisors Private Limited “Hiring and
retaining high quality talent, especially in the areas of product and technology remains a key
challenge” (Choudhary,2015)

4) Supporting Infrastructure
There are a number of support mechanisms that play a significant role in the lifecycle of
startups which include incubators, science and technology parks, business development
centers etc. Lack of access to such support mechanisms increases the risk of failure.

10 | P a g e
5) Creating Awareness in Markets
Startups fail due to lack of attention to limitations in the markets. The environment for a
startup is usually more difficult than for an established firm due to uniqueness of the product.
The situation is more difficult for a new product as the startup has to build everything from
scratch.

6) Exceed Customer Expectations

The next most important challenge is gauging the market need for the product, existing
trends, etc. Innovation plays an important role, since, that the startup has to fine-tune the
product offerings to suit the market demands (Skok, 2016). Also, the entrepreneur should
have thorough domain knowledge to counter competition with appropriate strategies. Due to
new technologies that are emerging, the challenge to provide over and above an earlier
innovation is pertinent. Namrata Garg, Director, SendKardo feels that the biggest challenge is
the need to constantly reinvent yourself and come up with a service to be able to match up
customer expectations and exceed them.

7) Tenacity of Founders
Founders of startups have to be tough when the going gets tough. The journey of starting a
venture is fraught with delays, setbacks and problems without adequate solutions. The
entrepreneur needs to be persistent, persuasive, and should never give up till he/she achieves
desired results. History is replete with startups who gave up the fight when things went
wrong. Sometimes the product could be ahead of its time or may require complimentary
technology /products for the use by the customers. For example, Apple had to delay
introduction of iTunes till the regulations favoured the launch. It is also relevant to quote
Steve Jobs who by commenting “A lot of times, people don't know what they want until you
show it to them” reiterates the fact those products from startups mostly fall in the “new and
untried” category where the success rate is minimal.

8) Regulations
Starting a business requires a number of permissions from government agencies. Although
there is a perceptible change, it is still a challenge to register a company. Regulations
pertaining to labor laws, intellectual property rights, dispute resolution etc. are rigorous in
India which takes about 30 days to comply compared to just 9 days in OECD countries.

11 | P a g e
Also, as per World Bank report, “World Bank Ease of Doing Business”, India ranks 142 out
of 189 economies (Mittal,2014).

9) Growth Decelerators
Some of the agencies which are part of the startup ecosystem themselves can sometimes
become hurdles in the growing stages. As per Sneh Bhavsar, co-founder and
CEO, OoWomaniya one of the major issues is the influence of incubators, institutes and
similar organisations which try to control, manage and be the daddies of the start-ups in the
name of helping, mentoring etc (Choudhury,2015).This needs proper coordination among the
organizations for mutual benefit.

10) Lack of Mentorship

Milan Hoogan, Vice President -Sales and Marketing at Erfolg Life Sciences feels that lack of
proper guidance and mentorship is one of the biggest problems that exist in the Indian startup
ecosystem (Choudhury, 2015) . Most of startups have brilliant ideas and/or products, but have
little or no industry, business and market experience to get the products to the market. It is a
proven example that a brilliant idea works only if executed promptly (Mittal,2014). Lack of
adequate mentoring/guidance is the biggest challenge which could bring a potentially good
idea to an end.

11) Lack of a Good Branding Strategy

Absence of an effective branding strategy is another issue that prevents startups from
flourishing at a faster pace. Hemant Arora, Business Head-Branded Content, Times Network
opines that branding demands paramount attention as it gives an identity and occupies a space
in the consumer minds(Choudhury,2015) .

12) Replicating Silicon Valley

Koushik Shee, Founder and CEO, Effia , feels that Indian startups get influenced by Silicon
Valley models which may not succeed in Indian scenario. Lot of tweaking and modifications
could be required when transplanted into Indian markets keeping in mind Indian
infrastructure in terms of roads, internet, electricity and telecom penetration
(Choudhury,2015) .

12 | P a g e
 Background
Reasons for failure
As regards major reasons for failure of startups, a survey based on analysis of 101 firms
showed that 42% failed as the product had no market, 29% firms ran out of cash, 23% did not
have the right team,18% closed due to pricing issues, 17% firms had poor product, 14%
failed due to poor marketing and 8% had no investor interest(Griffith,2014). These reasons
substantiate most of the issues and challenges that have been enumerated above.

Opportunities for startups

In spite of challenges and problems that startups are facing, Indian markets provide a plethora
of opportunities to find solutions tailored to solve them. Below is a list of few of the
opportunities that are discussed for consideration by startups.

1. India’s large population

The population of India is a huge asset for the country. By 2020, it is expected that the
working age population would surpass the non-working population. This unique demographic
advantage will offer a great opportunity to any startup. Various infrastructure issues and the
bottom- of- the- pyramid market would provide huge opportunities for the startups.

2. Change of mind set of working class

Traditional career paths will be giving way to Indian startup space. Challenging assignments,
good compensation packages would attract talented people to startups. Also, it is seen that
several high profile executives are quitting their jobs to start or work for startups. To
reinforce the trend being seen, a survey conducted by Economic Times also confirmed that
the number of students joining startups and e-commerce companies has grown considerably
in the recent years (Anand, 2016)

3. Huge investments in startups

Huge investment in Indian startups from foreign and Indian investors is taking place. In 2015,
more than 300 deals were done by 300+ angels and venture capital/ private equity players
with around $6.5-billion (Rs 42,300Cr) investments making India the most sought after
destination for investments. Some of the active players are New York-based Tiger Global

13 | P a g e
Management, Russian company- DST Global, Japanese telecom giant Softbank, Kalaari
Capital, Sequoia Capital and Accel Partners. More and more are going to join the bandwagon
as this is the tipping point in Indian commerce for making good returns by backing potential
unicorns.

4. Government initiatives
There are numerous government and semi-governmental initiatives to assist startups.
• Start-Up India
This initiative provides three-year tax and compliance breaks intended for cutting
government regulations and red tapism.
• MUDRA Yojna
Through this scheme, startups get loans from the banks to set up, grow and stabilize their
businesses.
• SETU (Self-Employment and Talent Utilization) Fund
Government has allotted Rs 1,000 Cr in order to create opportunities for self-employment
and new jobs mainly in technology-driven domains.
• E-Biz Portal
Government launched e-biz portal that integrates 14 regulatory permissions and licenses
at one source to enable faster clearances and improve the ease of doing business in India.
• Royalty Tax
Indian government has reduced the royalty tax paid by businesses and startup firms from
25per cent to 10 per cent

5. Investments by big business houses

Big business houses are already investing in startups as they cannot use their infrastructure to
concentrate on small outfits like startups which require different skill-sets. Industrialists like
Ratan Tata (Ola, Bluestone etc), Azim Premji (DataStax,Myntra etc) and many more are
investing in startups giving desired traction and respectability to the segment.

6. Examples of opportunities for startups

Startups in Indian scenario have a tremendous scope in catering to local and niche markets
that could be viable and sustainable with early potential of revenue generation. With small
area of operations and right product /service the success rate could be high with possible

14 | P a g e
chance for expansion. The bottom-of-the pyramid space is a potential market for offerings
ranging from food, clothing, water and hygienic items. The selection of items would be based
on the entrepreneurs’ expertise and the area of operation.

Given below in Table: 2 is a list of current offerings by startups followed by list in Table: 3
(Low-Tech) and Table:4 (High Tech) of few potential domains.
Table:2 List of Current Startups and Area of Operations
Area of Operation Startup Firm Name
Online food delivery FRESHMENU,SWIGGY
Online fish, meat delivery FRESHTOHOME
Big data analytics for trade PEELWORKS
Online pharmacy MYRA
Platform to get local businesses online NOWFLOATS
Logistics management software FAREYE
Lifestyle tracking platform HEALTHIFYME
Payments solutions for credit/debit cards PINELABS
AI-driven solutions for retailers- STAQU
Packaged ready-to-cook idli /dosa batter IDFOODS
Peer-to-peer lending FAIRCENT
Source: 17 Startups to Watch, TOI, 2017
Other areas with tremendous potential for startups to establish themselves and thrive are
listed in Table: 3 and Table: 4 as low-end and high-end ventures with varying degree of
investments and resources. These ventures could be solution providers for underdeveloped
and developing countries having similar economic profile at a very affordable cost.

Table:3 Startup Opportunities- Low-end Ventures

Snacks and Tiffins Health drinks Franchising
Waste management Media support services Food Processing
Washing and Ironing Solar Energy products Retailing
Supply of Drinking water Education & training Health& Pharmacy
Diagnostics Centers IT and ITES Food Delivery
Source: Author’s perspective

Table: 4 Startup Opportunities- High-end Ventures (Export Oriented)

15 | P a g e
 Auto-Components Ayurvedic medicines
Horticulture Software Exports
Engineering Goods Biotechnology
Organic Farming Floriculture
Source: Author’s perspective

Objectives
• To identify the problems faced by the startups over the acquiring of the capital
through outsiders.

• To find out the various channels available to obtain the funds and their procedure.

• To ponder over the issues of development of inclusive entrepreneurship and

innovation in India.

• To deliberate on issues and challenges for development of entrepreneurship and

innovation through startup

• To draw policy lessons from international experience of fostering inclusive

entrepreneurship and innovation

• To make recommendations for actionable policy initiatives aimed at fostering

inclusive entrepreneurship and innovation within the framework of the startup India
programme.

• Encourage and initiate collaborative thought process to explore new trends,

opportunities, and challenges in Entrepreneurship and Youth Empowerment; also
expand pool of Indian Entrepreneurs.

16 | P a g e
 Scheme of Chapterisation
The scheme of chapeterisation is organizing the pattern of study systematic way of
organizing the study which challenge the researcher to take the responsibility to act
accordingly which begin with commitment. When an individual is organized creativity
automatically flow and brings more ideas.
There arises the need of specific design layout .study has been organized in terms of five
chapters and the specific design layout of this chapterisation is described below.

Chapter 1 Introduction
Background
Justify the choice of topic and to state clerly the objectives
Scheme of chapterisation

Chapter 2 Litereatre review

Chapter 3
Research Design
Secndary Data Collecton method
Statistical tools used

Chapter 4 Result & Discussions

Chapter 5 Summary & Conclusion

Chapter 6 References

17 | P a g e
 Chapter 2

Literature Review
• Sunanda (2017) has done a case study approach on how to start and manage startup
companies in India, entrepreneurial venture is a new business in the form of company or
partnership business or temporary designed and search of a repeatable and scalable business
model, and explained how the entrepreneurial are innovate to create job opportunities in the
market.

• Andaleeb & Singh,(2016) did research on financing sources for start-up companies in India,
in this research paper identified the sources of financing with exclusively on financial
ventures in India, explored views on stages for development of start-ups. The major goal of
this paper was to know whether the country has made proper arrangements to fund the
entrepreneurial ideas.

• (Sharifi & Hossein, n.d.(2016) did research on understanding the financial challenges faced
by startups in India, explained the major problem in the country is creation of employment
opportunities. The researchers identified how the startups face the challenges over the
pooling of money from different sources and what are the difficulties faced by them during
that acquisition of funds.

• (Čalopa, 2014) conducted research on Analysis of Financing sources for start-ups

companies. They explored views on the development of start-up companies, their sources of
financing with special emphasis on financing venture. This research paper emphasized on
better understanding of the financing strategy of entrepreneurial ventures.

• (Journal, n.d.) According to Mr.Anurag Garg Indian markets are getting flooded by the
startups and highlighted the major sources available for acquiring of capital from the
outsiders like seed capital, Banks and venture capital without moving to the capital market.
This research paper explained the major problems faced by the startups in India especially
hiring the talent, Absence of mentor and in the conclusion explained the role of entrepreneurs
for industrial and market development.

18 | P a g e
The Prime Minister of India, Shri Narendra Modi had this year in his Independence Day
speech announced 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. The objective is that India must become a nation of job creators instead
of being a nation of job seekers.
The Prime Minister of India formally launched the initiative on January 16, 2016from Vigyan
Bhawan, New Delhi. The event was attended by a vast number of young Indian entrepreneurs
(over 2000) who have embarked on the journey of entrepreneurship through Start-ups. As a
key component of this “Start-up India” launch,Government of Indiahas organized a
globalworkshop on “ Innovation and Start-ups” on January 16, 2016. Shri NarendraModi,
Prime Minister of India was the Chief Guest on the occasion. The main aim of the workshop
was to provide a platform to bring together all stakeholders, stimulate dialogue on key
challenges that the Indian innovation ecosystem currently faces, and provide the potential
solutions to address them.

Fostering a fruitful culture of innovation in thencountry is a long and important journey. This
initiative will go a significant way in reiterating Government of India's commitment to
making India the hub of innovation, design and Start-ups. Actually, the challenges of Startup
India can be classified as:

Culture
Entrepreneurship and startups are only a recent phenomenon in the country. It is only in the
last decade and half that people in the country have moved from being job seekers to job
creators. Doing a startup is tough and every country sees more failures than success. More
often than not an entrepreneur needs to be prepared to face failures and unprecedented
hardship. However, culturally
we are not groomed to fail and failure is frowned upon. Entrepreneurship thrives on
celebrations and a society that fails to appreciate business failures stifles innovation and
creativity even before it can start. A startup failing has to be OK as failures often teach an
entrepreneur, what to do and what not to do.

19 | P a g e
Mentoring

Doing a startup is perilous and often a lonely journey. You may have co-founders, but you
may not necessarily possess the business acumen to succeed.Having a brilliant idea is
different from making that idea a business success. For a startup, it is very important to have
mentors who have been
through a similar process of starting or have business experience. A great mentor is often
what separates success from failure by providing valuable inputs. However, there is no
formal mechanism to mentor startups in the country. Every mentoring that happens is on an
ad-hoc basis. A startup that has raised funds can count the investors for some form of
mentoring, but honest, unbiased,good business mentors are far and few in between.For
startups finding a good mentor is often an uphill task.

Policies

Government is the single largest enabler for the entrepreneurial ecosystem. Government's role
in ease of doing business and helping companies start
is vital to ensuring success. The latest World Bank Ease of Doing Business (out of 189
economies) ranks India at an abysmal 142 where starting a
business rank for the country is even lower at 158.It is uncannily difficult to start a business
in India and myriad laws and regulations means it takes about 30 days to comply compared to
just 9 days in OECD countries. The government's role has so far been limited to giving out
grants and loans, but
without an effective, enabling environment, implementation is far off the target. In this regard
it will be interesting to see the contours of the
recently announced Startup Fund in this year's budget. For startups to thrive and succeed, the
government has a lot to do and understand the importance of entrepreneurship in economic
development.

Hiring

The economy has been in a flux and along with the world economy the heady days of high
growth are long gone. In an uncertain economy where one is not sure about demand, for a
20 | P a g e
startup, it is particularly difficult to make correct estimates on the number of employees
needed. This, however, is the minor problem where the biggest issue is about finding skilled
manpower. India's skilling need is so huge that National Skill Development Corporation
(NSDC) has been mandated to skill 150 million Indians by 2022. For a startup, it is
particularly difficult to attract and hire talent and skilled workers. A startup often cannot
match the salaries drawn at larger companies nor is a job at a startup seen as a steady one.
This means startups face severe hiring challenges and at times have to settle for the next best
option. First generation entrepreneurs across the country are applauding the government's
efforts to recognize their business ventures under the banner of Start-Up India, but for most
challenges of funding, patents and creation of intellectual property remain.“The Prime
Minister seated with entrepreneurs on a national platform is a very positive signaling,” said
Abhishek Sinha,
Co-Founder and CEO, Eko India Financial Services, who was also a panelist in one of the
session. However, small problems such as bank funding in the lack of any collateral turn out
to be big roadblocks for many entrepreneurs.“Banks are careful while giving out loans. When
we started out, we had to depend on loans and credit cards.Even today the story is same,” he
told Business Line.Minister of State for Finance Jayant Sinha had also noted that 90 per cent
of funding, at present, comes from foreign venture capitals and domestic financiers could
change the nature of innovation as well. A recent study by Grant Thornton revealed that in
2015 more than 600 such companies got funding, with over $2 billion deployed by PE and
VC funds.In fact, the Rs.10,000crore of funds that would start with an initial Rs.2,500 crore
annually would be a dip in the ocean given the vast potential of the sector and the huge
number of companies. Prime Minister Narendra Modi's Start-Up Action Planhas a 19-point
agenda including incentives such as self certification for complying with labor and
environment regulations, a panel of facilitators to help file patent and intellectual property
applications, tax exemptions for seed funding,
capital gains and three year holiday on income tax as well as a Rs.10,000 crore financing
support for four years.To be eligible, the Department of
Industrial Policy and Promotion has defined startup “an entity, incorporated or registered in
India not prior to five years, with annual turnover not
exceeding Rs. 25 crore in any preceding financial year, working towards innovation,
development, deployment or commercialization of new products,
processes or services driven by technology or intellectual property.”

21 | P a g e
Patents

Similarly, the long process of registration of patents and lack of incentives for research and
development is another bone of contention, which according to many is a reason why many
start-ups prefer to be domiciled abroad.“I have patents registered in the US and Singapore but
have not been able to do so in India till now,” said another start-up owner.“The intent of the
government is good and a lot has been done but not everything that was demanded has been
given,” said Umesh Sachdev, Co-Founder and CEO, Uniphore Software Systems, stressing
that more could be done for R&D that would have also helped in
patenting. According to government data, as many as 2,46,495 pendency in patent
applications and 5,32,682 trademark applications were pending as
on November 1, 2015.

Taxation

Industry has also called for clear definition of digital products and services from a taxation
point of view. “This is essential. We cannot have a long
list of intangibles in our balance sheet. There has to be an acknowledgement that IT products
are being created,” said Abhishek Sinha. As a start, the Centre has extended capital gain tax
exemption for investment in newly formed manufacturing MSMEs by individuals to all start-
ups and has promised that investment in 'computer or computer software' would also be
considered as purchase of 'new assets' to promote technology. It is of common knowledge
that a lot of VC and angel investors from India and abroad are actively investing in Indian
startups. Over $3.84 billion was pumped into the ecosystem in the third quarter of 2015 itself.
However, we have been observing that despite having raised good investments, many startups
struggle to survive the competition and are eventually forced to shut down their businesses.I
recently got to meet a number of Indian entrepreneurs across sectors at Startup India Rocks, a
two-day conference organized by Scaale in Goa on the 7th & 8th of October. It was a good
chance to hold direct confabs with startup founders and
cultivate a deeper understanding of the dynamics of the ecosystem, the common challenges
faced by native startups and a few more insights that could help one get the fundamentals of
running business correct.It is extremely important to find out and resolve the factors that are

22 | P a g e
preventing growth and sustainability of startups in the country. Below are the 8 key things,
influencing the failure or success rate of startups in India, according to
founders and mentors of various startups.

Right Talent Acquisition

India is known for its affordable pool of talent, especially when it comes to technology.
However, when one is starting up, talent acquisition becomes a pain, given that not everyone
is flexible enough to work in a startup. Upon being asked about the major deterrents on
Indian startups' path to a faster growth, Chirag Garg, CEO, HyperDell, exclaimed, “I see a lot
of roadblocks actually! One of them is the fear of failure. Affordable talent, and the right time
for the required talent is another challenge.”Failure to Mitigate the Gap Between Burn Rate
and Revenue : Of late, it has been observed that once VC-popular food delivery startups, are
now running low on cash. Amidst the growing competition, it becomes imperative for
startups to scale up fast, and this is where external funding comes in. Startups and Investors
go hand in hand, several Internet companies delay putting in efforts for revenue generation
and focus more on raising investment. When fundraising comes to a halt, troubles start.
Chirag maintained, “I think the right management of your burn rate is really a big concern”.
Citing an example of Local Banya which shuts its operations a couple of days back, he
said,“Many a time, we observe that as soon as a startup gets funded, it loses its conscious
approach to the burn rate and goes haywire.

Third Party Growth Decelerators

Similarly, when I approached Sneh Bhavsar, Co-Founder and CEO, OoWomaniya with the
same query, he asserted, “It is really interesting how the problems are evolving along with the
evolution of startups in India.” According to him one of the major issues is “the influence of
external organizations” that is businesses, incubators, institutes and all such organizations
which are trying to control, manage, take advantage for their events, brand or just numbers,
be the daddies of the start-ups and entrepreneurs in the name of helping, mentoring etc. He
added, “In Ahmedabad, I have seen the most innovative, fast growing startups which also
started making profits – they all were self-dependent, never incubated or mentored. Yes, they
23 | P a g e
may have grown slower in early stage but on any day it is better as they are profitable,
sustainable. There are more daddies than kids in India's startup ecosystem.”

Lack of Mentorship

Lack of proper guidance and mentorship is one of the biggest problems that exists in the
Indian startup ecosystem, believes Milan Hoogan, Vice President -Sales and Marketing at
Erfolg Life Sciences. He is of the opinion that the current startup ecosystem consists of a lot
of young talent
coming out with some very unique ideas. These ideas have enough fuel in them to propel
most of these start-ups to great heights. But, one of the biggest factors that slow the growth of
these companies is the poor quality of mentorship they get. Most of these organizations are
good with their ideas and/or products, but have little or no industry,business and market
experience to effectively get their products out.Hoogan says, “I think having a good mentor
right from the early stages, can help these companies in not only capturing the markets faster
and have the first mover advantage, but can also help them in strategizing each of their steps
from a more experiential standpoint. Plus, a mentor brings with him/her, a huge professional
network that can be a huge bonus for the entrepreneurs. One of the best ways to find a good
mentor is to be networking all the time. Meet new people, take part in the start-up based
networking events, discuss about the industry and your ideas to improving it, learn about their
respective stories.”

Lack of a Good Branding Strategy

Absence of an effective branding strategy is yet another issue that bars startups from
flourishing speedily. Giving insights into the subject, Hemant Arora, Business Head –
Branded Content, Times Network, said that branding is one of those areas in a business that
demands paramount attention.However, given the question of affordability, many startups
struggle to build a good branding strategy for their businesses. Arora maintains, “branding
has to be a commitment. In fact, almost like a spiritual commitment for entrepreneurs looking
at pacing up their product's long term commercial success. Branding starts at the same time
as the business does…it's like a baby being born and given a name so that people can identify
it with that name. Then comes the process of making it popular which is what advertising is
24 | P a g e
all about and that is completely objectified.”During his session on the subject, Arora gave a
very lucid yet striking definition of advertising- the essence of advertising lies in the ability to
influence your target audience positively towards your brand.

Fragmented Market and the Dearth of Domain Knowledge

The largely unorganized and fragmented market in India stands as one of the biggest hurdles
for startups on their way to success. Umesh Chhikara, Co - Founder and CEO, Inkhorn
Publishing India is of the opinion that before foraying into any business, one must cultivate a
strong domain knowledge. “Consumer behaviour changes every 30 km in India, which makes
it a highly complex, diverse and un -orchestrated market.” Chhikara opines that it's very easy
for startups to bag capital these days. However, what is not easy is building a strategy to
move ahead and capture the larger market. Only a few have managed to spread their
footprints across the country. Most of them usually get stuck in stagnancy and eventually,
shut down.

Silicon Valley Replicas Topped by Infrastructure Deficit

Emulation of ideas and business models is a common tendency that startups in India need to
get rid of. Koushik Shee, Founder and CEO, Effia, questions Indian startups' infatuation with
Silicon Valley models. He stated that most of these business models have been replicated
from the West. Hence, few are profitable despite raising different scenario. Hence, we should
build our
models based on our market. India has a huge potential given that most of the market is still
untapped due to the lack of internet penetration in rural and suburban areas owing to the issue
of affordability and infrastructure deficit.”Nevertheless, She hopes that with Digital India
initiative, things are going to change for good.

Struggle to Reinvent Constantly

Last but not the least, Namrata Garg, Director, SendKardo, opines that customers today are
very adaptable to change. “The biggest challenge is the need to constantly reinvent yourself
and come up with a service to be able to match up customer expectations. Having said that, I
would also like to add that this 'roadblock' could as well be converted into a big opportunity.
25 | P a g e
Also, certain services provided by earlier applications have become pre requisite for customer
today. So, you need to be providing something over and above constantly. It's all about
providing the wow factor.”Startups are significant. They are the new 'in' in business sphere.
They play a critical role in development of a country. Growing market, favorable funding,
and technology have really made the startup ecosystem take off. Who would have thought
some years ago that Filters! That's right, filters could make Instagram so popular. Or, you
could call cleaners to cab and everything in between at doorsteps with a mere touch of a
button. Startups are nothing but an idea that manifests into a commercial undertaking. The
growing number of startups in India is certainly not an elapsing trend and is here to stay.
Moreover, the recent Prime Ministerial visit has certainly helped impetus startup ecosystem
in India. Indian startups take a lot of their learning
from Silicon Valley. However, a direct comparison between Silicon Valley and Indian startup
is not sagacious. Every country has their own set challenges in terms of government policies,
permissions, raising capital, competition, unforeseen challenges, etc.

Challenges faced by startups in India Hiring the right talent

Hiring the right talent for your startup can be quite an uphill task. To find and hire the right
kind of talent for the business with skills to match growing customer expectations is one of
the biggest challenges. With low salaries in comparison with other corporates, hiring skilled
manpower may not be possible and so you may have to settle for the next best option. You
may have to convince people to join you. The key is to spread your passion and motivate
people to be as passionate. Right talent will ensure rock solid foundation which will help your
startup to take the plunge.

Capital

Investors and startups go hand in hand. Sometimes the investor's response to a startups
ecosystem can be sluggish. Scaling is prudent in case of a startup and scaling comes from
capital. The challenge is not to merely generate enough seed capital but also to support in
expansion and sustenance and maintenance. It is critical to plan your finances in advance.
Factor in all the elements and set a budget, try and maintain this as much as possible to be on
track. Set a specific budget for PR, marketing, advertising. In the end, it's important to

26 | P a g e
remember that external capital can only give the necessary push to your business, it cannot
run the business, hence focus on creating value and solving the problem of the people .

Cultural views and lack of infrastructure support

There is little tolerance for failure in our country.Our focus is still on getting reputable jobs in
a reputable company. In complement to that, infrastructural support such as incubation and
funding are not easy to find in India. Irregular power supply, telephone reception network,
etc. can be a hindrance to the growth of any business. Corruption free environment, friendly
regulations, good connectivity, healthy environment, efficient logistic support, can help a
great deal in attracting investor in the country.
Absence of mentor

Young entrepreneurs usually have unique ideas however they lack experience. A brilliant
idea works only if executed promptly. Industry insights, market knowledge, business
experience is important to materialize the idea. Mere ideas cannot propel startups.
Additionally mentors are tagged by a network system that can of great help to develop
contacts and expand your existing
business network.
Learning from mistake

While the economic can be arduous influence, mistakes in a startup environment are
inevitable. The idea is to learn from mistakes and take quick actions toward some serious
aftershock. Create a robust team and work in cohesion with the stakeholders.At Voler, we
make no mistakes. We term them as 'area of opportunity', we learn from them and ascertain
they are not repeated. In fact, each mistake provides us with learning which acts as a stepping
stones to success.

27 | P a g e
 Chapter 3

Research Methodology
This research paper basically focuses on the challenges faced by the startups
over the acquiring funding sources and challenges faced by them to make
successful grant of loans from banks, NBFC and other private channels. This
information basically collected through secondary sources especially from
journal, articles, internet and news papers and through peers’ discussion. The
study is descriptive & conceptual in nature After referring various case studies
and observing existing startup management practices, researcher has made own
analysis and elaborated on various critical challenges faced by Startup
companies

28 | P a g e
 Research Design
I have used descriptive research to describe particular phenomena or relationships within a
single group sample. The main goal of this type of research is to describe the data and
characteristics of what is being studied. Thus a descriptive study generates a data on who,
what, when, where, why and how pertaining to investigation of study. Descriptive designs are
typically used as either pilot or preliminary studies and generally have rather basic statistical
procedures. They are often more quantitative in nature, requiring questions as a data-
collection method. The respondents are selected by means of randomized sampling methods.

29 | P a g e
 Data Collection Method
The data collection is essential part of research. The nature of data which is collected and
used for this research is primary in nature. The relevant and required secondary data has been
collected from journals, RBI annual reports, government regulation, magazines, and literature
through various search engines.

Primary Data :
The primary data are those which are collected for the first time and which is original in
nature. The primary data is a data that is gathered for a specific research in response to a
particular problem through interviews, questionnaires or observations.

Secondary Data :
The secondary data for this study was obtained from published documents and literature
relevant to the study. The secondary data is obtained through various kinds of documents
such as research reports, RBI annual reports, books and articles, research papers from online
journals and Government regulation for core banking and also from web information.
For this study secondary data has been collected from various reliable sources.

Turning a Startup into a success is not an easy task. Many factors need to be considered while
starting a new business. If an entrepreneur is working on some business idea for the first time,
he may face many challenges like raising capital or getting funding, finding suitable location,
marketing strategy, return on investment, resource planning, positioning of product into right
market, risk of failure etc.

Below are some critical challenges that are faced while managing startups –

1) Idea conceptualization and implementation

Many people think that funding is the biggest challenge for a start-up, but more important
than that is putting the idea into reality. It means making a blue print of the business plan.
Building up a sustainable business model which will not just get idea into reality but it will
help to generate positive cash flows in its future course. It is being observed that most of the
times people with completely unique and great idea fail to be realistic and their business plan

30 | P a g e
lacks feasibility. That is why implementation of the idea is as equally important as its
conceptualization.

2) Funding

After working out a proper implementation strategy, next big thing is planning of financial
resources. It is important to estimate how much money is required, how much money is
needed at what stage, whether to raise capital by giving share of ownership to some angel
investor or through availing the loan i.e. deciding amongst equity and debt etc. This depends
upon the business model, whether there will be small margins with big volumes or large
margins with thin volumes, distribution business or manufacturing and many more such
factors. An entrepreneur must meticulously plan for arranging finance as it is the blood of any
business. Many big ideas fail to sustain till it actually reaches tipping point because of lack of
adequate financial support. Likewise some businesses have to change their core product or
services just for making sure that the company survives. With this it may lose its original
vision and model.

2) Human resources

It is said that money is not all that makes a business successful but the people in it. Finding
out good employees is really a challenge now days. Another challenge is to make them stay
with you for long, as good people easily find better opportunities.For any young startup,
addition of every single employee is very critical. Good potential employees ask for high
compensation packages which can be a challenge in terms of hiring as well as holding such
talents in startups. Likewise sometimes properly trained and groomed employees choose to
leave the job and start on their own. This again adds lots of cost in terms of hiring new ones
or sometimes affecting existing business.

3) Market place

It is easy to start working on some idea but finding suitable target market and customers is
really a big deal. It requires lots of research about existing business models, customer
demands, existing products or services available, geographical characteristics, economic and
trade policies, legal policies and lot more. A product or service needs to be structured after
essential analysis of the above mentioned factors. Few months of pilot study in various

31 | P a g e
geographies helps a lot to grab the pulse of the customers as well as market.After this,
management needs to decide whether the product should be launched initially in specific
territory or should be made available in selected cities or to be made available across the
country.

4) Marketing

With high accessibility and use of social media for marketing purposes now a days,
positioning and targeting selected customer base has become very convenient. But it again
becomes a challenge for start-ups as it is very costly to outsource it to the advertising firms.
Hiring full time employee for social media management also can be a costly affair if it is not
directly adding towards immediate results. Though costly, marketing is an integral part of
start up management practices to showcase its product and services amongst target customer
groups and to spread the awareness. This expense might be on a higher side at initial stages as
it will reduce once the startup idea or brand becomes popular.

5) Competition

One of the biggest challenges faced by startups is the fierce competition. They need to be
very cautious as well as aggressive while designing the market strategy. It is more a threat if
one is entering into established markets or trying to establish oneself into existing product or
service line. Growth in emergence of various online business models poses a threat to new as
well as traditional businesses. Apart from this, they need to be flexible as well as innovative
at framing various policies in terms of offering, pricing, technology etc. Strategic
Partnerships can be one of the solutions for coping up with such challenges occurring from
competition.

Sampling Design
32 | P a g e
 The research objective is translated into research questions that enable the researcher to
indentify the information needed.

Probability Sampling Methods

Random sampling is analogous to putting everyone's name into a hat and drawing out
several names. Each element in the population has an equal chance of occuring. While this is
the preferred way of sampling, it is often difficult to do. It requires that a complete list of
every element in the population be obtained. Computer generated lists are often used with
random sampling. You can generate random numbers using the TI82 calculator.

Systematic sampling is easier to do than random sampling. In systematic sampling, the list
of elements is "counted off". That is, every kth element is taken. This is similar to lining
everyone up and numbering off "1,2,3,4; 1,2,3,4; etc". When done numbering, all people
numbered 4 would be used.

Cluster sampling is accomplished by dividing the population into groups -- usually

geographically. These groups are called clusters or blocks. The clusters are randomly
selected, and each element in the selected clusters are used.

Stratified sampling also divides the population into groups called strata. However, this time
it is by some characteristic, not geographically. For instance, the population might be
separated into males and females. A sample is taken from each of these strata using either
random, systematic, or convenience sampling.

Non Probability Sampling Method

Convenience sampling is very easy to do, but it's probably the worst technique to use. In
convenience sampling, readily available data is used. That is, the first people the surveyor
runs into.

• Judgmental or purposive sampling: Judgemental or purposive samples are formed by the

discretion of the researcher. Researchers purely consider the purpose of the study, along
with the understanding of the target audience. For instance, when researchers want to
understand the thought process of people interested in studying for their master’s degree.

33 | P a g e
 The selection criteria will be: “Are you interested in doing your masters in …?” and those
who respond with a “No” are excluded from the sample.
• Snowball sampling: Snowball sampling is a sampling method that researchers apply when
the subjects are difficult to trace. For example, it will be extremely challenging to survey
shelterless people or illegal immigrants. In such cases, using the snowball theory,
researchers can track a few categories to interview and derive results. Researchers also
implement this sampling method in situations where the topic is highly sensitive and not
openly discussed—for example, surveys to gather information about HIV Aids. Not many
victims will readily respond to the questions. Still, researchers can contact people they
might know or volunteers associated with the cause to get in touch with the victims and
collect information.
• Quota sampling: In Quota sampling, the selection of members in this sampling technique
happens based on a pre-set standard. In this case, as a sample is formed based on specific
attributes, the created sample will have the same qualities found in the total population. It
is a rapid method of collecting samples.

Statistical Tool Used

Discussion: Strengths and Limitations of Secondary Analysis for LIS Research The major
advantages associated with secondary analysis are the cost effectiveness and convenience it
provides (Dale et al., 1988; Glaser, 1962; Smith, 2008). Since someone else has already
collected the data, the researcher does not have to devote financial resources to the collection
of data. When good secondary data is available, researchers can gain access to and utilize
high quality larger datasets, such as those collected by funded studies or agencies that involve
larger samples and contain substantial breadth. The larger samples are more representative of
the target population and allow for greater validity and more generalizable findings (Smith,
2008; Smith et al., 2011). Access to this type of data presents opportunities for all

34 | P a g e
researchers, even the novice or unfunded researcher, therefore equalizing opportunities and
building capacity for empirical research (Hakim, 1982) in LIS research.

The use of existing data sets can accelerate the pace of research because some of the most
time consuming steps of a typical research project, such as measurement development and
data collection are eliminated (Doolan & Froelicher, 2009). In LIS research areas, such as
information and technology that are constantly changing, utilizing existing data allows
projects to be completed and findings to be produced much faster, and therefore the
development and contribution of new knowledge occurs in a timely manner before they are
considered dated by the field. Additionally, in the area of information policy, utilizing
existing data can allow the researcher to answer important time-sensitive policy related
questions quicker (Magee et al., 2006).

Secondary data analysis provides many opportunities for furthering LIS research through
replication, re-analysis and re-interpretation of existing research. It provides researchers with
opportunities to engage in work to test new ideas, theories, frameworks, and models of
research design. Yet there are unique methodological considerations when utilizing existing
data to investigate new research questions and generate new knowledge. The most recognized
limitation to the secondary data analysis method approach is “inherent in its nature” in that
the data were collected for some other purpose (Boslaugh, 2007, p. 4). Since the data were
not collected to answer the researcher’s specific research questions issues can arise. The
specific information that the researcher would like to have may not have been collected; or
data may not have been collected in the geographic region of interest, in the years the
researcher would have chosen, or on the specific population that is the Qualitative and
Quantitative Methods in Libraries (QQML) 3:619 626, 2014 625 focus of interest (Boslaugh,
2007; Doolan & Froelicher, 2009).

In this particular project the researcher avoided some common pitfalls often associated with
secondary analysis by participating in the primary research design plan and then ensuring a
match between her research questions and the existing data through the previously described
process. Yet, a significant limitation of this research was that the school identifiers collected
in the primary study was not available to the researcher due to confidentiality reasons. The
school identifiers connect to the participants, therefore school identifiers were removed from
the dataset, in order to ensure all participants remain anonymous in accordance with the
original consent agreement. Therefore, subjects cannot be contacted for follow-up questions
35 | P a g e
and additional data cannot be collected. While this lack of opportunity for follow-up or the
collection of additional data from the participants has proven to be a limitation in furthering
this research, it is important that secondary data analysis abide by the consent conditions of
the original study (Heaton, 2008).

A second major disadvantage of using secondary data is that the secondary researcher did not
participate in the data collection process and does not know exactly how it was conducted.
Therefore, the secondary researcher does not know how well it was done and if the data are
affected by problems such as low response rate or respondent misunderstanding of specific
survey questions. Hence the researcher has to find this information through other means such
as documentation of the data collection procedures, technical reports, and publications
(Boslaugh, 2007; Dale et al., 1988; Kiecolt & Nathan, 1985). In this research the researcher
was at a disadvantage because she did not participate in the execution of the data collection
process. In order to address these issues the researcher utilized documentation from the
original study, information from published findings, and consultations with the original
primary researchers and statistician. Ensuring a match between the research question and the
existing data and following a process, as proposed, for careful reflective examination and
critical evaluation of the data, can avoid most limitations of secondary data analysis.

Analysis

Sources of Finances to Startups In India

The startups in India having paucity of funds, pooling the money from their own source of
funds and all startup should follow the norms of corporate governance in India. Banks are
lending the money on security; venture capitalist and private equity fund also provide money
to startups.

Banks

Banks are intermediaries between public and Industrial units as they accept deposits from the
general public and mobilize funds to industrial units. Industries require short term and long
term funds to fulfill long term and working capital requirements; Banks provide secured and
unsecured loans. The start-ups in India get loan from bank at every stage of the business life
cycle.

36 | P a g e
In India both public and private sector banks are providing loans to start-ups and their
continuous growth, In India it is easy to take the loans from private sector banks as the
Interest rates are higher but it is recommended to take loans from public sector banks as the
interest rates are pocket friendly. Process of getting loans from Bank- Usually start-ups
follow certain norms to get loan approval from the banks.
Registration of firm
Submission of relevant documents along with license and clearance
Business plan and complete project reports (Covers all the dimensions of Products and
services)
Submission of subsidy report(If eligible)
Banker verifies track record i.e. checking of CIBIL Score should be above 700
Banker assesses the feasibility of firm
Submission of collateral security documents
There are various schemes and eligibility criteria available to start-ups in India

Venture capitalist

usually venture capitalist provides funding to risky business units. It is the best source of
funds to startups without moving to capital markets in India but for the investors point of
view it is high risk investment option. The venture capitalist basically supports for long term
point of view like expansion and maintenance by providing of seed capital. It acts as an
important tool for acquiring funds to start-ups.

Role of venture capitalists

Venture capitalist creates opportunities to turn the ideas of start-up into reality as they
recommend the project execution properly. Many start-ups usually have the problem of come
into the reality, this venture capitalist give assistance for solving all the problems like
technical, financial and execution.

Funding process is done in five stages-

Seed stage (Providing capital sources to start-ups)

37 | P a g e
 Stat-up stage( Submission of business plan) Second stage( transform the idea into
product/service)
Third stage(market expansion stage)
IPO stage(Bridge finance)

Private equity funds

It is a form of venture capitalists. It is basically a collective investment scheme used for

making investments in various equity securities, these are actually limited partnership funds
with a fixed term of ten years. These funds are managed by professionals who are having
sound knowledge about the market conditions. Providing funding for high net worth
individual is another prerequisite for granting loans.

Angel Investors

Basically these Investors inject capital for startups in exchange for ownership equity and
some of them invest in the form of crowd funding. The initial step for granting of funds
through seed funding and it is secured by start-ups form their own money sources and
pooling the money from friends and family members.

Stages of getting funds through this platform –

Preparation stage
Application process stage
Screening the right applicants
Presentation of detailed business plan
Deep dive into the project
Going through the potential suppliers and customers
Investment
Submission of reports

38 | P a g e
 Chapter 4

Results & Discussions

The policies made for start-ups easy of doing business.

The venture capitalists are one of the best sources of funding for start-ups.

Private equity funding sources widen the route for start-ups in India.

The initial step for granting of funds through seed funding.

There are five stages available for funding sources from venture capitalist

Major hurdles faced by the startups:

Low quality of personnel skills

Low quality technical skills

Not having enough securities for mortgage loans

Less confidence about the business plan

High competition with global giants

Less policies, programs and subsidies from government

39 | P a g e
 Chapter 5

Summary & Conclusion

The current economic scenario in India is on expansion mode. The Indian government is
increasingly showing greater enthusiasm to increase the GDP rate of growth from grass root
levels with introduction of liberal policies and initiatives for entrepreneurs like ‘Make in
India’, ‘Startup India’, MUDRA etc. ‘Make in India’ is great opportunity for the Indian start-
ups. With government going full hog on developing entrepreneurs, it could arrest brain drain
and provide an environment to improve availability of local talent for hiring by startup firms.
Small contributions from a number of entrepreneurs would have cascading effect on the
economy and employment generation which would complement medium and large industries
efforts catapulting India into a fast growing economy. The startup arena has lot of challenges
ranging from finance to human resources and from launch to sustaining the growth with
tenacity. Being a country with large population, the plethora of opportunities available are
many for startups offering products and services ranging from food, retail, and hygiene to
solar and IT applications for day to day problems which could be delivered at affordable
prices. It is not out of place to mention that some of these startups would become unicorns
and may become world renowned businesses by expanding into other developing and
underdeveloped countries.

40 | P a g e
 Chapter 6

References

1. G.S. Mongia, R.K. Sinha, Nationalisation of Banks Retrospect and Prospects

2. R.V. Kulkarni, B.L. Desai, Knowledge based system on Banking Sector
3. I.V. Trivedi, Indian Banking in the new millennium
4. M.P. Jaiswal, Anjali Kaushik, e-CRM Business System frontiers
5. DR. C.S. Rayudu –E-Commerce, E-Business
6. E-Commerce-S.Pankaj

Newspapers
1. Business Standard Line
2. Economic Times
3. Times of India
4. The Pioneer
5. The Hindu
6. Hindustan Times

41 | P a g e