lOMoARcPSD|52109361

Startups Black book

M.Com - Advanced Accountancy (University of Mumbai)

Scan to open on Studocu

Studocu is not sponsored or endorsed by any college or university

Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

A Study on Financial Problem Faced by Start-Ups

A Project Submitted to
University of Mumbai for partial completion of the
degree of Master in Commerce
Under the Faculty of Commerce

By
AFAKUR REHMAN SHAIKH
ROLL NO.32
SEAT NO.1357508

Under the Guidance of

DR. SHRADHA SHUKLA

K.P.B HINDUJA COLLEGE OF COMMERCE

315, New Charni Road, Charni Road East, Opera House, Girgaon,
Mumbai, Maharashtra 400004

MARCH 2023

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

A Study on Financial Problem Faced by Start-Ups

A Project Submitted to
University of Mumbai for partial completion of the
degree of Master in Commerce
Under the Faculty of Commerce

By
AFAKUR REHMAN SHAIKH
ROLL NO.32
SEAT NO.1357508

Under the Guidance of

DR. SHRADHA SHUKLA

K.P.B HINDUJA COLLEGE OF COMMERCE

315, New Charni Road, Charni Road East, Opera House, Girgaon,
Mumbai, Maharashtra 400004

MARCH 2023

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

K.P.B HINDUJA COLLEGE OF COMMERCE

315, New Charni Road, Charni Road East, Opera House, Girgaon,
Mumbai, Maharashtra 400004

Certificate

This is to certify that Ms./Mr. AFAKUR REHMAN SHAIKH has worked and
duly completed her/his Project Work for the degree of Master in Commerce under the
Faculty of Commerce in the subject of. ACCOUNTANCY__________________
and her/his project is entitled, “ A STUDY ON FINANCIAL PROBLEM
FACED BY START-UPS__” under my supervision. I further certify that the entire work
has been done by the learner under my guidance and that no part of it has been submitted
previously for any Degree or Diploma of any University.
It is her/ his own work and facts reported by her/his personal findings and investigations.

Seal of the
DR. SHARDHA SUKLA
College

Date of submission:

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

Declaration by learner

I the undersigned Miss / Mr. AFAKUR REHMAN SHAIKH here by,

declare that the work embodied in this project work titled “
A STUDY ON FINANCIAL PROBLEM FACED BY START-UPS ”,
forms my own contribution to the research work carried out under the guidance of
DR. SHRADHA SHUKLA is a result of my own research work and has not been
previously submitted to any other University for any other Degree/ Diploma to this or
any other University.
Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

AFAKUR REHMAN SHAIKH

Certified by

DR. SHARDHA SHUKLA

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

Acknowledgment

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to
do this project.

I would like to thank my principal, DR. (MS) MINU MADLANI for providing
the necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator for his/her moral support and
guidance.

I would also like to express my sincere gratitude towards my project guide

DR. SHRADHA SHUKLA whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

Index

CHAPTER NO. TOPICS PAGE NO.

1 INTRODUCTION 1 - 10
1.1 EXECUTIVE SUMMARY
1.2 DEFINATION OF START-UP
1.3 START-UP INDIA
1.4 START-UP COMPANY
1.5 19 PLANS FOR START-UPS BY P.M.
1.6 ENTREPRENEURSHIP
2 RESEARCH METHODOLOGY 11 - 16
2.1 OBJECTIVE
2.2 SCOPE OF STUDY
2.3 LIMITATION OF STUDY
2.4 TYPES OF RESEARCH
2.5 RESEARCH METHOD
2.6 TYPES OF DATA
2.7 SAMPLE SIZE
2.8 SAMPLE METHOD
2.9 DATA COLLECTION
3 LITERATURE REVIEW 17 - 21
3.1 THE IMPERFECT EDUCATION SYSTEM
AND CONSERVATIVE LIFESTYLE
3.2 LACK OF SUPPORT NETWORKS AND
ENTREPRENEURSHIP ECOSYSTEM
3.3 INDIA LACKS ENOUGH ANGEL
INVESTORS TO FUND START-UPS
3.4 POOR CASH FLOW
3.5 UNIT ECONOMICS
3.6 HUMAN TALENT
3.7 WOMEN ENTREPRENEUR
4 DATA ANALYSIS,
INTERPRETATION & 22 - 56
PRESENTATION
4.1 PRIMARY DATA
4.2 SECONDARY DATA

5 CONCLUSIONS & SUGGESTIONS 57 - 59

5.1 CONCLUSION
5.2 SUGGESTIONS

6 WEBLIOGRAPHY & 60
BIBLIOGRAPHY
6.1 WEBLIOGRAPHY
6.2 BIBLIOGRAPHY

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

1. INTRODUCTION

1.1 EXECUTIVE SUMMARY

India is a country of many great legends that were famous all over the world because
of their work, sharp mind & high skill. Youths in India are very talented, high skilled
& full of innovative ideas. But they don't get opportunity due to lack of solid support
& proper guidance in right direction. In this way, BJP government launched “START
UP INDIA STAND UP INDIA” scheme on 16 January 2016 to help the youth of
India to go in right direction using their new & innovative ideas. This scheme was
launched to motivate & promote new comers towards business & grow their career as
well as economy of the country. This programme is a big start to enable Start-ups
through financial support so that they can use their innovative ideas in right direction.
There are tremendous opportunities for Start-up entrepreneurs in India. The key areas
are Like Textile, Media, Health Sector, Event Planner, Tourism, Automobile etc. So,
there are various opportunities where entrepreneurs can start their Start-ups. But along
with opportunities there are some challenges also that Start up entrepreneurs may have
to face like Infrastructure Deficit in India, Risk Factor and Right Talent Acquisition
etc. Despite of these challenges, Government as well Start up entrepreneurs should
have to work together to face these challenges & make this programme effective. The
study will focus on Start-up India scheme, opportunities available under this scheme
as well as challenges may have to be faced & suggestions to overcome the challenges
so as to make the Start-up India programme successful. Skill India Programme, Start-
up India and Stand-Up India programme are the buzz words of today in
manufacturing, Production and Services sectors. As present government has taken the
oath to inculcate skills in every youth and help them towards start-ups and establish
their own enterprise and become owner of their own rather doing job with some other
and intern help in employment and GDP development. It is also observed that
SC/ST/Women categories are marginalized in this area since inception and it was the
dream of Dr. B. R. Ambedkar that equal opportunities to be given to them also to
grow and showcase their talents, ideas and ability to prove themselves as a successful

1
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

entrepreneur, a person and citizen of India. The present study is to understand the
progress of this program and its success. The results of the study state that nearly 70%
of the units expressed positive growth and expressed that if financial support would
have not been availed through this platform, it would be a dream to start-up their own
industries and women entrepreneurs also feel that they are more empowered and able
to establish their identity.

1.2 DEFINATION OF START-UPS

A start-up company or start-up or start-up is a young company that is just beginning
to develop. Start-ups are usually small and initially financed and operated by a
handful of founders or one individual. These companies offer a product or service that
is not currently being offered elsewhere in the market, or that the founders believe is
being offered in an inferior manner. In the early stages, start-up companies' expenses
tend to exceed their revenues as they work on developing, testing and marketing their
idea. As such, they often require financing. Start-ups may be funded by traditional
small business loans from banks or credit unions, by government sponsored Small
Business Administration loans from local banks, or by grants from non-profit
organizations and state governments. Paul Graham says that "A start-up is a company
designed to grow fast. Being newly founded does not in itself make a company a
start-up. Nor is it necessary for a start-up to work on technology, or take venture
funding, or have some sort of "exit". The only essential thing is growth. Everything
else we associate with startups follows from growth."

2
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

1.3 START-UP INDIA

Startup India is an initiative of the Government of India. The campaign was first
announced by Indian Prime Minister, Narendra Modi during his 15 August 2015
address from the Red Fort, in New Delhi. The action plan of this initiative, is based
on the following three pillars: 1. Simplification and Handholding. 2. Funding Support
and Incentives. 3. Industry-Academia Partnership and Incubation. An additional area
of focused relating to this initiative, is to discard restrictive States Government
policies within this domain, such as License Raj, Land Permissions, Foreign
Investment Proposals, and Environmental Clearances. It was organized by The
Department for promotion of industry and internal trade (DPI&IT). A startup defined
as an entity that is headquartered in India, which was opened less than seven years
ago, and has an annual turnover less than 25 ₹ crore (US$3.5 million). Under this
initiative, the government has already launched the I-MADE program, to help Indian
entrepreneurs build 1 million mobile app start-ups, and the MUDRA Banks scheme
(Pradhan Mantri Mudra Yojana), an initiative which aims to provide micro-finance,
low-interest rate loans to entrepreneurs from low socioeconomic backgrounds. Initial
capital of 200 ₹ billion (US$2.8 billion) has been allocated for this scheme.
The start-up scenario in India has gone a huge makeover, now people are not alien
with the concept of start-ups. Earlier people had no idea what this concept is all
about, thanks to the rise in media’s encouraging coverage towards start-ups recently.

3
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

The concept of start-up is somehow different for Indians and not so different for
people of developed economies. Start-ups are something to do with new
product/process for the entire market or fraction of the market. Start-ups must not be
confused with small business, as the biggest difference being is INNOVATION.
Recently government of India has launched “Start-up India” initiative to
foster/support and encourage start up efforts in India. The results are very satisfactory
with initiative being accepted with open arms in country, various state governments
have also started the similar efforts. India stands at a very important cross road, India
stood at number three in overall technology driven stat ups in the world (Top two
positions are held by USA and UK respectively). The very nature of start-ups in India
is technology based which is fueled by young IIT’s graduates as the patterns of start-
ups in India further suggests, they are undertaken in very unconventional terrain like
medical etc. The important question remains is, how start-ups are shaping the very
structure of economy in India or elsewhere (In similar economies). The overall
impact of start-ups is very visible initially then, only those ideas persist which are
smartly implemented. In India government is constantly trying to create an
environment which is both conducive and optimum for stat ups. The reason is very
simple, start-ups are necessary for the entrepreneurial and innovative growth of any
nation. There are nations which are smaller than ours and less naturally equipped than
ours, but made tremendous growth and advancements in the field of economy and
overall development. The secret of their success is nothing but an appetite for
innovation. If India wants to be in the front lines with developed nations in the world,
innovation is the key to become so. Fortunately, India is endowed with youngest
population which is primarily required for setting up start-ups. With the growing
inclination towards “Having something of my own” attitude is also helping in
bringing new ideas into successful implementation. India has produced some of the
leading start-ups in the world, which are working as the lighthouse for the rest. The
prominent example being OYO Rooms and Zomato (both catering to a very different
market segment and objectives). In short, the start-up scenario is looking very
convincing and bright as the investments is growing in India start-ups from
worldwide investing bodies both organized and individuals. The recent example of

4
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

such investment being the huge multibillion-dollar investments in various start-ups

functioning in India like Ola and Flipkart. In a way start up era has started in India
and it is the time to give its due push. As it is a known fact that when someone starts a
new enterprise or tries to get into entrepreneurship, they face many problems like
finance, land permissions, environmental clearance, foreign investment proposals,
family support etc. It is one of the much-needed initiative plans of Govt of India. This
initiative focuses on filling the gap in the economy and its development and has the
objective to fire the entrepreneurial blood at the bottom level. It has brought lot of
positivity and confidence among the entrepreneurs of India. According to PM
Narender Modi the start-ups, its technology and innovation is exciting and effective
instruments for India’s transformation. An idea can be converted into a start-up. Even
sometimes the crisis becomes the opportunity and it gives birth to the start-ups. Many
times, we have seen that we have an idea but we do not dare to initiate it or we do not
find it worthy. On the other hand, other people take that idea as an opportunity and
mobilize into reality. The main objective of the govt is to reduce the load on the start-
ups hence allowing them to concentrate fully on their business and keeping the low
cost of adherence. The Ministry of Human Resource Development and the
Department of Science and Technology have agreed to partner in an initiative to set
up over 75 such startup support hubs in the National Institutes of Technology (NITs),
the Indian Institutes of Information Technology (IIITs), the Indian Institutes of
Science Education and Research (IISERs) and National Institutes of Pharmaceutical
Education and Research (NIPERs). The Reserve Bank of India said it will take steps
to help improve the ‘ease of doing business’ in the country and contribute to an
ecosystem that is conducive for the growth of start-up businesses. SoftBank, which is
headquartered in Japan, has invested US$2 billion into Indian startups. The Japanese
firm has pledged to investment US$10 billion. Google declared to launch a startup,
based on the highest votes in which the top three startups will be allowed to join the
next Google Launchpad Week, and the final winner could win an amount of
US$100,000in Google cloud credits. Oracle on 12 February 2016 announced that it
will establish nine incubation centers. In Bengaluru, Chennai, Gurgaon, Hyderabad,
Mumbai, Noida, Pune, Trivandrum and Vijayawada. The result of first ever startup

5
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

state ranking were announced in December 2018 by the Department of Industrial

Policy and Promotion (DIPP) based on the criteria of policy, incubation hubs, seeding
innovation, scaling innovation, regulatory change, procurement, communication,
North-Eastern states, and hill states.
• 2018 Start-up State Ranking are as follows:
• Best performer: Gujarat
• Top performers: Karnataka, Kerala, Odisha, and Rajasthan
• Leader: Andhra Pradesh, Bihar, Chhattisgarh, Madhya Pradesh, and
Telangana
• Aspiring leaders: Haryana, Himachal Pradesh, Jharkhand, Uttar Pradesh, and
West Bengal.
• Emerging states: Assam, Delhi, Goa, Jammu & Kashmir, Maharashtra,
Punjab, Tamil Nadu, and Uttarakhand
• Beginners: Chandigarh, Manipur, Mizoram, Nagaland, Puducherry, Sikkim,
and Tripura.
Kerala has initiated a government start-up policy called "Kerala IT Mission" which
focuses on fetching ₹50 billion (US$700 million) in investments for the state's start-
up ecosystem. It also founded India's first telecom incubator Start-up village in 2012.
The state also matches the funding raised by its incubator from Central government
with 1:1. Telangana has launched the largest incubation Centre in India as "T-Hub".
Andhra Pradesh has allocated a 17,000-sq.ft. Technological Research and Innovation
Park as a Research and Development laboratory. It has also created a fund called
"Initial Innovation Fund" of ₹100 crore (US$14 million) for entrepreneurs. The
government of Madhya Pradesh has collaborated with the Small Industries
Development Bank of India (SIDBI) to create a fund of ₹200 crore (US$28 million).
Rajasthan has also launched a "Start-up Oasis" scheme. In order to promote start-ups
in Odisha, the state government organized a two-day Start-up Conclave in
Bhubaneswar on November 28, 2016.

6
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

1.4 START-UP COMPANY

A start-up or start-up is started by individual founders or entrepreneurs to search for a
repeatable and scalable business model. More specifically, a start-up is a newly
emerged business venture that aims to develop a viable business model to meet a
marketplace need or problem. Founders design start-ups to effectively develop and
validate a scalable business model. Hence, the concepts of start-ups and
entrepreneurship are similar. However, entrepreneurship refers all new businesses,
including self-employment and businesses that never intend to grow big or become
registered, while start-ups refer to new businesses that intend to grow beyond the solo
founder, have employees, and intend to grow large. Start-ups face high uncertainty
and do have high rates of failure, but the minority that go on to be successful
companies have the potential to become large and influential. Some start-ups become
unicorns, i.e., privately held start-up companies valued at over $1 billion. According
to TechCrunch, there were 279 unicorns as of March 2018, with most of the unicorns
located in China, followed by the United States. The largest unicorns founded as of
October 2018 included Ant Financial, Byte Dance, Uber, Xiaomi, and Airbnb.

1.5 HERE ARE THE 19 PLANS PM MODI HAS FOR START-UPS

1. Self-certification: The start-ups will adopt self-certification to reduce the
regulatory liabilities. The self-certification will apply to laws including
payment of gratuity, labor contract, provident fund management, water and air
pollution acts.
2. Start-up India hub: An all-India hub will be created as a single contact point
for start-up foundations in India, which will help the entrepreneurs to
exchange knowledge and access financial aid.
3. Register through app: An online portal, in the shape of a mobile application,
will be launched to help start-up founders to easily register. The app is
scheduled to be launched on April 1.
4. Patent protection: A fast-track system for patent examination at lower costs
is being conceptualized by the central government. The system will promote
awareness and adoption of the Intellectual Property Rights (IPRs) by the start-

7
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

up foundations.
5. Rs 10,000 crore fund: The government will develop a fund with an initial
corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over four years,
to support upcoming start-up enterprises. The Life Insurance Corporation of
India will play a major role in developing this corpus. A committee of private
professionals selected from the start-up industry will manage the fund.
6. National Credit Guarantee Trust Company: A National Credit Guarantee
Trust Company (NCGTC) is being conceptualized with a budget of Rs 500
crore per year for the next four years to support the flow of funds to start-ups.
7. No Capital Gains Tax: At present, investments by venture capital funds are
exempt from the Capital Gains Tax. The same policy is being implemented on
primary-level investments in start-ups.
8. No Income Tax for three years: Start-ups would not pay Income Tax for
three years. This policy would revolutionize the pace with which start-ups
would grow in the future.
9. Tax exemption for investments of higher value: In case of an investment of
higher value than the market price, it will be exempt from paying tax
10. Building entrepreneurs: Innovation-related study plans for students in over 5
lakh schools. Besides, there will also be an annual incubator grand challenge
to develop world class incubators.
11. Atal Innovation Mission: The Atal Innovation Mission will be launched to
boost innovation and encourage talented youths.
12. Setting up incubators: A private-public partnership model is being
considered for 35 new incubators and 31 innovation centers at national
institutes.
13. Research parks: The government plans to set up seven new research parks,
including six in the Indian Institute of Technology campuses and one in the
Indian Institute of Science campus, with an investment of Rs 100 crore each.
14. Entrepreneurship in biotechnology: The government will further establish
five new biotech clusters, 50 new bio incubators, 150 technology transfer
offices and 20 bio-connect offices in the country.

8
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

15. Dedicated program in schools: The government will introduce innovation-

related program for students in over 5 lakh schools.
16. Legal support: A panel of facilitators will provide legal support and
assistance in submitting patent applications and other official documents.
17. Rebate: A rebate amount of 80 percent of the total value will be provided to
the entrepreneurs on filing patent applications.
18. Easy rules: Norms of public procurement and rules of trading have been
simplified for the start-ups.
19. Faster exit: If a start-up fails, the government will also assist the
entrepreneurs to find suitable solutions for their problems. If they fail again,
the government will provide an easy way out.

1.6 ENTREPRENEURSHIP
Entrepreneurship is the process of designing, launching and running a new business,
which is often initially a small business. The people who create these businesses are
called entrepreneurs. Entrepreneurship has been described as the "capacity and
willingness to develop, organize and manage a business venture along with any of its
risks in order to make a profit". While definitions of entrepreneurship typically focus
on the launching and running of businesses, due to the high risks involved in
launching a start-up, a significant proportion of start-up businesses have to close due
to "lack of funding, bad business decisions, an economic crisis, lack of market
demand—or a combination of all of these. A broader definition of the term is
sometimes used, especially in the field of economics. In this usage, an Entrepreneur is
an entity which has the ability to find and act upon opportunities to translate
inventions or technology into new products: "The entrepreneur is able to recognize
the commercial potential of the invention and organize the capital, talent, and other
resources that turn an invention into a commercially viable innovation." In this sense,
the term "Entrepreneurship" also captures innovative activities on the part of
established firms, in addition to similar activities on the part of new businesses.
Entrepreneurship is the act of being an entrepreneur, or "the owner or manager of a
business enterprise who, by risk and initiative, attempts to make profits".

9
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

Entrepreneurs act as managers and oversee the launch and growth of an enterprise.
Entrepreneurship is the process by which either an individual or a team identifies a
business opportunity and acquires and deploys the necessary resources required for its
exploitation. Early-19th-century French economist Jean-Baptiste Say provided a
broad definition of entrepreneurship, saying that it "shifts economic resources out of
an area of lower and into an area of higher productivity and greater yield".
Entrepreneurs create something new, something different—they change or transmute
values. Regardless of the firm size, big or small, they can partake in entrepreneurship
opportunities. The opportunity to become an entrepreneur requires four criteria. First,
there must be opportunities or situations to recombine resources to generate profit.
Second, entrepreneurship requires differences between people, such as preferential
access to certain individuals or the ability to recognize information about
opportunities. Third, taking on risk is a necessary. Fourth, the entrepreneurial process
requires the organization of people and resources. The entrepreneur is a factor in and
the study of entrepreneurship reaches back to the work of Richard Cantillon and
Adam Smith in the late 17th and early 18th centuries. However, entrepreneurship was
largely ignored theoretically until the late 19th and early 20th centuries and
empirically until a profound resurgence in business and economics since the late
1970s. In the 20th century, the understanding of entrepreneurship owes much to the
work of economist Joseph Schumpeter in the 1930s and other Austrian economists
such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. According to
Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea
or invention into a successful innovation. Entrepreneurship employs what Schumpeter
called "the gale of creative destruction" to replace in whole or in part inferior
innovations across markets and industries, simultaneously creating new products
including new business models. In this way, creative destruction is largely
responsible for the dynamism of industries and long-run economic growth. The
supposition that entrepreneurship leads to economic growth is an interpretation of the
residual in endogenous growth theory and as such is hotly debated in academic
economics.

10
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

2. RESEARCH METHODOLOGY
2.1 Objective
a. Meaning:
• A research objective is a clear, concise, declarative statement, which provides
direction to investigate the variables under the study.
• The objectives of a research project summarize what is to be achieved by the
study.
b. Characteristics:
• Research objective is a concrete statement describing what the research is
trying to achieve.
• A well-known objective will be SMART: • S – SPECIFIC • M –
MEASURABLE. • A – ATTAINABLE. • R – REALISTIC. • T – TIME
BOUND
• Research objective should be RELEVANT, FEASIBLE, LOGICAL,
OBSERVABLE, UNEQUIVOCAL & MEASURABLE.
• Objective is a purpose that can be reasonably achieved within the expected
timeframe and with the available resources.
• The objective of research project summarizes what is to be achieved by the
study.
• The research objectives are the specific accomplishments the researcher hopes
to achieve by the study.
• The objectives include obtaining answers to research questions or testing the
research hypotheses.

c. Objectives of the study are as follows:

• To study the financial problems faced by the start-ups in India.
• To study the Women entrepreneurs in India.
• To find out the reasons behind few or limited start-ups in India.
• To highlight the importance of financing agencies for start-ups in India.
• To understand the Entrepreneurial Development Plan.

11
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

2.2 Scope of Study

i. The study will be able to reveal the preferences, need, perception, of the Start-Ups
regarding funding, Support and Trainings.
ii. It also helps upcoming entrepreneur to gain a deeper understanding of the
financial challenges facing startups and identical potential solutions to help them
succeed.

2.3 Limitation of Study

a. The financial problems faced by startups may vary depending on the industry,
location and other contextual factors.
b. Some startups may not disclose their financial information, or may provide
incomplete or inaccurate data, which can affect validity of findings.

2.4 Types of Research

The research is primarily both exploratory as well as descriptive in nature. The sources
of information are both Primary & Secondary.
A well-structured questionnaire was prepared to collect the perception of the
respondent, through this questionnaire

2.5 Research Method

Research can be defined as systematized effort to gain new knowledge.
Research is carried out by different methodology, which has their own pros and
cons.
Research methodology is a way to solve research problem along with the logic
behind them. Thus, when we talk of the research methodology, we not only
take of research method but also context of our research study and explain why
we are using a particular method or techniques and why we are not using other
so that research result are capable of being evaluated either by the researchers
himself or by others.

12
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

2.6 Types of Data

1. Primary Data
Primary data is the first-hand data which is collected from the number of
respondents. Here structured questionnaire was used to collect primary data
through surveys.

ADVANTAGES AND DISADVANGES:

Primary data collection has many advantages over traditional data
collection methods. Primary data is collected directly from the people who
are experiencing the problem or issue you’re trying to solve. This means
that it’s more accurate and reliable than other types of data, which can be
collected through surveys or interviews.

Traditional data collection methods rely on asking questions of a sample

of people in order to get an understanding of the problem or issue.
However, this method isn’t always as accurate as primary data because it
doesn’t allow for feedback from the people who are experiencing the
problem.

By collecting primary data, you’re able to gather information from those

who are affected by the issue at hand. This allows you to get a better
understanding of how they’re feeling and what needs to be done in order
to address their concerns.

It also makes research more efficient since there’s no need for a large
number of respondents—just enough people who have experienced the
issue firsthand will do fine.

Plus, primary data is often more relevant because it considers all aspects
of an individual’s experience rather than just one aspect (like with survey
results). Ultimately, this leads to better solutions that reflect everyone’s
reality accurately and efficiently.

13
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

There are a few disadvantages to primary data collection. One

disadvantage is that it can be time-consuming and difficult to collect
accurate information. Another disadvantage is that it can be invasive and
disruptive, often requiring people to take time away from their normal
activities. And finally, it may not be representative of your entire
audience, and you may not have access to all the relevant information.

The advantages and disadvantages of different types of primary data

collections should be considered when designing a study or when selecting
a sampling method for your research project.

2. Secondary Data
Secondary data means data that are already available i.e., they refer to the data
which have already been collected and analyzed by someone else. When the
researcher utilizes secondary data, then he has to look into various sources from
where he can obtain them. In this case he is certainly not confronted with the
problems that are usually associated with the collection of original data.
Secondary data may either be published data or unpublished data. Usually
published data are available in: (a) various publications of the central, state are
local governments; (b) various publications of foreign governments or of
international bodies and their subsidiary organizations; (c) technical and trade
journals; (d) books, magazines and newspapers; (e) reports and publications of
various associations connected with business and industry, banks, stock
exchanges, etc.; (f) reports prepared by research scholars, universities,
economists, etc. in different fields; and (g) public records and statistics, historical
documents, and other sources of published information. The sources of
unpublished data are many; they may be found in diaries, letters, unpublished
biographies and autobiographies and also may be available with scholars and
research workers, trade associations, labour bureaus and other public/ private
individuals and organizations.

14
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

ADVANTAGES AND DISADVANGES:

Secondary data is available from other sources and may already have been used in
previous research, making it easier to carry out further research. It is time-saving
and cost-efficient: the data was collected by someone other than the researcher.
Administrative data and census data may cover both larger and much smaller
samples of the population in detail. Information collected by the government will
also cover parts of the population that may be less likely to respond to the census
(in countries where this is optional). A clear benefit of using secondary data is
that much of the background work needed has already been carried out, such as
literature reviews or case studies. The data may have been used in published texts
and statistics elsewhere, and the data could already be promoted in the media or
bring in useful personal contacts. Secondary data generally have a pre-established
degree of validity and reliability which need not be re-examined by the researcher
who is re-using such data. Secondary data can provide a baseline for primary
research to compare the collected primary data results to and it can also be helpful
in research design. However, secondary data can present problems, too. The data
may be out of date or inaccurate. If using data collected for different research
purposes, it may not cover those samples of the population researchers want to
examine, or not in sufficient detail. Administrative data, which is not originally
collected for research, may not be available in the usual research formats or may
be difficult to get access to.

2.7 Sample Size

20 Random People has been selected as a sample size for research.

2.8 Sample Method

1. Sample Method
Random sampling is used for research project.

15
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

2. Data Representation technique & Tool

Column Charts, pie charts and bar graph has used for the
representation.

2.9 Data Collection

i. Survey Method
ii. Survey Instrument: Questionnaire
iii. Method of Survey: Questionnaire prepared on google forms and
circulated

16
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

3. REVIEW OF LITERATURE
3.1 The Imperfect Education System and Conservative Lifestyle
The education system is one of hindrance for start-ups. In college, students are
usually trained with advanced techniques but lack of marketing, sales and operational
ability and leadership skills needed to advance their own enterprises. In addition,
conservative lifestyle also contributes as one of obstacles. As a culture of family
remains, family remains skeptical to change and prefer options that are able to
provide a steady income rather than engaging risk. This places pressure on the
budding entrepreneur who fall victim to the dichotomy of providing for the family
instead of following some “whimsical” dream (Au & Kwan, 2009).

3.2 Lack of Support Networks and Entrepreneurship Ecosystem

One of the major challenges is that there is severe shortage of start-up support
networks and entrepreneurship ecosystems. In many western countries, there are
special institutions serve as incubators, start-up accelerators, start-up competitions for
entrepreneurs to put their ideas to test and obtain necessary guidance. In India,
incubators, start-up accelerators, and start-up competitions are slowly making their
way into the first-tier cities, but there truly are not enough to go around. As a result of
this shortage, many start-ups fail at the “idea” stage of their business. The ecosystem
usually does not directly provide funding to start-ups; they just serve as platforms that
link investors and entrepreneurs so that entrepreneurs can obtain necessary funding to
test out their ideas. The lack of these facilities makes it more difficult for
entrepreneurs to find investors. In return, investors are more difficult to find
entrepreneurs as well. Even if entrepreneurs are able to find investors, they will face
an entirely different set of challenges. Indian culture inherently does not promote
entrepreneurship. Conversely, it encourages stability, employment at large state-
owned or private organizations and, above all, teaches people to be risk averse. Even
if young Indian individuals have intention to start their own business, their family
usually places a considerable amount of negative pressure on them to forget
entrepreneurship and look for a “stable job” instead

17
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

3.3 India lacks enough angel investors to fund start-ups:

Unlike the West, India does not have an adequate number of angel investors who can
fuel the growth of the country’s thriving start-up ecosystem, industry body
NASSCOM has said. “For a successful start-up ecosystem there is a need for enough
angel investors who can support budding entrepreneurs from an early stage. But this
is not happening in India and there is a serious lack of it,” NASSCOM Vice-President
Rajat Tandon told PTI. “High net-worth individuals and corporate executives, among
others, should come forward and participate in this growth story,” he said. A recent
report by NASSCOM had said India ranks third among global start-up ecosystems,
with more than 4,200 new-age companies. Tandon said, “The case is very different in
countries like the US. People are just waiting to invest in good companies. We should
also have something like that.” “Mainly, investors (in India) are afraid because there
is a high risk of failure in these investments and also there is a lack of policy on such
investments,” he added. “Why will investors put money in such companies? They
need tax benefits and a number of other things to put in their money. We have already
written about these things to the Government and I am sure we can expect something
by the year-end,” he said. In his Independence Day speech, Prime Minister Narendra
Modi had announced a new campaign „Start-up India; Stand up India ‟ to promote
bank financing for start-ups and offer incentives to boost entrepreneurship and job
creation in the country. “At NASSCOM, we are not only encouraging investors but
also asking people to mentor start-ups. Like someone has a design business, they can
help start-ups develop UIs and guide them in the process. In return they take some
equity,” he said. “And there are people like Ratan Tata and Azim Premji, who are
making a slew of investments and helping these young entrepreneurs. They are the
inspiration,” he said. Ratan Tata has invested in a number of companies including
Ola, Snapdeal, Paytm, Urban Ladder, and Bluestone. Wipro boss Azim Premji has
funded companies such as Myntra and Amagi, among others, through his investment
arm Premji Invest.

18
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

3.4 Poor Cash Flow:

For every business, irrespective of its size, cash flow is a top priority. To grow the
business and allocate resources to different aspects of the business adequately,
liquidity is very important. The rule to calculate cash flow is simple- all you need is
to subtract your total expenses from total income. If the figure comes out to be
positive, this means that your business is turning a profit and you’re in the right
direction. On the other hand, if the resulting number is negative, this means that your
business has gone into the red and it’s an alarming situation. There are numerous
ways to avoid that. For starters, you should consider changing or tweaking your
policies. You could seek an upfront payment, which would be great, but it’s also too
risky and may drive your clients away. You could consider setting a contract with
your new clients. Here, you should define when they should pay you and clearly
underline the consequences of late payments.

3.5 Unit Economics:

Moving on, there is unit economics, basically, metrics that show revenues, gross
margins, EBITDA margins of the business. Per unit, economics is relevant for hard
products, hardware etc. and are expected to improve with higher volumes. For
instance, B2B SaaS businesses typically have very high gross margins due to less cost
of sales.

In your revenue, you will have to show the price paid by a customer. For monthly
recurring revenue, you will multiply the number of units sold in a month by the price
per unit. Investors like recurring revenues as against the one-time revenue businesses,
as they can see higher revenue visibility over longer periods of time.

Gross margins are your revenue-less direct costs. Higher gross margins give better
and more surplus to acquire more customers, faster. Furthermore, you need to know
EBITDA margins or operating margins that are GM-less indirect costs, including
CAC and sales-related costs, administrative, maintenance, rentals, legal, accounting,

19
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

etc., costs are termed as indirect costs. A profitable business means businesses with
positive EBITDA – it is the target of every venture.

While initially, most startups will have negative EBITDA, but every startup should
have positive Gross Margins for sure.

As you calculate your unit economics, beware of competition. Undertake extensive

research on players offering similar products/services. Apart from a detailed feature
to feature comparison, know about their revenues, userbase, pricing, etc. Also,
knowledge about their funding and their investors shows how well you understand
your competition.

3.6 Human Talent:

Compared to large mature enterprises, small start-ups are in an exponentially more
difficult dilemma and encountering much severe challenging in recruiting due to the
reason that it cannot pay high salary to its employees or offer any career
development opportunities aside from building their business from the ground up.
What is worse is that working for a start-up in China is far less glamorous than
working for a start-up in the west due to culture differences. It is a disaster for a
company who needs to execute on their business plan with minimal errors to just
survive the month.

3.7 Women Entrepreneur:

Melanne Verveerin, Women entrepreneurs are a vital source of growth that can power
our economies for decades, yet they face tremendous challenges to their full
economic participation. The GEM Women ‘s Report provides important data which is
critical to our understanding of women-run SMEs. V Krishnamoorthy and R
Balasubramaniam, identified the important women entrepreneurial motivation factors
and its impact on entrepreneurial success. The study identified ambition, skills and
knowledge, family support, market opportunities, independence, government subsidy
and satisfaction are the important entrepreneurial motivational factors. The study also

20
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

concluded that ambition knowledge and skill independence dimensions of

entrepreneurial motivational has significant impact on entrepreneurial success.
Jalbert, (2000) performed a study to explore the role of women entrepreneurs in a
global economy. It also examined how women ‘s business associations can strengthen
women ‘s position in business and international trade. The analysis is performed on
the basis of facts and data collected through field work (surveys, focus groups and
interviews) and through examining the existing published research. The study has
shown that the women business owners are making significant contributions to global
economic health, national competitiveness and community commerce by bringing
many assets to the global market. Bowen & Hirsch, (1986), compared & evaluated
various research studies done on entrepreneurship including women entrepreneurship.
Its summaries various studies in this way that female entrepreneurs are relatively well
educated in general but perhaps not in management skills, high in internal locus of
control, more masculine, or instrumental than other women in their values likely to
have had entrepreneurial fathers, relatively likely to have first born or only children,
unlikely to start business in traditionally male dominated industries & experiencing a
need of additional managerial training. Singh, (2008), identifies the reasons &
influencing factors behind entry of women in entrepreneurship. He explained the
characteristics of their businesses in Indian context and also obstacles & challenges.
He mentioned the obstacles in the growth of women entrepreneurship are mainly lack
of interaction with successful entrepreneurs, social un-acceptance as women
entrepreneurs, family responsibility, gender discrimination, missing network, low
priority given by bankers to provide loan to women entrepreneurs. He suggested the
remedial measures like promoting micro enterprises, unlocking institutional frame
work, projecting & pulling to grow & support the winners etc. The study advocates
for ensuring synergy among women related ministry, economic ministry & social &
welfare development ministry of the Government of India.

21
Downloaded by Priyanka jha ([email protected])
 lOMoARcPSD|52109361

4. DATA ANALYSIS, INTREPRETATION &

PRESENTATION

4.1 PRIMARY DATA

DATA ANALYSIS & INTERPRETATION

INTREPRETATION:40% of female and 60% of male invited to answered the survey as

per above pie diagram.

INTREPRETATION: The above diagram represents the age group of the people who
answered the survey. The age group between 18-24 has the highest percentage followed
by 25-30 age group. The age group between 36-49 and more 50 has the lowest percentage
of 20% equally divided.

22

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

INTREPRETATION: From total 20 responses 40% Individual Agree that start-ups in

todays context are doing well and 35% Individual highly agree. 25% people have negative
opinion and are not agree with the statement.

INTREPRETATION: The above pie diagram shows the percentage of how many people
tried to start their own business as an entrepreneur. Around 11(55%) individuals tried to
start their own business and rest 9(45%) individuals not even tried.

23

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

INTREPRETATION: According to the above chart and 20 responses, problem faced by

entrepreneurs today include 20% lack of confidence, 50% Lack of support from families,
55% fear of letting go existing job and 55% Fear of taking risk. The percentage peak is
100% of each.

INTREPRETATION: The above pie chart shows that 75% of people agrees that
entrepreneurship should be one of the subject in undergraduate program and 10% are not
agree with this. 15% are not sure.

24

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

INTREPRETATION: The above chart shows that out of 100%, 45% had worked in start-
ups company and 55% didn’t work with start-ups in their entire lifetime.

INTREPRETATION: The above chart shows that 50% of people are not agree that
marketing and financial knowledge taught by colleges are not sufficient to handle a
business and 5% people agrees. 45% people are not sure whether knowledge of marketing
and finance opted from college can handle business or not.

25

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

INTREPRETATION: According to the above presented chart and 20 responses shows that
financial problem faced by start-ups are 60% of Lack of capital to start, 75% of lack of
investments, 60% of higher salaries paid to professional staffs, 25% of higher ask of
equity from investors and 65% Not able to manage burn rate, cash flow and marketing
expenses. The percentage high margin is 100% of each.

INTREPRETATION The above bar Diagram and opinion of 20 responses shows that, 2
individual thinks that government supporting start-ups is only 10%, 7 thinks 35%, 6 thinks
30%, 3 thinks 15% and other 2 thinks 10%.

26

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

INTREPRETATION The above Diagram and opinion of 20 responses shows that, 60%
Corruption, 30% Poverty, 45% Traditional Mindset and 50% founder wants to be CEO
are the reasons which restrict the success of start-ups in India.

INTREPRETATION: The above Diagram and opinion of 20 responses shows that, 75%
Generation of employment, 40% Increase in government revenue and funds, 40% Increase
in GDP and 55% Improvement in economy are the benefits can be provided by start-ups
to the nation.

27

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

INTREPRETATION: The above Diagram and opinion of 20 responses shows that, 30%
Role Conflict, 60% Work-life Balance, 35% Lack of family support, 25% lack of
networking and mentorship, 60% Male Dominated Society could be the problems faced by
women entrepreneurs on scale of 100% of each.

INTREPRETATION: The above Diagram and opinion of 20 responses shows that on the
scale of 100% of each, 25% not understands the needs of the society, 60% lacks fresh and
innovative ideas, 55% are unaware of changing market dynamics and 20% Meritocracy
are the reasons behind failure of every start-ups.

28

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

4.2 Secondary Data

(A) Women Entrepreneurs in India:
Women Entrepreneurs may be defined as the women or a group of women who
initiate, organize and operate a business enterprise. The Government of India has
defined women entrepreneurs as an enterprise owned and controlled by women
having a minimum financial interest of 51 per cent of the capital and giving at
least 51 per cent of the employment generated in the enterprise to women.
Women ‖ entrepreneurs engaged in business due to push and pull factors which
encourage women to have an independent occupation and stands on their own
legs. A sense towards independent decision-making on their life and career is the
motivational factor behind this urge. With the change of time there is tremendous
upliftment in the status of Indian women entrepreneur. Women entrepreneurs are
gaining a strong hold in most of the developing countries including India, Brazil
etc. Another recent trend is women are increasingly coming on the fore front in
private and government business organizations and occupying the top positions
everywhere like Indra Nooyi, Chanda Kochhar, Shikha Sharma, Kiran Mazumdar
Shaw, Naina Lal Kidwai, etc. Again, there is increased awareness and women
entrepreneurs are increasingly finding easy to finance their business. Women
entrepreneurs are also taking up issues of environmental changes too.

(i)Status of women entrepreneurs in India:

Entrepreneurship is considered as one of the most important factors contributing
to the development of society. India has been ranked among the worst performing
countries in the area of women entrepreneurship in gender-focused global
entrepreneurship survey, released in July 2013 by PC maker Dell and Washington
based consulting firm Global Entrepreneurship and Development Institute
(GEDI). Of the 17 countries surveyed India ranks 16th, just above Uganda.
Countries like Turkey, Morocco and Egypt has outperformed India. Status of
higher education in women in India came out to be lower than most countries in
the world. At present, women entrepreneurial role is limited in the large-scale
industries and technology-based businesses. But even in small scale industries, the

29

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

women’s participation is very low. As per the third all-India census of Small-
Scale Industries, only 10.11% of the micro and small enterprises were owned by
women, and only 9.46% of them were managed by women. While the number of
women operating their own business is increasing globally, women continue to
face huge obstacles that stunt the growth of their businesses, such as lack of
capital, strict social constraints, and limited time and skill.

(ii)Reasons for becoming Women Entrepreneurs:

The glass ceilings are shattered and women are found indulged in every line of
business. The entry of women into business in India is traced out as an extension
of their kitchen activities, mainly 3P ‘s, Pickle, Powder and Pappas. But with the
spread of education and passage of time women started shifting from 3P ‘s to
modern 3E ‘s i.e., Energy, Electronics and Engineering. Skill, knowledge and
adaptability in business are the main reasons for women to emerge into business
ventures. Women Entrepreneur is a person who accepts challenging role to meet
her personal needs and become economically independent. A strong desire to do
something positive is an inbuilt quality of entrepreneurial women, who is capable
of contributing values in both family and social life. With the advent of media,
women are aware of their own traits, rights and also the work situations. The
challenges and opportunities provided to the women of digital era are growing
rapidly that the job seekers are turning into job creators. Many women start a
business due to some traumatic event, such as divorce, discrimination due to
pregnancy or the corporate glass ceiling, the health of a family member, or
economic reasons such as a layoff. But a new talent pool of women entrepreneurs
is forming today, as more women opt to leave corporate world to chart their own
destinies. They are flourishing as designers, interior decorators, exporters,
publishers, garment manufacturers and still exploring new avenues of economic
participation.
(iii)Role of Government to develop Women Entrepreneurs in India:
Development of women has been a policy objective of the government since
independence. Until the 70s the concept of women development was mainly

30

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

welfare oriented. In 1970s, there was a shift from welfare approach to

development approach that recognized the mutually reinforcing nature of the
process of development. The 80s adopted a multi-disciplinary approach with an
emphasis on three core areas of health, education and employment. Women were
given priorities in all the sectors including SSI sector. Government and non-
government bodies have paid increasing attention to women economic
contribution through self- employment and industrial ventures.
➢ The First Five-Year Plan (1951-56) envisaged a number of welfare measures
for women. Establishment of the Central Social Welfare Board, organization
of Mahala Mandal’s and the Community Development Programmes were a
few steps in this direction.
➢ In the second Five-Year Plan (1956-61), the empowerment of women was
closely linked with the overall approach of intensive agricultural development
programmes.
➢ The Third and Fourth Five-Year Plans (1961- 66 and 1969-74) supported
female education as a major welfare measure.
➢ The Fifth Five-Year Plan (1974-79) emphasized training of women, who
were in need of income and protection. This plan coincided with International
Women ‘s Decade and the submission of Report of the Committee on the
Status of Women in India. In1976, Women ‘s welfare and Development
Bureau was set up under the Ministry of Social Welfare.
➢ The Sixth Five-Year Plan (1980-85) saw a definite shift from welfare to
development. It recognized women ‘s lack of access to resources as a critical
factor impending their growth. Steps taken in Seventh Five-Year Plan:
➢ In the seventh five-year plan, a special chapter on the “Integration of women
in development” was introduced by Government with following suggestion.
(i)Specific target group: It was suggested to treat women as a specific target
group in all major development programs of the country.
(ii) Arranging training facilities: It is also suggested in the chapter to devise
and diversify vocational training facilities for women to suit their changing
needs and skills.

31

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

(iii) Developing new equipment’s: Efforts should be made to increase their

efficiency and productivity through appropriate technologies, equipment’s
and practices.
(iv) Marketing assistance: It was suggested to provide the required assistance
for marketing the products produced by women entrepreneurs.
(v) Decision-making process: It was also suggested to involve the women in
decision-making process.
• Steps taken by Government during Eight Five-Year Plan: The Government of
India devised special programs to increases employment and income-generating
activities for women in rural areas. The following plans are lunched during the
Eight-Five Year Plan:
(a) Prime Minister Rojgar Yojana and EDPs were introduced to develop
entrepreneurial qualities among rural women.
(b) Women in agriculture’ scheme was introduced to train women farmers having
small and marginal holdings in agriculture and allied activities.
(c) To generate more employment opportunities for women KVIC took special
measures in remote areas.
(d) Women co-operatives schemes were formed to help women in agro-based
industries like dairy farming, poultry, animal husbandry, horticulture etc. with
full financial support from the Government.
(e) Several other schemes like integrated Rural Development Programs (IRDP),
Training of Rural youth for Self-employment (TRYSEM) etc. were started to
alleviated poverty.30-40% reservation is provided to women under these
schemes.
• Steps taken by Government during Ninth Five-Year Plan: Economic
development and growth are0 not achieved fully without the development of
women entrepreneurs. The Government of India has introduced the following
schemes for promoting women entrepreneurship because the future of small-scale
industries depends upon the women-entrepreneurs
(a) Trade Related Entrepreneurship Assistance and Development (TREAD)
scheme was lunched by Ministry of Small Industries to develop women

32

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

entrepreneurs in rural, semi-urban and urban areas by developing

entrepreneurial qualities.
(b) Women Comkp0onent Plant, a special strategy adop0ted by Government to
provide assistance to women entrepreneurs.
(c) Swarna Jayanti Gram Swarozgar Yojana and Swarna Jayanti Sekhari Rozgar
Yojana were introduced by government to provide reservations for women
and encouraging them to start their ventures.
(d) New schemes named Women Development Corporations were introduced
by government to help women entrepreneurs in arranging credit and
marketing facilities.
(e) State Industrial and Development Bank of India (SIDBI) has introduced
following schemes to assist the women entrepreneurs. These schemes are:
(i) Mahila Udyam Nidhi
(ii) Micro Cordite Scheme for Women
(iii) Mahila Vikas Nidhi
(iv) Women Entrepreneurial Development Programmes
(v) Marketing Development Fund for Women

(iv)Consortium of Women entrepreneurs of India provides a platform to assist

the women entrepreneurs to develop new, creative and innovative techniques of
production, finance and marketing. There are different bodies such as NGOs,
voluntary organizations, Self-help groups, institutions and individual enterprises
from rural and urban areas which collectively help the women entrepreneurs in
their activities.
(v) Training Programmes:
The following training schemes specially for the self-employment of women are
introduced by government:
(i) Support for Training and Employment Programmed of Women (STEP).
(ii) Development of Women and Children in Rural Areas (DWCRA).
(iii)Small Industry Service Institutes (SISIs)
(iv) State Financial Corporations

33

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

(v) National Small Industries Corporations

(vi) District Industrial Centre’s (DICs)
(vi) Mahila Vikas Nidhi:
SIDBI has developed this fund for the entrepreneurial development of women
especially in rural areas. Under Mahila Vikas Nidhi grants loan to women are
given to start their venture in the field like spinning, weaving, knitting,
embroidery products, block printing, handlooms handicrafts, bamboo products
etc.
(vii) Rastriya Mahila Kosh:
In 1993, Rastriya Mahila Kosh was set up to grant micro credit to pore women at
reasonable rates of interest with very low transaction costs and simple procedures.
STATES No. of Units No. of Women Percentage
Registered Entrepreneurs
Tamil Nadu 9618 2930 30.36
Uttar Pradesh 7980 3180 39.84
Kerala 5487 2135 38.91
Punjab 4791 1618 33.77
Maharashtra 4339 1394 32.12
Gujrat 3872 1538 39.72
Karnataka 3822 1026 26.84
Madhya Pradesh 2967 842 28.38
Other states & 14576 4185 28.71
UTS
TOTAL 57,452 18,848 32.82

Promotional Organizations to help Women Entrepreneur:

Federation of Indian Women Entrepreneur–The FIWE was started in 1993 at
the fourth international conference of women entrepreneurs held in December at
Hyderabad. Its main function was to establish networking and to provide a
package of service to women entrepreneurs’ association in India. Association of
women entrepreneurs in different states are affiliated to FIWE, so that they can
have networking.
Federation of Ladies Organization - FLO was formed in 1983 as a national
level forum for women with the objective of women empowerment. FLO has
spectrum of activities in order to promote women entrepreneurship and

34

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

professional excellence.
World Association of Women Entrepreneurs - The world association of
Women entrepreneurs is an international women organization. It aims is to bring
together all women who are qualified to take up an active and leading part in
employers’ organization along with their male colleagues.
National Women Development Corporation - NWDC serves all women
especially in rural and urban poor areas through promotion of women
development in rural and urban areas.
Association of Women Entrepreneurs of Karnataka - AWAKE was
established in 1983 and has been recognized worldwide. It is an affiliation of
Women World Bank in New York. It is one of India ‘s institution for women
totally devoted to entrepreneurship development.
Women’s India trust (WIT) - The trust was established in 1968 by Kamila
Tyabji. WIT Centre at Panvel, 40kms, from Mumbai. The Kamila trust UK was
set up in the early 1990‘s with an aim of selling in England items produced by
WIT family of women in India. Encourage by its London, WIT expanded the
export activities to Australia, Europe, Germany from 1995 onwards. WIT had
plans to launch computer training for women
Consortium of women entrepreneur of India (CWEI) - In the context of the
opening up of the economy and the need for up-gradation of technology, the
consortium of women entrepreneur of India started in year 2001 provides a
common platform to help women entrepreneurs in finding innovative techniques
of production marketing and finance.
Self-help groups (SHGs) - A SHGs’ is a small, economical homogeneous and
significant group of rural and urban poor, voluntarily formed to save and mutually
agreed to contribute to common fund to be lent to its members as per group
decision.

35

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

(B) Reason behind limited Start-Ups in India

The failing-start-up problem in India has become a big issue in the start-up
ecosystem. As per statistics, majority of entrepreneurs fail while trying to
establish their business. After studying failed start-ups in India, I have compiled a
list of several major reasons behind their failure. From the lack of talent to
changing market dynamics, these top reasons can become a nightmare for any
entrepreneur who wants to start a new venture in the ever-changing Indian-
market.

➢ Not Understanding the Needs of the Society: Most successful business ideas
arise from needs of the society. Since high school, teenagers become a part of
the competition to get the best college and eventually, the best job. Due to
competition, most people spend countless hours in studies and disconnect
themselves from society. The divide between the tech-driven lifestyle of
millennials and lack of understanding for society’s demands contribute
towards failing business models. The educational pressure is one of the many
reasons that experts believe to be the source for lack of understanding between
people and society.
➢ Lack of fresh and Innovative Ideas: Almost every niche market in India is
suffocated with multiple startups trying to provide solutions to the same
problem. This calls for entrepreneurs to be inventive and push the boundaries
using innovation to stand out. Due to competition, the urge to grab market

36

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

share makes an entrepreneur vulnerable to mistakes by producing the wrong

product.
➢ Lack of People with Hands-on Experience: The startup ecosystem in India
has a dearth of talent due to issues like brain drain. Due to the competition
among startups, the idea of training a new employee goes right out of the
window as time is a critical factor. Nobody wants to spend resources training
the new crop when you can get experienced personnel. This has created a void
of experienced professionals, who can contribute from the first day itself. By
hiring amateurs, which most Indian startups do, they fail to provide a better
product, which eventually leads to a startup’s demise.
➢ Limited Access to Funding: Entrepreneurs have to fight hard to get funding
for their startups nowadays. To get started, they use their savings or take
money from friends and family. Very few are lucky to get angel funding.
Moreover, venture capitalists tend to finance only those business ideas that
can provide a good return on investment. This results in majority of young
entrepreneurs missing VC funding. As a result, most Indian entrepreneurs are
not able to continue their venture due to lack of funding.
➢ Lack of Understanding between Technical and Management Teams There
is a big difference between a technical graduate and a management graduate.
For a startup to succeed, complete understanding is need between the two. The
lack of technical know-how among management graduates and the lack of
managerial knowledge among technical graduates is one of the common
reasons behind the failure of startups in India.
➢ Offering very High Salaries Startups in India face a serious shortage of
talent pool. To bring experienced professionals on board, they offer high
salaries to keep the startup in safe hands. However, offering high salaries to
employees makes the startup eat into its resources. The shortage of funds
leads to instability within the startup, which leads to bad decisions.
➢ Lack of Interpersonal and Soft Skills Most entrepreneurs in India are found
to lack interpersonal and soft skills. Due to poor communication skills, an
entrepreneur increases the failure rate of his/her startup. The lack of such

37

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

essential skills makes a startup not able to compete in international market.

Also, entrepreneurs face a lot of difficulty in pitching their business ideas to a
venture capitalist with poor communication.
➢ Not Able to Address the Issue of Scalability Over one-third of Indian
population is on the internet. Startups that have successfully built a product
based on the needs of the society and are running profitably, will face the
issue of scalability. In such cases, lack of awareness or no mentor-ship
becomes the deciding factors behind a startup’s failure. Due to inexperience,
entrepreneurs fail to understand the changing needs of their product’s growing
consumer base.
➢ Unaware of Changing Market Dynamics: Market dynamics keep changing
with new trends becoming outdated in no time. Before a startup knows what
hit them, it is often too late to react and change the strategy. Such scenarios
arise when a startup’s core team is unable to make timely decisions due to
lack of industry insight, not conducting thorough research about the niche
market, targeting a wide market segment, and more.
➢ Every founder cannot be the CEO: There can be only one CEO, even if
there are many founders. Only one person sets the vision, and the others
execute after there is broad agreement over what needs to be done. Too many
people trying to display the big picture is a waste of time and shows role
ambiguity. “Too many cooks spoil the broth” comes in when everybody is the
boss. Direction comes from a single person and that position must be stable,
secure, and given space to experiment, with a reasonable error margin.
➢ Meritocracy: This should be ruthlessly executed from the top down. The
agenda is to build a business and not protect anyone. Right people doing the
right task is the only way to build a business. With a well-laid appraisal
mechanism, talent must be timely rewarded and given a greater platform so
that they feel as much as a part of the venture as the founders. It takes 8-10
years to build a good/great business, and without a performing team which
sticks around, it is simply not possible

38

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

(C) To highlight the importance of financing agencies in India

A start-up is a reflection of an out of the box idea which is put into execution for
the generation of revenues through the sale of products and services that are
unique and fills the gap of the consumer needs that are in the market. India is fifth
in the world in the aspect of the startups with 3100 startups functioning since the
last 3-4 years. India has been seeing a trend of risk-taking entrepreneurs who are
willing to sacrifice huge opportunity costs for startups. But, according to a study,
more than 94% of the business leads to the falling scenario due to the lack of
sufficient funds. Lack of funding is a common barrier seen in the startup world.
The known example of the Saurav Karukar’s startup SASLAB technologies in
2014 was due to the lack of funding. The generation of revenue is not a piece of
cake without the constant fuel of funding to the business. So, most of the times
this inquisitive question hits the mind of every other entrepreneur: How my
startup should be funded?
The funding of the business also depends on the nature of the business and the
type of the business. Some startups that are unique but the idea holds a lot of risk
for the business the funding becomes tough. The business can be funded through
various means and ways in India. Here, is a guide that can make you startup grow
by leaps and bounds through the proper source of funding.

(i) Venture Capital

Venture Capital is money provided by professionals who invest and manage
young rapidly growing companies that have the potential to develop into
significant economic contributors. According to SEBI regulations, venture capital
fund means a fund established in the form of a company or trust, which raises
money through loans, donations, issue of securities or units and makes or
proposes, to make investments in accordance with these regulations. The funds so
collected are available for investment in potentially highly profitable enterprises
at a high risk of loss. A Venture Capitalist is an individual or a company who
provides. Investment Capital, Management Expertise, Networking & marketing
support while funding and running highly innovative & prospective areas of

39

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

products as well as services. In India, the Venture Capital Funds can be

categorized into the following groups: Promoted by Public Banks: These type of
Venture Capitalist funds is promoted by Public Banks. SBI Capital Markets Ltd
and Can bank Venture Capital Fund are some examples of these kinds of VC
funds. Promoted by the Central Government controlled development finance
institutions: This group contains Venture Capital Funds that are promoted by
development finance institutions that are controlled by the Central Government of
the country. The examples are IFCI Venture Capital Funds Ltd. (IFCI Venture)
and SIDBI Venture Capital Limited (SVCL). Promoted by State Government
Controlled development finance Institutions: This group includes Venture Capital
Funds which are promoted by development finance institutions controlled by state
government. Some of the famous examples are:
• Explain what’s changed. Detail the innovation, industry shift, or problem that
presents substantial opportunity for your company.
• Explain what you do. In one sentence, show how your company can capitalize
on this opportunity.
• Explain the facts. Get to your company’s story and financials quickly. Lay out
the opportunity with numbers. Discuss the team and their abilities and
experience.
(ii) Bootstrapping:
Bootstrapping or in layman terms is the self-funding of your startup financing
when you are an immature entrepreneur and don’t get any support from any bank
or any other financial source unless you hold a strong plan to execute the business
along with a sure guarantee of growth of the business. Also, one of the ways to
start funding the business is that the source of the funding is flexible as your
borrowing from your friends and family. You can borrow the money at low-
interest rates and also can avail the benefit of not being answerable to anyone. At
the maturity stage of the business, this is considered as an edge in front of the
investors as they consider it as a good point for the startups that have low
requirements. But, not advisable to startups who are in need have vigorous
funding since day 1 for their operations.

40

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

(iii) Crowdfunding:
One of the developing sources of finance for your start-up is to avail the finance
from the public. The process works in an interactive way wherein an entrepreneur
pitches his business idea in front of the layman on a platform where he orients
them about his business, the process and how revenues would be generated along
with the seed capital amount and where would the amount be invested into. The
crowd then reverts the pitch in the form of donation or form of pre-buying orders
for the entrepreneur. This type of sourcing not only full-fills the need of the
entrepreneur but also generates an audience for him who are willing to fund his
idea as well as support it giving a boost for the business in the initial years. This
also grabs the attention of the venture capitalists few years down the timeline and
would be interested in funding your business by looking at the success of your
campaign and your risk.

(iv) Angel Investors:

Angels are generally wealthy individuals or retired company executives who
invest directly in small firms owned by others. They are often leaders in their own
field who not only contribute their experience and network of contacts but also
their technical and/or management knowledge. Angels tend to finance the early
stages of the business with investments in the order of $25,000 to $100,000.
Institutional venture capitalists prefer larger investments, in the order of
$1,000,000.
In exchange for risking their money, they reserve the right to supervise the
company's management practices. In concrete terms, this often involves a seat on
the board of directors and an assurance of transparency.
Angels tend to keep a low profile. To meet them, you have to contact specialized
associations or search websites on angels. The National Angel Capital
Organization (NACO) is an umbrella organization that helps build capacity for
Canadian angel investors. You can check out their member’s directory for ideas
about who to contact in your region

41

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

(v) Incubators & Accelerators:

Incubators and accelerators are one of the other options when you’re looking for
an initial start-up investment. They are basically the programs for a short span of
time that help the business to grow and nurture also with to provide them with
other mentors and connections for the benefit. Incubators are basically the
programs where they provide you with an in-house space and equipment with
their funding to run your start-up against stakes going as high as up to 20%. On
the other hand, accelerators are the programs with a short span of time where you
are assigned a small seed capital along with a return of a large mentor network
against the stakes of 2-10% of your business. Thus, incubators are like your
parents who nurture you and the accelerators are the programs which give you
huge opportunities. India holds some popular names of Amity Innovation
Incubator & Angel Prime.

(vi) Government Programs:

The government is also providing incentives for the startups and to promote them.
The government of India passed the startup fund in the union budget of 2014-15
which is valued at 10,000 crores for Indian startups. There are more programs
launched by the government to take the benefit such as the Bank of Ideas and
Innovations by the program that will support the new product ideas. There are
also government programs wherein you need no collateral security against the
loan you borrow for your startup under the name of Credit Guarantee Fund Trust
for Micro and Small Enterprises. The government also started with MUDRA with
an amount of 20,000 crores to sanction loans to startup once you clear the criteria.
There are also institutions who take lower interest rates as compared to the
market. The awareness is a parameter if you are applying for loan through the
government programs.

(vii) High Net-Individuals:

Lastly, our final source of funding is the High Net-worth individuals who are
individuals with ample number of financial resources for your startup. These

42

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

individuals are having their existing business and are looking for opportunities to
invest into your business with their resources for the time span of 1-3. After this
time span, they expect the amount of the investment to be twice or thrice during
this period. They mainly invest in those businesses which are having the highest
caliber level to sustain in the market and generate good revenue streams in short
span of time. The first advantage of this type of funding that you can design a
custom investment based on the funds you need which give you an edge. Lastly,
the high net-worth individuals charge you lower fees.

(vii) Bank Loans:

This might probably be the first option when you have an idea of your own
startup. Banks offer loans to the entrepreneurs who are eligible and capable of
carrying out a sustainable and stable business project. For the sanction of the loan,
the bank takes into consideration the business model, the valuation of various
inventories and the project report along with other documentation. But now the
process is hassle free and without any collateral. Under all the banks there are 7-8
different types of loans for the SME Business. But the only thing that needs to be
taken care of is the timely repayment of the amount. The funding done by the
bank has got benefits such as the profit or loss remains with you along with the
proper procedure and framework of the banks. Also, they are available every and
charge less as compared to venture capitals i.e., 13-17%.

(viii) Friends & Families:

One of the best places to raise funds is from your own house. As your family is
well aware of your talents, they will be willing to support you regardless of what
you want to do. Family and friends are the only ones who know your potential
and will be willing to give you money to start your business. This may seem like a
great way of gaining investment partners, but everything has its drawbacks.
Acquiring loans or investment form family or friends may be advantageous to
some businesses as they have faith in your talents and your success. But for others
that require expert assistance or guidelines, angel investors are the best way as

43

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

your family might not have those experiences which are needed. This may be a
good way for you to raise money as they love and care for you but it is not fun
when you lose it as it may affect your relationship with that person forever. A
good way of raising funds from your family may be if you choose those who have
the knowledge of business and its risks while investing. Regardless of this fact, it
is important to behave like a professional with them, and while they are
considering to invest, you should lay out all the risks involved in the investment
so they can decide at first.

(D) Entrepreneurship Development Plan

Entrepreneurship is the process of setting up one’s own business as distinct from
pursuing any other economic activity, be it employment or practicing some
profession. The person who set-up his business is called an entrepreneur. The
output of the process, that is, the business unit is called an enterprise.
It is interesting to note that entrepreneurship besides providing self-employment
to the entrepreneur is responsible to a great extent for creation and expansion of
opportunities for the other two economic activities, that is, employment and
profession. (Can you think why and how?) Further, each business gives rise to
other businesses– the suppliers of raw materials and components, service
providers (be it transport, courier, telecom, distributor middlemen and advertising
firms, accounting firms and advocates etc. And, in the process, entrepreneurship
becomes crucial for overall economic development of a nation. Given its
important role in the overall scheme of economic development, it is interesting to
note that not many persons opt for a career in entrepreneurship. Traditionally, it
was believed that entrepreneurs are born. No society can wait for the chance of
‘birth’ of entrepreneurs to pursue its developmental plans. In fact, plans for
economic development would bear little fruit unless entrepreneurship
development is regarded as a deliberate process of making people aware of
entrepreneurship as a career at an early age and creating situations where they
may actually make a choice to become entrepreneurs. When you make this
choice, you become a job-provider rather than a job-seeker, besides enjoying a

44

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

host of other financial and psychological rewards. Taking to entrepreneurship is

surely more a matter of aspiring to become an entrepreneur rather as being born as
one.

Characteristics of Entrepreneurship:
In the SVO formulation of the concepts of entrepreneur, entrepreneurship and
enterprise, we saw that entrepreneurship is about the process of setting up a
business. One cannot help but marvel at the beauty of the process: how does one
first of all decide to choose own business as a career; how does one sense a
market opportunity; how does one muster up courage to embark upon it, and
mobilize the requisite resources, etc.; so much so that recourse to
entrepreneurship, in common parlance, is considered as an exclusive preserve of a
few gifted individuals. In the following paragraphs, our effort would be to
establish entrepreneurship as a career that you should aspire for. Remember,
resources may be limited, aspiration need not be. So, you can aspire for something
greater, bigger than your present status and resources. And start today.
Remember, aspiration means desire multiplied by action.

1.Systematic Activity: Entrepreneurship is not a mysterious gift or charm and

something that happens by chance! It is a systematic, step-by step and
purposeful activity. It has certain temperamental, skill and other knowledge
and competency requirements that can be acquired, learnt and developed, both
by formal educational and vocational training as well as by observation and
work experience. Such an understanding of the process of entrepreneurship is
crucial for dispelling the myth that entrepreneurs are born rather than made.
2. Lawful and Purposeful Activity: The object of entrepreneurship is lawful
business. It is important to take note of this as one may try to legitimize
unlawful actions as entrepreneurship on the grounds that just as
entrepreneurship entails risk, so does illicit businesses. Purpose of
entrepreneurship is creation of value for personal profit and social gain.
3. Innovation: From the point of view of the firm, innovation may be cost

45

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

saving or revenue-enhancing. If it does both it is more than welcome. Even if

it does none, it is still welcome as innovation must become a habit!
Entrepreneurship is creative in the sense that it involves creation of value.
You must appreciate that in the absence of entrepreneurship ‘matter’ does not
become a “resource.” By combining the various factors of production,
entrepreneurs produce goods and services that meet the needs and wants of the
society. Every entrepreneurial act result in income and wealth generation.
Even when innovations destroy the existing industries, for example, zerox
machines destroyed carbon paper industry, mobile telephony threatens
landline/ basic telephony, net gains accruing to the economy lend such
entrepreneurial actions as commendable as the acts of creative destruction.
Entrepreneurship is creative also in the sense that it involves innovation-
introduction of new products, discovery of new markets and sources of supply
of inputs, technological breakthroughs as well as introduction of newer
organizational forms for doing things better, cheaper, faster and, in the present
context, in a manner that causes the least harm to the ecology/environment. It
is possible that entrepreneurs in developing countries may not be pioneering/
innovative in introducing pathbreaking, radical innovations. They may be the
first or second adopters of technologies developed elsewhere. That does not
make their achievement small. For imitating technologies from developed
world to the indigenous setting is quite challenging. A lady entrepreneur
wanting to introduce thermal pads for industrial heating faced tremendous
reluctance form the owners of chemical and sugar mills despite the established
superiority of her products over the conventional heating of the vessels by
burning of wood/coke or using LPG. Moreover, there is no need to suffer
from “it was not invented here” complex– there is no need to reinvent the
wheel. The global electronics major, Sony did not invent the transistor! It used
the transistor to build entertainment products that are world leaders.
4. Organization of Production: Production, implying creation of form, place,
time personal utility, requires the combined utilization of diverse factors of
production, land, labour, capital and technology. Entrepreneur, in response to

46

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

a perceived business opportunity mobilizes these resources into a productive

enterprise or firm. It may be pointed out that the entrepreneur may not be
possessing any of these resources; he may just have the ‘idea’ that he
promotes among the resource providers. In an economy with a well-developed
financial system, he has to convince just the funding institutions and with the
capital so arranged he may enter into contracts of supply of equipment,
materials, utilities (such as water and electricity) and technology. What lies at
the core of organization of production is the knowledge about availability and
location of the resources as well as the optimum way to combine them. An
entrepreneur needs negotiation skills to raise these in the best interests of the
enterprise. Organization of production also involves product development and
development of the market for the product. Besides, entrepreneur may be
required to develop even the sources of supply of requisite inputs. For
example, whether it is a matter of putting together an automobile
manufacturing unit or manufacture of burger/pizza, besides cultivating a
market and developing products to suit its tastes and preferences, there would
be a need to develop a pool of suppliers of the diverse components or
elements that go into their manufacture.
5. Risk-taking: As the entrepreneur contracts for an assured supply of the
various inputs for his project, he incurs the risk of paying them off whether or
not the venture succeeds. Thus, landowner gets the contracted rent, capital
providers get the contracted interest, and the workforce gets the contracted
wages and salaries. However, there is no assurance of profit to the
entrepreneur. It may be pointed out that the possibility of absolute ruin may be
rare as the entrepreneur does everything within his control to de-risk the
business. For example, he may enter into prior contract with the customers of
his production. So much so that he may just be contract manufacturer or
marketer of someone else’s products! What is generally implied by risk taking
is that realized profit may be less than the expected profit. It is generally
believed that entrepreneurs take high risks. Yes, individuals opting for a
career in entrepreneurship take a bigger risk that involved in a career in

47

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

employment or practice of a profession as there is no “assured” payoff. (See

Box above) In practice, for example, when a person quits a job to start on his
own, he tries to calculate whether he or she would be able to earn the same
level of income or not. To an observer, the risk of quitting a well-entrenched
and promising career seems a “high” risk, but what the person has taken is a
calculated risk. The situation is similarly to a motorcyclist in the ‘ring of
death’ or a trapeze artist in circus. While the spectators are in the awe of the
high-risk, the artists have taken a calculated risk given their training, skills,
and of course, confidence and daring. It is said that the entrepreneurs thrive on
circumstances where odds favoring and against success area even, that is
50:50 situations. They are so sure of their capabilities that they convert 50%
chances into 100% success. They avoid situations with higher risks as they
hate failure as anyone would do; they dislike lower risk situations as business
ceases to be a game/fun! Risk as such more than a financial stake, becomes a
matter of personal stake, where less than expected performance causes
displeasure and distress. The characteristics of entrepreneurship discussed as
above apply in diverse contexts, so does the usage of the term, viz.,
Agricultural/Rural Entrepreneurship, Industrial entrepreneurship, Techno-
preneurship, Net preneurship, Green/Environmental or Eco-preneurship, Intra-
corporate/firm or Intra-preneusrhip and social entrepreneurship. In fact,
entrepreneurship has come to be regarded as a ‘type of behaviors’, whereby
one,
1. rather than becoming a part of the problem, proactively tries to solve it;
2. uses personal creativity and intellect to develop innovative solutions;
3. thinks beyond resources presently controlled in exploiting the emerging
opportunities or attending to the impending problems;
4. has the conviction to convince others of one’s ideas and seek their
commitment towards the project; and
5. has the courage of heart to withstand adversities, persist despite setbacks
and be generally optimistic.

48

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

Characteristics of Entrepreneurship:
Entrepreneurship is about business start-ups and renewals. That is, it appears at
the time of starting a new business, disappears for some time in the course of
stabilizing the venture as an on-going business and reappears in case there is a
need for introducing changes in product, market, technology, structure and so on.
In fact, it is said that everyone is an entrepreneur when he actually ‘carries out
new combinations,’ and loses that character as soon as he has built up his
business, when he settles down to running it as other people run their businesses.
In developed countries, the distinction between the entrepreneurial focus on start-
ups and managerial focus on routine is so sharp that it is argued that once the
project has reached a level of maturity, the entrepreneurs must move out and the
managers must come in.
In developing countries, however, the concept of owner-manager seems more apt
for entrepreneurship as the entrepreneur remains attached even to the day-to-day
operations of the venture. In fact, their lacking in managerial skills is often
forwarded as the cause of business failures. Just as managers are expected to play
entrepreneurial roles in the times of need, likewise the entrepreneurs must also
demonstrate managerial abilities for the success of their ventures. Irrespective of
whether the entrepreneurs pave way for the managers or they themselves assume
the managerial responsibilities, it is possible to distinguish between the term’s
entrepreneurship and management.

Need for Entrepreneurship:

Every country, whether developed or developing, needs entrepreneurs. Whereas, a
developing country needs entrepreneurs to initiate the process of development, the
developed one needs entrepreneurship to sustain it. In the present Indian context,
where on the one hand, employment opportunities in public sector and large-scale
sector are shrinking, and on the other, vast opportunities arising from
globalization are waiting to be exploited; entrepreneurship can really take India to
the heights of becoming a super economic power. Studies by Global
Entrepreneurship Monitor, a research programme involving annual assessment of

49

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

the national level of entrepreneurial activity across a number of countries show

that differences in the levels of entrepreneurial activity account for the differences
in the level of economic growth to the extent of as much as 33%. What is that the
entrepreneurs do to affect economic development? This leads us to a discussion of
the functions of the entrepreneurs in relation to economic development. As the
enterprise is the object of their endeavor, it is also necessary that we examine their
functions in relation to the enterprise as well. Thus, the need for entrepreneurship
arises from the functions the entrepreneurs perform in relation to the process of
economic development and in relation to the business enterprise.

Functions of Entrepreneurs in Relation to Economic development

You are aware that entrepreneurs “organize” the production process. In the
absence this function, all other resources, namely land, labour and capital would
remain idle. They may not be inventing/discovering the products, their role in
commercial exploitation of the advancements in science and technology via
organization of the productive apparatus makes the other resources productive and
useful. So much so that it is said that in the absence of entrepreneurial
intervention, every plant would remain a weed and every mineral would remain a
rock.
i. Contribution to GDP: Increase in the Gross Domestic Product or GDP is the
most common definition of economic development. You are aware that
income is generated in the process of production. So, entrepreneurs generate
income via organization of production be it agriculture, manufacturing or
services. You are also aware that income generated is distributed among the
factors of production where land gets rent, labour gets wages and salaries,
capital gets interest and the residual income accrues to the entrepreneur in the
form of profits. As rent and interest accrue to those few who have land and
capital respectively whereas larger masses are destined to earn their incomes
via wage employment, the biggest contribution of the entrepreneurship lies in
capital formation and generation of employment. This is what we turn our
attention to.

50

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

ii. Capital Formation: The entrepreneurial decision, in effect, is an investment

decision that augments the productive capacity of the economy and hence
results in capital formation. In fact, GDP and capital formation are related to
each other via Capital Output Ratio (COR); more precisely Incremental
Capital Output Ratio (ICOR) that measures the percentage increase in capital
formation required obtaining a percentage increase in GDP. So, if a country
desires to grow @ 10.0 % p.a. and its ICOR is 2.6, then it must ensure capital
formation @ 26.0% p.a entrepreneurs, by investing their own savings and
informally mobilizing the savings of their friends and relatives contribute to
the process of capital formation. These informal funding supplements the
funds made available by the formal means of raising resources from banks,
financial institutions and capital markets.
iii. Generation of Employment: Every new business is a source of employment to
people with different abilities, skills and qualifications. As such
entrepreneurship becomes a source of livelihood to those who do neither have
capital to earn interest on nor have the land to earn rent. In fact, what they earn
is not only a livelihood or means of sustenance but also a lifestyle for
themselves and their families as well as personal job satisfaction. As such
entrepreneurs touch the lives of many, directly as well as indirectly.
iv. Generation of Business Opportunities for Others: Every new business creates
opportunities for the suppliers of inputs (this is referred to as backward
linkages) and the marketers of the output (what is referred to as forward
linkages). As a pen manufacturer you would create opportunities for refill
manufacturers as well as wholesalers and retailers of stationery products.
These immediate linkages induce further linkages. For example, greater
opportunities for refill manufacturers would mean expansion of business for
ink manufacturers. In general, there are greater opportunities for transporters,
advertisers, and, so on. So, via a chain-reaction, entrepreneurship provides a
spur to the level of economic activity.
v. Improvement in Economic Efficiency: You are aware that efficiency means to
have greater output from the same input. Entrepreneurs improve economic

51

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

efficiency by, a. Improving processes, reducing wastes, increasing yield, and,

b. Bringing about technical progress, that is, by altering labour-capital ratios.
You are aware that if labour is provided with good implements (capital), its
productivity increases.
vi. Increasing the Spectrum and Scope of Economic Activities: Development does
not merely mean ‘more’ and ‘better’ of the existing, it also and more crucially
means diversification of economic activities– across the geographic, sectoral
and technological scope. You are aware that underdeveloped countries are
caught in the vicious cycles on the demand as well as supply side.
Entrepreneurs penetrate into and break these cycles, for example, by
organizing and orienting domestic production for exports. Thus, production
(and thereby generation of income) is not constrained by the inadequacy of
domestic demand. (Demand-side Vicious Cycle). In today’s context, you are
aware that India is poised to become a manufacturing hub for the global
markets for diverse products. Economic development is also constrained by
the supply-side pressures resulting into absence of capacity to meet the
demand whether domestic or overseas. Entrepreneurs mobilize local and even
overseas resources to augment the productive capacity of a country. Indian
Multinational Giants is fast becoming a reality. Entrepreneurs lead the process
of economic development via bringing about sectoral change. You must be
aware that as the economies grow, percentage of GDP originating from
agriculture decreases and that originating in industry and services sectors goes
up. Entrepreneurs through their decisions to divest from the stale sectors and
invest in green-field sectors bring about a virtual transformation of the
economy from ‘underdeveloped’ to an ‘emerging’ and ‘developed’ status.
vii. Impact on Local Communities: Entrepreneurship, in its natural habitat, that is,
small business is at a great level. You may see from table on marginalized
groups. That small-scale entrepreneurship enables such marginalized groups as
women, SC, ST and OBC to pursue their economic dreams. As there are no
entry barriers in terms of educational qualifications, entrepreneurship is an
even more attractive career option for such marginalized groups. Argo based

52

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

rural industries and craft-based cottage industries can really catapult local
communities to socio-economic success stories. Local governments do their
bit in developing these entrepreneurship clusters with a view to encouraging
inter-firm collaboration and development of common facilities. entitled,
‘Entrepreneurship Clusters in India.’ In regard to the development of
entrepreneurship for impacting local communities, some corporate-sector
initiatives also deserve a mention. ITC through their ‘eChau pal’ and HLL
through their ‘Shakti’ initiatives have sought to mobilize native entrepreneurs
for improving the lot of those lying at the bottom of the economic pyramid.
viii. Fostering the Spirit of Exploration, Experimentation and Daring: Economic
development, among other things, requires breaking away from the shackles of
traditions and beliefs that restrict growth. For example, if ‘crossing the seas’
were a taboo, there would not have been international trade and the resultant
economic growth. The established ways of life need to be challenged and
change must be seen as an opportunity to improve rather than something to be
scared of. Entrepreneurs, through their urge to do something new, seeing
change as an opportunity, experimenting with the novel ideas and showing the
courage to try them prepare a fertile ground for persistent economic
development. Have you seen the Hindi movie ‘Lagan,’ where the protagonist
Bhuvan raises a cricket team from the villagers who had not even seen the
game? Don’t the feats of Karasn Bhai of ‘Nirma’ who challenged ‘Surf’ from
the mighty Hindustan Lever Limited make you proud of the daring of the
entrepreneurs? Thus, whether one looks at economic development narrowly in
terms of the increase in GDP or in the wider context of economic, institutional
and social change, entrepreneurship plays a crucial role. Global
Entrepreneurship Monitor studies report a lag of 1-2 years between
entrepreneurial activity and economic development, suggesting that it takes
time for the impact of entrepreneurship on economic development. An
important observation needs be made here. While entrepreneurship leads to
economic development, the vice-versa is also true. That is, economic
development also fosters entrepreneurship development. Growing economies

53

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

provide a fertile soil for the flourishing of entrepreneurship, an aspect that we

will take up while discussing entrepreneurship development

Role of Entrepreneur in relation to their Enterprise:

Drawing an analogy from musicology in explaining the role of the entrepreneurs
in relation to their enterprise, one may say that an entrepreneur is not only the
composer of the musical score and the conductor of orchestra but also a one-man
band. His roles and functions get much broader in scope in a developing country
context like ours. entitled ‘Role and Functions of the Entrepreneur in Relation to
his/her enterprise.’ These elements are no sequential as the figure may convey, the
entrepreneur may have to address to all these elements simultaneously. Yet,
depending upon their backgrounds, the individual entrepreneur may prefer one
over the other. For example, technicians tend to be over obsessed with the
production aspect; those with marketing background may over emphasise creation
of market. Investor type entrepreneurs may be over concerned with the returns
from the project. One should resist the temptation of looking at the business only
from one’s own narrow perspective. Having said this, it is apt that we provide a
brief description of the various issues that may be relevant at each stage.
Opportunity Scouting: Entrepreneurial opportunities have to be actively
searched for. One may rely on personal observation, discovery or invention.
Personal/professional contacts/networks and experience or may also help in
identifying business opportunities. Alternatively, one may rely on published
reports, surveys and the like. Narayan Reddy of Virchow Laboratories relied on
the personal discovery of the molecule during his employment with a
pharmaceutical company. As observation means seeing/hearing/smelling with a
purpose, opportunity spotting presupposes tendency to look at the things and
phenomenon from an entrepreneurial mindset. Most of us have a consumer’s
mindset. If we see any object of desire, may be a pen, laptop, latest model of the
mobile phone or somebody eating pizza or burger, we crave to have the same
thing for ourselves. The entrepreneurial mind, on the other hand starts working
out, what would be the market size, where to procure it from and at what price,

54

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

will I able to woo the customers from the existing players and how– by selling it
cheaper, by providing more value or by better service and so on. Entrepreneurial
opportunities may also be identified through a process of research of international,
domestic, sectoral/ industrial analysis. For example, post WTO, international
trade and investment have become freer of restrictions. Textile quotas are being
phased out, and, there are greater opportunities for textile and textile made-ups
from India. Global outsourcing is on the rise and India offers a huge and varied
pool of technical manpower that makes it a cost-effective destination for in-bound
global outsourcing in manufacturing as well as Information Technology Enabled
Services (ITES).

The process of Entrepreneurship Development:

Entrepreneurship does not emerge spontaneously. Rather it is the outcome of a
dynamic process of interaction between the person and the environment.
Ultimately the choice of entrepreneurship as a career lies with the individual, yet
he must see it as a desirable as well as a feasible option. In this regard, it becomes
imperative to look at both the factors in the environment as well as the factors in
the individual as having a nearing on the perception of desirability and feasibility
and thereby entrepreneurship development. One may, therefore, model the
process of entrepreneurship development in terms. In general, capitalist economy
with its emphasis on individual achievement is more suitable for
entrepreneurship. Lower rates of taxation on personal income, lower rates of
interest and moderate inflation stimulate entrepreneurial activity. (Can you think
why it is so?) Moderately low external value of domestic currency or in other
words, moderately lower exchange rates, stimulate import substituting and export
promoting entrepreneurship. (Can you rationalize why?). Well-developed
financial system, good infrastructure, helpful bureaucracy all these have a
favorable impact on entrepreneurship. Specially designed and dedicated
institutions such as National Institute for Entrepreneurship and Small Business
Development (visit, niesbud.nic.in), Entrepreneurship Development Institute of
India (visit, www.ediindia.org) that conduct entrepreneurship awareness and

55

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

entrepreneurship development programmes (EAPs and EDPs) a further fillip to

this activity.
An important enabler or disabler of entrepreneurship is the prevailing
sociocultural milieu. Those societies that respect individual freedom to choose
among occupations, that encourage the spirit of enquiry, exploration and
experimentation, celebrate individual accomplishment and in general accord
important status to the entrepreneurs are likely to have self-sustaining supply of
able and willing men and women for taking to entrepreneurship as a career.

The role of the individual in Entrepreneurship Development:

Mr. Narayan Reddy was desirous of starting a small-scale industry and also had a
sense of efficacy or readiness to pursue it given his qualifications, experience and
the necessary values, attitudes and motivation (the opening case does not
elaborate this. We will discuss these at suitable places). Even you may like to see
as to where do you find yourself on the desirability (willingness)-efficacy (ability)
matrix, won’t you? As you may see from the matrix figure able and willing men
and women are a “ready” source of entrepreneurship. Such persons leap up the
first opportunity comes their way to be on their own. Recall, Narayan Reddy leapt
up the opportunity as he met the two medicos who had returned from the Gulf. At
any point of time, there are many men and women who “want” to set up a
business of their own but experience self-perceived barriers to entrepreneurship.
They could be having a low perception of self-efficacy either on account of lack
of resources (or to be more correct, resourcefulness), knowledge or know-how,
and the skills. Collectively, these are referred to as competencies, which now we
turn our attention to.

The Role of Environment in Entrepreneurship Development:

Entrepreneurs bring about economic growth and development, and the latter in
turn provides a fertile soil for the flourishing of entrepreneurship. There certainly
is a mutually facilitating reciprocity between economic growth and
entrepreneurship development.

56

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

5. CONCLUSION & SUGGESTIONS

5.1 Conclusion
➢ Start-ups are the future growth engines of our country and government should
do all it can to foster the growth of entrepreneurship culture in India.
➢ Already Facebook, Google and Yahoo have acquired start-ups based in India
and the likes of Flipkart, Inmobi, MuSigma show us that world class
companies can have origins in India also. It just needs a little push in right
direction.
➢ Government initiatives like the $1.68bn funds for the ‘Make in India’ and the
new company law are a step-in right direction.

“The quicker you let go of old cheese, the sooner you will find new cheese”
Spencer Johnson

5.2 Suggestions
Solutions for reason of failures:
➢ Entrepreneurs should conduct in-depth market researches to understand the
need of the society and then proceed to the product design phase.
➢ Entrepreneurs need to analyses their business idea and think out of the box.
An ideal example can be the number of start-ups in the ecommerce industry,
but rarely anyone focuses on logistics-based start-up ideas, where the need is.
➢ Start-ups should aim to hire those people who share the same zeal to make the
start-up successful.
➢ Entrepreneurs should reach out to multiple venture capitalists and know who
is better aligned towards the goals of start-ups.
➢ Business process should involve meetings of the management team and
technical teams on weekly basis to ensure a smooth workflow. 
➢ Start-ups should be policy driven and offer same salaries to team members. It
should offer incentives for performance-based work. Doing so will help

57

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

manage the funding in an appropriate way. 

➢ Entrepreneurs can enroll themselves at personality development classes to
improve their soft skills or hire an experienced person for business
communication. 
➢ Entrepreneurs should keep a close watch on the growing demand for their
product and focus on response time and capacity planning. 
➢ An entrepreneur should keep up with changing market dynamics to see a
decline in the demand for their product and take necessary steps to run the
start-up profitably

To remove the obstacles for Women Entrepreneur:

The basic requirement in development of women entrepreneurship is to make
aware the women regarding her existence, her unique identity and her
contribution towards the economic growth and development of country. The
elimination of obstacles for women entrepreneurship requires a major change in
traditional attitudes and mindsets of people in society rather than being limited to
only creation of opportunities for women. Hence, it is imperative to design
programmes that will address to attitudinal changes, training, supportive services.
The basic instinct of entrepreneurship should be tried to be reaped into the minds
of the women from their childhood. This could be achieved by carefully designing
the curriculum that will impart the basic knowledge along with its practical
implication regarding management (financial, legal etc.) of an enterprise.
Adopting a structured skill training package can pave the way for development of
women entrepreneurship. Such programmes can train, motivate and assist the
upcoming women entrepreneurship in achieving their ultimate goals. Various
schemes like the World Bank sponsored programmes can be undertaken for such
purposes. The course design should focus on imparting input on profitability,
marketability and practical management lessons. Besides, there should be
consideration in helping the women entrepreneurs in balancing their family life
and work life. As a special concern, computer illiterate women can be trained on
Information Technology to take the advantage of new technology and automation.

58

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

The initiatives taken from these well-established entrepreneurs for having

interaction with such upcoming women entrepreneurs can be proved to be
beneficial in terms of boosting their morale and confidence. The established and
successful women entrepreneurs can act as advisors for the upcoming women
entrepreneurs. It may result in more active involvement of women entrepreneurs
in their enterprises. Infrastructure set up plays a vital role for any enterprise.
Government can set some priorities for women entrepreneurs for allocation of
industrial plots, sheds and other amenities. However, precautionary measures
should be undertaken to avoid the misuse of such facility by the men in the name
of the women. Even in todays’ era of modernization the women entrepreneurs
depend on males of their family for marketing activities. This is simply because
they lack the skill and confidence for undertaking such activities. Women
development corporations should come forward to help the women entrepreneurs
in arranging frequent exhibitions and setting up marketing outlets to provide
space for the display of products or advertisement about services made by
women.

59

Downloaded by Priyanka jha ([email protected])

 lOMoARcPSD|52109361

6. WEBLIOGRAPHY & BIBLIOGRAPHY

6.1 Webliography
➢ Sharifi, Omid, PhD Scholar, Aligarh University, Understanding the financing
challenges faced by start-ups in India-Research Paper.
➢ Study on Women Entrepreneurship in Indiahttps://www.researchgate.net.
➢ Start-up India-https://en.wikipedia.org/wiki/Startup India.
➢ Economic Times Website-Challenges and Opportunities

➢ Case Studies-www.entrepreneur.com

6.1 Bibliography
➢ Mascarenhas, Romeo S, Business Planning and Entrepreneurship
Management, Published by-Vipul Prakashan ,2017.
➢ Article-The Economic Times News Paper

60

Downloaded by Priyanka jha ([email protected])