An accelerator programme not only provides a business environment, it improves its immunity against market shocks
With 108 per cent growth in funding, entries of more than 1,200 new players and 40,000 additional workforce, the Indian start-up sector has witnessed a great revival in 2018 after the slowdown of 2016-17. As the majority of start-up entrepreneurs were young with an average age of 28 years, digital technology was the common growth factors among the successful ones. Today, the young breed of start-up founders is receptive and agile using AI, Blockchain, Big Data and IoT for improving their growth momentum. Amongst these innovative startups, there are hundreds of brands making a sharp groove not only in the domestic market but in international markets, too.
Impressed with the phenomenal growth of Indian start-ups in and outside the country, investors from all over the world, including America, Europe, Australia, and the Middle East, are now taking interest in disruptive Indian start-ups. From Asia, arch rivals like China and Japan are also watching them as a lucrative investment option. Most of the successful start-ups are taking birth in Tier-1 cities, and, due to their geographical and demographic merits, Bengaluru and Delhi-NCR occupy the top position in raising funds from private investors and VCs. But, despite enjoying the status of the financial capital of India, Mumbai is still in the third position. Consequently, investment into Indian start-ups has increased from $ 2.03 billion in 2017 to $ 4.2 billion in 2018. These positive changes brought a fresh life to more than 39K start-ups, the majority of them falling under Micro, Small and Medium Enterprises (MSME) category, which is often referred to as the engine of the Indian economy. In a hugely populated and developing country like India, MSMEs play a pivotal role in adding value to GDP. Their share in the manufacturing sector is about 45 per cent, to exports about 40 per cent and they provide employment to more than 69 million people. The growth of start-ups in India is directly proportional to the growth of MSMEs. In addition, to achieve double-digit economic growth by 2020, both public and private institutions must come up with plans and schemes that may bolster the growing start-up culture in the country.
Small businesses in Start-up India: The Government’s initiatives like Stand-up India and Start-up India resulted in a flourishing culture of small businesses across the country and reforms such as up to INR one crore loan in 59 minutes are indeed a commendable effort to push small businesses. On similar lines, many economists believe that CLCSTUS (Credit Linked Capital Subsidy Technical Upgradation Scheme) would do miracles for MSMEs. CLCSTUS, under which seven types of subsidies would be made available to the MSMEs, includes the majority of the start-ups that have come availing the Mudra loan scheme. Besides, such initiatives by the government will also induce private investors to take part in the growth of small businesses and providing funds to competitive players. The principal purposes behind the Start-up India and Stand-up India campaign were to promote a healthy entrepreneurial culture in the country, mass employment and faster economic growth. Though the response was tremendous in the first two years (2015-16), the move has lost the pace in the very third year. Lack of experience, guidance and support were the factors for this slow-down. Finally, the country realised that there is dire need of some good incubators and accelerators in the system to revive the pace of the moment. In the very next year (2018), under the guidance of incubators and accelerators, the sector has performed well on various fronts. Besides, helping young businesses with tax relaxation, subsidies, and other economic incentives, the Government must also take adequate steps to promote a culture of innovations in MSMEs and take appropriate decisions that may further improve business conditions in the country.
Significance of accelerators: Be it a new-born baby or a newborn business, survival depends largely on its adaptability with the environment. An accelerator programme not only provides a healthy environment to a business but also improves its immunity against market shocks, threats and challenges. After joining an accelerator programme, a start-up receives support and guidance of industry experts in all aspects to run the business, successfully and efficiently. Moreover, their relations with venture capitalists help them to meet both short and long-term financial needs. And, the vast and pragmatic knowledge of mentors enable them to overcome the entry barriers that almost every business usually comes across in the initial phase of the journey. Hence, from ecosystem support to funding and polishing the professional skills of the founding members to building image among all the stakeholders, a start-up gains a lot during the accelerator programme.
(The writer is Operations and Strategy Management Director of a start-up accelerator firm)
