Families and friends have emerged as the primary source of funding for as many as 1,246 Indian start-ups that participated in the Reserve Bank of India (RBI) survey, data from the report showed. This was the first of its kind start-up survey conducted by the central bank between November 2018 and April 2019 with the objective to ascertain the ‘broad picture’ of the sector in the country.
About 43 per cent of the respondents said their families and friends were the largest source of funding apart from their own funds, with about 13 per cent of the surveyed startups saying that their funding requirements were met by international investors, findings showed.
In 2016, the Cabinet has approved the establishment of ‘Fund of Funds for Start-ups’ at Small Industries Development Bank of India for contribution to various Alternative Investment Funds with a corpus of Rs 10,000 crore.
However, for three years, it has been able to distribute only Rs 700 crore, which is less than ten per cent of the overall corpus of funding, set aside for start-ups.
The RBI has now asked for stakeholder comments on the survey results to determine the usefulness of information and scope for improvement for future such exercises.
“A total of 1,246 start-ups (public/private limited companies, partnership firms, limited liabilities partnerships, and others) participated in the survey,” the central bank said in the summary note of the report. Among the participants, around three-fourths of respondents were from Karnataka, Maharashtra, Telangana, New Delhi, and Tamil Nadu.
Also, start-ups in six sectors — agriculture, data and analytics, education, health, IT consulting/ solution and manufacturing accounted for nearly 50 per cent of the survey respondents. Nearly 70 per cent of the surveyed start-ups were set up in the last three years while over 86 per cent of them were privately set up. “Private efforts spearhead the start-up sector in India,” said the RBI.