What are the challenges in availing government funds?

Over the last couple of years, the government of India has introduced a number of initiatives and various schemes to encourage entrepreneurs and boost the growth of startups in the country.

Published: 07th November 2019 06:33 AM  |   Last Updated: 07th November 2019 06:33 AM   |  A+A-

By Express News Service

BENGALURU: “Though the common perception is that availing government funding is far from easy for a startup, it does not have to be as complicated as it is often made out to be. Over the last couple of years, the government of India has introduced a number of initiatives and various schemes to encourage entrepreneurs and boost the growth of startups in the country. The popular Startup India initiative by the government provides funding support and a variety of other benefits like networking opportunities, access to incubators, tax benefits, ease of registration and much more.However, one of the key concerns is the complex process, bureaucratic hurdles and lack of clear guidelines on the procedures to be followed. The elaborate list of criteria to register and get started with the process of funding is a primary dampener for most startups.Though there have been promising initiatives by the government to drive entrepreneurial growth, a lot has to be done to simplify the process and make it easier for startups to partake in the initiative. For entrepreneurs to leverage initiatives and funding from the government, it’s important to create a conducive environment and work towards better implementation of the schemes.”   
-Samara Mahindra, CEO and founder, Carer

“It is not very easy for startups to raise funds from the government and rightly so. But the government has put a great ecosystem for startups to raise funds from other sources indirectly from government-linked agencies and even private players. Our startup is a beneficiary of a government PSU investing in our company and supporting us wholeheartedly. We are also supported by Invest India which is a national investment promotion and facilitation agency. They help us showcase our work on an international platform. The startup ecosystem should be and will be funded by private entities who have the risk appetite and also have the wherewithal to identify potential investees and make sure the money is well used to generate wealth.”

- Maxson Lewis, MD of Magenta Power

“This is perhaps the best environment for a startup to operate in India: governments, both at the state and central level have numerous schemes, SOPs and funds to enable their success. The regulatory regime is also well aligned to changing industry dynamics, responding with agility to newer business models and creating mechanisms to mainstream them. By taking a fund-of-fund approach in its flagship Rs 10,000 crore SIDBI administered fund, the government has sent a strong signal to other LPs to invest in Indian funds, thereby growing the capital pool available to startups. Since nearly Rs 3,000 crore of this fund has already been deployed, with Rs 1,400 crore more slated for deployment in the coming year, this has already created a deployable capital pool of nearly 10x that amount. Founders are hustlers, with such a strong pool of capital available if they are facing difficulty in getting access to these funds, the excuse doesn’t fly. In any case, by keeping a one-arm distance between them and the startups using the fund-of-fund approach, one can’t even claim supposed government bureaucracy as a hindering factor.

- Utkarsh Sinha, managing director of Bexley Advisors

‘‘As an entrepreneur, you will face several challenges while seeking funds, because you’ll have to convince others that your idea is a solid investment. This means being able to increase profits without increasing costs at an equal (or higher) rate. Sure, it should be unique, but without scalability, it is less likely to be investable. While expanding, your business model needs to remain aligned with the company’s core offerings. In other words, if your business model is likely to result in the overextension of time, money, and resources, investors will be hesitant to welcome you with open arms. Determine how much money to ask for: Whether you are asking a non-banking financial company to fund your expansion or seeking a bank loan. When investors pay you, they expect to see how you plan to spend their money and grow your business to its next milestone. Every business will have a few roller coaster moments but your business should be able to show consistent achievements. Finding the right funding option: Many new startup funding options are available today. To increase your chances of getting the funds, you need to choose the most suitable funding alternative. If you took investment, you’re accountable to your investors to do what you said you would do with their funds and to be transparent if you’re thinking of changing course. Starting a business requires a number of permissions from government agencies. Although there is a perceptible change, it is still a challenge to register a company. Regulations pertaining to labour laws, intellectual property rights, dispute resolution etc. are rigorous in India.

- Mehul Sharma,CEO & Founder Signum Hotels & Resorts


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