Page 22 - Banking Finance December 2022

ARTICLE

about startups the picture that flashes in our mind is of an towards being a developed nation the proportion of
untested idea which could disrupt the way the business is entrepreneurs and startups is bound to increase
done and if successful could be worth millions or billions of exponentially and so will the opportunities for the financial
dollars and if unsuccessful the investment could go down the and banking sector.
drain. They are not the only kind of startups, the loan given
by the banks to an entrepreneur is also a startup although
Some examples of Operational Challe-
with a less level of disruption, none the less such a venture
nges (Risks) to Funding:
generates employment and aids the country’s GDP growth.
Such ventures until recently were more synonymous by the One of the startups which disrupted the taxi and mobility
name of entrepreneurship than startups. business across the world, in its quest to grow, became
promoter of a toxic work culture leading to complaints
The banking industry in India had and is having a very active and grievance by many employees. The investors had
role in encouraging the startup culture by promoting and to ultimately intervene and asked the founder to step
handholding entrepreneurship. This endeavor on part of the down. That startup today is a significant contributor to
banks has now expanded to the funding of new ideas based our daily mobility solution.
on their disruption potential. Country’s leading banks have
Another example is of an Indian Startup which was the
now launched separate schemes to promote the startups first to enter the real estate market with a data and
in the country and have formulated a well drafted policy for analytics based approach. This startup which was initially
the same. Country’s largest bank State Bank of India has very promising, a trend setter of sorts and had the first
recently opened a branch exclusively for catering to the mover advantage in the industry eventually lost its
financial needs of Startups in the silicon valley of India, sheen due to dispute between one of the founders and
Bengaluru. the investors.
One of the recent examples is of a financial startup
Seed stage startups though risky, provide a business
whose founder was accused by the investors of unethical
opportunity that has an increased probability of either a high
practices and causing loss to the company. This founder
payoff or no payoff at all. The risks are there and so are the
also made counter allegations. The investors have since
chances of return. There has been a shift in the way startups
taken control of the company and appointed a different
have been viewed as a business opportunity.
management team to steer the company clear of the
controversies and drive it to the next phase of growth.
The government has also been very proactive and
supportive of startups and has been leading to ensure that
Disputes between founders and investors / financers is not
the funding requirements of startups are taken care of.
new, they have happened before and would continue to
Along with that the state governments are going all out to
happen as long new businesses are created. In fact the late
provide these budding entrepreneurs the right infrastructure
founder of a company who was ousted by the other
and administrative support so that the promoters only focus
stakeholders, came back after 10 years to make the
on their project.
Promotion of startups has dual benefits, firstly they provide
an impetus to the economy by promoting GDP growth and
increasing employment and secondly they provide a solution
to the problems faced by the public by transforming the
solutions into a business idea. The regulator has also pitched
in with a number of awareness and policy initiatives to
promote the startup sector along with the government that
has undertaken number of steps for ease of doing business.

It is also a fact all the developed economies have a major
contribution of entrepreneurs. And as we grow on the path

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