Page 42 - Banking Finance May 2022

ARTICLE

Progress of Startup Scheme in India:

As per the Startup India web-site, the number of startups
stood at 41,061 in December 2020 which provided jobs to
4.7 lakhs persons (7). These provide jobs with an average
of 11 employees per startup. Encouraged from this
development, a Fund of Fund for startups (FFS) is created
with a total corpus of Rs. 10,000 crores. Among the startup
industries, the Indian pharmaceutical market is the fastest-
growing and the most competitive amongst all in the world.
The revenue generated in 2020 amounted to $55 million,
clearly indicating that there is enough scope for profit in the
domain. Location wise, startups are setup in 492 districts in
29 states and six Union territories. The report of Pilot Survey of Startups, conducted by RBI in
2019 shares additional information relating profile of
Startups are spread and far wide since these seen in Tier 1, startups (8). A total of 1,246 startups participated in the
Tier 2 and Tier 3 cities with the percentage share in the total survey. As per the survey findings, the startups are mainly
startups of 55, 27 and 18 respectively. Gender wise, nearly in six sectors, viz., agriculture, data & analytics, education,
15 per cent of them are set up by woman entrepreneurs. health, IT consulting/solution and manufacturing. According
Regarding growth in different segments, Enterprise Software
to them, market/industry demand and team experience
witnessed a growth rate of 16 per cent with over 1100 have been the major enabling factors for setting up the
ventures and, so did the FinTech segment with a growth rate startups. Almost half of them informed that they were in
of 14 per cent. More than 900 startups are due to the onset
an early stage of revenue generation while 31 per cent of
of innovative technology in payment, lending and banking.
the same were in a growing stage.
Similarly, the seamless digital transaction process for
The average annual turnover for over one-fourths of the
consumers has brought about 500 million new users and, respondents was up to Rs 10 lakhs whereas around 20 per
thus, increasing internet penetration by 12 per cent.
cent startups did not report any revenue generation. Less
Integrating a tech-platform, connecting doctors and than one-fifths of the respondents reported that their
patients, has also led to a significant rise of 8 per cent in average annual turnover exceeded Rs. 1 crore. Only 14 per
Health Tech space. Over 500 startups in this domain have cent of startups had more than 10 employees in the first six
come up, comprising online pharmacies, wearable solutions months of their operation but as the sector matured, the
for fitness tracking and coaching, health monitoring devices, number of employees increased to 40 at the time of
consultation platforms etc. In the same way, the technology-
conducting the survey. Lastly, it is shocking to note that just
induced educational solutions for the new generation of 36 per cent of the startups availed institutional loans
learners and the wide level of acceptance in the ecosystem,
(including from banks) to finance their activities, indicating
has resulted in the creation of over 400 startups implying a that borrowing from friends and relatives has been the major
growth rate of 6 per cent in the last five years.
source of finance. The survey concludes that there are
numerous emerging business opportunities due to recent
Industry verticals like logistics and transport, industrial & developments which are worth examining.
manufacturing, consumer software, food-tech, HR-tech and
retail-tech witnessed a growth rate in the range of 2-5 per
cent. The others including automotive, travel, media & Emerging Business Opportunities:
entertainment, ad-tech, real estate, gaming, security, etc. The recent National Education Policy of 2020 envisages to
have a collective growth rate of 24 per cent. Thus, the promote student entrepreneurs by offering vocational
number of startups incorporating advanced technology in education in partnership with industries and introducing
their business has soared and is constantly expanding at 40 coding for school children. This can have a favorable impact
per cent CAGR. These include artificial intelligence, block- on the startup ecosystem in India, if entrepreneurial skills
chain, 3D printing, drones, automation vehicles etc. are integrated with the education curriculum under the New

42 | 2022 | MAY | BANKING FINANCE