A compilation of important news from the startup world:
Start-up India: only 189 out of 400 applications considered for tax benefits
In January, the Narendra Modi government had announced the ambitious Start Up India initiative promising host of benefits including tax exemption for first three years to budding entrepreneurs. Few months later, it has emerged than as many as 400 entrepreneurs applied to Department of Department of Industrial Policy and Promotion (DIPP) for recognition as innovative startups to avail tax breaks and other benefits. According to a PTI report, an inter-ministerial committee assessing the applications has, so far, considered only 189 requests and out of that 148 applicants have been asked to properly attach relevant documents. 10 applications have been rejected because their initiatives were deemed to have innovation involved. The report further added that 30 startups had been asked to give additional information about their innovation. Just one received the approval to avail benefits for intellectual property rights.
How the men who built Infosys are directing their talent and money towards India’s newest startups Infosys, founded by seven engineers in 1981, is still India’s most successful startup. The Bengaluru-based software services company has a market value of nearly $42 billion—more than the combined estimated worth of India’s startup ‘unicorns’— and its founders know a thing or two about turning an idea into one of India’s, and indeed the world’s, most respected companies. Over the last few years, the people who built InfosysBSE -0.67 % have been putting their money to work by investments in startups and entrepreneurs seeking to emulate their success. And it is not just the founders alone—some of its senior alumni have also taken to the startup game, too. Together they are contributing with money, mentorship, ideas and the middle class values that made Infosys—integrity, transparency, quality and winning big and fair.
Private equity funding into Indian startups down 25% in 2016 – Goldman Sachs
On Friday, global financial major Goldman Sachs released a report stating that private equity funding in Indian startups has declined by 25 percent year-on-year, falling from $2.5 billion in 2015 to $1.9 billion in 2016. Further, the slowdown in private equity capital has seriously impacted Series B and Series C rounds, pushing startups to restructure operations for profitability and lower cash burn rates and focus on profitability. However, the report states that the tide seems to be smooth for those who have attained scale in their operations. The report says that ‘the newer ones are finding it more difficult’, while further outlining that “forced consolidation has led players with stronger balance sheets or scale to acquire the weaker companies in some cases”.
IFC to focus on startups in healthcare, edu-tech, consumer internet and clean technology sectors
International Finance Corp, the private sector investment arm of the World Bank, is looking to ramp up its venture capital activity in India, a geography that represents the long-term investor’s second-largest portfolio globally. Currently India ranks behind China in terms of venture capital transactions for IFC. The marquee global investor has active investments, estimated at between $150 million-$200 million in the world’s second-largest economy till date, and which is spread across a dozen companies. IFC’s VC unit looks to invest in companies from its balance sheet, and in startups that have a strong technology focus, are about five years old or less, and have already raised capital from a class of investors, preferably venture capital. Last year, the company chalked up five VC deals in India.