From the startup world – May 29

Prime Minister Narendra Modi's meeting with Tim Cook, CEO, Apple Inc, was much talked about. But questions remain on how many startups have benefitted by the steps his government has taken.

A compilation of important news from the startup world:

 

Two years in power – what PM Narendra Modi has done for startups
Policies were announced one after the other, and the annual Budget sessions in 2015 and 2016 displayed a major effort for boosting the startup ecosystem. The much-celebrated Startup India Standup India event in January 2016 relaxed the regulatory framework by introducing measures such as self-certification, a single-window system, and tax exemptions. Besides, the government also promised to set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over four years. Women and SC/ST entrepreneurs were offered credit facilities at lower interest rates. To ensure the easy flow of funds into the country, an exemption of 20 percent has been offered on capital gains tax on funds raised by the SEBI-registered entities.  In a country of more than a billion people, the NDA government, which came to power on May 26, 2014, has recognised that entrepreneurship is the only way for employment creation. However, there is no information on the startups that have benefited from these schemes and on how much funds have been allocated and to who all funds have been allocated.

IITs plan safety net as startups revoke offers
After Flipkart deferred the joining date for its B-school recruits, several other startups have withdrawn their offers to MBAs and engineering graduates, forcing the IITs to mull a safety net for its students.Some of the startups have, after making their offers , reduced the compensation they had promised to pay to the freshers. As a result, the IITs have allowed all the affected students to re-register for placements. With Flipkart deferring the joining dates of 18 graduates of the Indian Institute of Management-Ahmedabad (IIM-A) by six months, the premier business school is set to draft new guidelines for placements to avoid such episodes in the future. No solution has emerged in the Flipkart row so far, as both the institute and the company continue to stick to their demands. IIM-A has asked Flipkart to increase the compensation amount from the existing Rs 1.50 lakh, to be paid lump sum on joining, but the latter is neither ready to increase it nor change the joining dates.

Bahrain wants India to mentor its financial technology & gaming startups
Startup India has struck a chord with Bahrain, so much so that the West Asian country wants to have its own version of the programme initiated by Prime Minister Narendra Modi. Bahrain wants Indian startups working in areas of financial technology and gaming in particular to expand base in the country and provide mentoring. The government of Bahrain is also keen that local high net worth individuals, angel investors and serial entrepreneurs become active investors in startups in India that wish to set up shop there and get access to other markets in the region. Besides India, Bahrain plans to connect its startups with those in London and Hong Kong, and develop accelerators linked to companies in telecom and fintech such as payments systems, peer to peer lending and crowdfunding. Such a mechanism could work well for Indian startups since access to foreign markets is sometimes considered a criterion by investors for funding.

Deals Galore – Why Are Startups In India Opting For Acquisitions Amid Dry Funding?
A startup is an entrepreneur’s baby. Why would it like to part with it? There could be several reasons under healthy circumstances. Talent and product acquisition, increasing market reach and improving operational efficiencies, are some of the most common triggers for a deal. However, even as funding turns dry and there is a never ending cry of negativity in the environment, the startup ecosystem is witnessing a string of deals. With several miniature-sized deals coming in daily, the hottest and most-talked about deal was the Tiny Owl and Roadrunnr deal, earlier this month.  Post the merger, Tiny Owl has been making several stringent modifications to its business model, which goes to show the gloominess of the scenario. In today’s scenario, when a startup is unable to raise funds they often see the benefit of getting acquired, rather than completely shutting shop.

Five takeaways from Zomato’s FY16 performance
Restaurant listings and discovery company Zomato Media Pvt Ltd has been able to reduce its operating cash burn to $1.7 million in May from a high of $9 million last year, but it’s still a long way from being in the black. In an investors call on Thursday, Zomato CEO and co-founder Deepinder Goyal said he was keeping his fingers crossed that the startup would reach break-even in the next six to nine months. Info Edge (India) Ltd, which holds 50.1% stake in Zomato, had in its regulatory filings on Wednesday said that pre-tax loss at Zomato had grown almost four-fold to Rs 492.27 crore in 2015-16 from Rs 136 crore the year before.Here’s a look at the key takeaways from the investors call.

Legal-tech start-ups make a case for entrepreneurs
The Indian start-up world is growing and so are the legal issues associated with it. However, most of the start-ups can’t afford a team of lawyers and are also quite unaware about issues they have to deal with. For example, a Bengaluru-based start-up (name withheld) resorted to legal aid after an ex-employee started a similar company with an identical brand name and logo. The start-up, which was bootstrapped and couldn’t afford high fees of established lawyers, found a solution through Delhi-based start-up LawRato, a legal tech platform providing expert legal advice and counsel to enterprises and individuals. LawRato helped the company sent a cease and desist notice followed by a criminal complaint and FIR. LawRato also ensured that the ex-employee shut operations before causing much damage to clients.

 

Gujarat govt set to announce new policy for technology start-ups
In a first, the Gujarat Government is all set to announce a new startup policy in the next 15 days especially for technology start-ups where private incubators and accelerators are expected to play a role in creating a start-up ecosystem in the state. With this policy- the Gujarat government is looking to facilitate at least 2000 start-ups that have availed a minimum one round of VC (Venture Capital) funding, to establish at least 100 incubators in Gujarat, develop 2 million sq.ft of ‘incubation space’ and facilitate investment (VC funding) of USD 1 billion to start-ups in the next 5 years.

 

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