Government to introduce startup blueprint this month
The government, in two weeks, will unveil a blueprint for startups to ease the process of setting up new ventures.
Prime Minister Narendra Modi will release the blueprint of ‘Start Up India’ programme which may include a Startups and Entrepreneurship Law to make it easier for setting up new ventures and closing unviable ones, besides clearing regulatory issues that hamper access to finance.
The government is also seeking to define a new category of business — ‘Innovative Start-ups’ — to distinguish them from micro, small, medium and large enterprises that are built on conventional business models. There would be a special support structure for such innovative start-ups, including funding from the government.
“In such start-ups, the government, through the domestic venture capital funds, could take a 25 per cent stake. We will leave the due diligence, mentoring and refining of business ideas to the professional venture capital (VC) and private equity (PE) funds,” a senior government official familiar with the policy formulation told The Hindu.
“As these start-ups gain in scale after two or three years, other investors, including PE and VC funds could buy back the government venture fund’s stake. This would help create a revolving fund to finance such ventures with transformative potential, as the government can deploy the proceeds from exiting these start-ups to fund other ideas,” the official said.
The Start Up India policy would attempt to address two key concerns the government wants to fix in India’s start-up ecosystem. Over 65 per cent of successful start-ups re-locate out of India owing to the difficulty of doing business, usually to Singapore. Secondly, 90 per cent of start-up funding presently comes from foreign VC and PE funds.
Read full article: The Hindu
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