Startup India: Tax Sops for Angel Investment Will Boost Initiative, Says Google India

As Prime Minister Narendra Modi gears up to give a shot in the arm to startups with the launch of 'Start Up India, Stand up India' initiative on Saturday, Google India feels friendly policies, encouragement to the existing startups, and adequate infrastructure would provide an impetus to newcomers.

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It also suggests that tax incentives would go a long way in supporting entrants. "Tax-free investment for angel money for three years will help startups," Sunil Rao, head of startup ecosystem, Google India, told IANS in an interview in New Delhi.

"The ecosystem will get a real boost with startup friendly policies that the government may announce. Secondly, if the government provides encouragement to people who have been flourishing in the existing ecosystem, like recognising them and giving them a good platform, will be great. That will motivate others to go ahead," Rao said.

The industry also expects the government to make exiting easier if a venture does not work, so that new startups could be floated.

Google mentors startup companies across the world, providing them with assistance and seeing them through their teething troubles. In India, Google started this programme around three years back. It has so far trained 70 companies in early stage and an additional 70 under the Google Launchpad programme. By 2016, it would have trained 16 more under the Google Accelerator programme.

The company is also planning to start an advanced stage programme soon for startup firms which have already raised some funding.

Rao mentioned that the mortality rate of startup ventures in India is high. "Around 60 percent of the startups don't last more than 18 months. But it is globally in tune with similar countries like Indonesia, Brazil and Latin America. And the good thing is out of this 60 percent, around 50 percent companies start another venture," he said.

Rao attributed the high mortality rate to inadequate due diligence that the entrepreneurs do before they start the venture. "They don't do sufficient due diligence about product or market fit," Rao said.

He suggested that to become a successful entrepreneur, young entrepreneurs should spend six to eight months to validate the ideas before starting.

Saying that strategising the business model well before the launch is crucial, he added that Indian startup market is now at a stage where China was five years back.

"The future of startups in India is bright. I can compare this to the what China was five years back. More and more Chinese companies are working and developing apps for the China market and not for the western market. Even in India, we have seen in the last two years that the survival rate of startups providing products for the local market is much higher."