Parliamentary Panel Flags Gaps in Startup Funds: What It Means for Small-Town Founders
The Startup Report and What it Means for Entrepreneurs in Small Towns
As the Indian startup scene grows, there is often an uneven distribution of funding and support for entrepreneurs in smaller towns. However, some key points have been raised in a parliamentary standing committee report looking at the startup ecosystem in India.
What the Committee Recommended
On 10th August 2023, the Standing Committee on Commerce chaired by Dr. Abhishek Manu Singhvi published their report ‘Ecosystem of Startups to Benefit India’. The following points are important for entrepreneurs in smaller towns;
Additional funding – The committee noted that startups are cyclical in nature and therefore there is a need for additional funding to support quality startups during lean times.
Streamlined registration process – Simplify the registration processes and remove the lengthy list of criteria needed for DPIIT registrations.
Support agri startups – More funding and mentorship for agriculture based startups.
Support for smaller cities – The report asked the government to focus on identifying and supporting underperforming tier 2 and tier 3 cities and rural areas with quality incubation centres, consistent mentoring and additional funding.
What the Current Situation is Outside of the Metros
Currently, a large majority of startups in smaller cities. The Startup India report highlighted that almost half of recognised startups originated from Tier 2 and Tier 3 cities. However, industry reports suggest that almost 80% of venture capital is still being invested into Bengaluru, Delhi-NCR and Mumbai. This means entrepreneurs in smaller towns will often look to angel funding, government schemes and bank funding.
What Entrepreneurs Can Do
Whilst policy changes can take time, entrepreneurs can put some of the following into place to help;
Apply for DPIIT recognition via the official Startup India portal to benefit from scheme.
Use local incubators, mentors and start up cells.
Keep your accounts, contracts and ownership in order as investors will look into these.
Set up a clear business plan and understand what the different funding stages are.
Attend investor events and pitching sessions.
Fox Hog News have guides on what business structure to choose and working capital vs growth capital.
Focus on Start-ups and Entrepreneurs in Emerging Markets
Fox Hog Ventures specialise in supporting early stage startups and entrepreneurs including those based in tier 2 and tier 3 cities. Founder and CEO of Fox Hog Ventures, Tarun Poddar has spoken about how they want to shine a light on the stories of entrepreneurs in rural areas via The Tarun Talks. Improving access to investment and business networks within regions aligns with the overall aim to encourage entrepreneurship across the country.news.foxhogventures.com
