Top things startups want in 2022

On India's first National Startup Day on January 16, startups lay bare on their wish list
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Chaitanya Ramalingegowda, Director and Co-founder, Wakefit.co

1. Firstly, I would strongly advocate for taxation on ESOPs only upon a liquidity event and not when it is converted into shares. This will help in building the perception that ESOPs are truly a wealth generation medium and not simply paper money. This will help the startup workforce to value it more. 

  

2. Secondly, it would be highly beneficial to simplify the perception of how angel tax is being levied on startups. If we have to cultivate more startups, we also need to have an environment that is highly fertile to invest at an early stage. Late stage investments will only happen if there are enough and more companies in the early stages and angels play a very important role in that. 

 

3. Thirdly, my wishlist would include simplifying the GST structure, particularly for companies in multiple categories and sectors. Incorporating global best practices in taxation would truly help create change for Indian startups with multifold expansion plans. 

 

4. Fourthly, for startups that are taking pains to set up manufacturing entities, backward integrating their businesses and truly living the dream of Make in India, a lot more incentives should be provided, along with the ability to improve margins. These startups are creating thousands of employment opportunities and true manufacturing ecosystems, and the support to foster these businesses would be a huge boost.

Apeksha Gupta, CEO and Creative director of John Jacobs Eyewear

  1. The process of returns for compliances such as GST, TDS and income tax should be simplified
  2. Compliances under various statutes such as labour laws and Company law should be made simpler
  3. Measures to facilitate ease of doing business should be introduced
  4. Consumer spending should be encouraged by offering deductions on local spending

P.C Musthafa, CEO & CO-Founder, iD Fresh Food

As a startup founder, my top 3 things would be:

  1. A favourable tax regime 
  2. Up-skilling youngsters and integrating it with the academia 
  3. Creating resources and infrastructure to support entrepreneurs in rural India

Sateesh Andra, Managing Director, Endiya Partners

  1. Direct Listing of private companies abroad 
  2. For fund managers to bring offshore capital onshore regulatory frameworks need to be simplified. The Fee & carry tax treatment should be equitable.
  3. Collaboration between regulatory authorities, (SEBI, RBI, CBDT, Ministry of Finance, Ministry of Commerce, DPIIT & Industry Associations like IVCA) and the start-up eco-system is great and is sure to bear great and positive outcomes.

Jeevika Tyagi and Kanupriya Mundhra, Co-founders at Aastey 

  1. A startup network that connects India’s top startups, online in the form of an app and offline in the form of events and workshops, and more 
  2. Tax rebates for startups and their employees and partners so people see the further benefit in working for/ with a startup 
  3. Manufacturing rebates
  4. A change in textile laws to help us source sustainable fabrics within India

Vineeta Singh, Co-founder and CEO, SUGAR Cosmetics

  1. Relaxation of taxations, government process, paper work and various compliance costs which can slow down the high-paced startups in India
  2. Creation of newer platforms in India and globally for various startups to showcase their innovations
  3. Creating a Startup India Funds scheme or banking schemes to help new startup to easily raise funds and gain capital
  4. Creating easier ways for startups to import and export to build and grow faster
  5. Reduction and easing of logistics and transport rules for startups

Ravi Kallayil, CEO & Co-founder, Plaeto 

As a startup founder, my top 5 things would be:

  1. While there are a lot of things being done to promote the ecosystem - too many compliances and regulations, most of the time, forces the entrepreneurs to take their eyes off building the business - this can be made easier.
  2. Difficulty in getting access to public funds for R&D, working capital, etc. If we have to become a truly innovation driven economy, startups should get funding for early-stage R&D just as it is done in the US with the National Science Foundation, a Govt funded organization that is independently run to propel innovation
  3. Collaboration of the education system, in order to encourage individuals with multiple skill sets. For example, startups may not have the resources to hire individuals for separate skills, rather it would be easier to go for an individual with several skill sets.
  4. To encourage more startups who are trying to solve severe societal issues.
  5. Better incentives and ease of manufacturing in India

Narendra Pasuparthy, Chief Farmer, CEO & Founder, Nandu’s

As a startup founder, my top 5 things would be:

  1. Better access to funding from traditional sources such as banks.
  2. Enhanced clarity on ESOPs as an instrument for hiring and retaining talent
  3. A more favourable tax regime 
  4. Access to well-rounded individuals with diverse skill sets.
  5. Ease in compliances 

Harsh Pokharna, Co-founder and CEO, OkCredit 

Exemption of taxes on foreign direct investment which will aid in globalisation as many startups plan to go global by 2022. The govt could further boost startups by assisting them through policies for domestic capital participation and by introducing incentives to promote incubation in every state. Another area that could be looked at –  assisting in enabling access to funds and markets. Last but not the least,  a clear long term start up road map would be the need of the hour. 

Dhruv Sawhney, Business Head and COO nurture.farm 

As an agritech startup, we are here to change how agriculture is done in India by offering solutions that make the Indian farmer more resilient, earn more profits, and engage in sustainable farming methods.

 

Farmers in India still work on agri models that are input-intensive, which affects their overall profitability. Encouraging startups in this space by promoting them to the farmers will lead to lean agribusiness models via shared economy platforms. 

 

By doing this, smallholder farmers who constitute more than 70% of Indian farmers will have access to farm equipment and machinery at substantially lower costs. Mechanisation in agriculture would improve productivity and yield, and India needs significant improvements in both these spheres. 

 

An impetus towards shared economy models and digitisation of agri ecosystems in India would induce transparency into the entire sector - empowering farmers to make informed decisions and improve their output and incomes.

 

Another way to improve farmer incomes is to focus on adopting sustainable agricultural practices. Incentivising this for Indian farmers will have a two-pronged impact - on the one hand, it will improve the carbon footprint of agriculture, making it climate-friendly. On the other hand, farmers will have a scope to earn higher incomes by leveraging carbon credits.

 

With the second-largest arable land in the world, India can be a world leader in establishing the potential impact on climate and farmer incomes by adopting sustainable agriculture practices. 

 

Enabling public-private partnerships in this domain can help Indian farmers leap towards climate-friendly, sustainable, and profitable agriculture.

Neha Khanna, Director, ValPro

1. Taxation of ESOPs in the hands of employees

2. Speed of issue of regulation for new business models (as recently done for drones, P2P lending, Crypto currencies) via a consultative approach to avoid issues as raised by the recent auto debit restrictions issued by RBI

3. Separate resolution channel for compliance issues pertaining to startups for more timely and efficient solutions

Deb Mukherjee, Founder & CEO, Ceres Foods Pvt. Ltd

  1. Removal of requirement of registration with DPIIT for availing angel tax exemption.
  2. Startups less than three years old, should be exempted from the requirement of valuation.
  3. Access to low-cost financing should be provided
  4. Taxation on ESOPs to be based on Sale Date and Remove Tax on ESOPs to attract talent.
  5. Early-stage startups should be exempted from paying GST under the reverse-charge mechanism.
  6. Capital gain taxation of unlisted equity shares should be brought at par with listed equity shares.

Aanan Khurma, Founder, Wellversed 

  1.  We don't need an income tax rebate, we need a simpler GST structure.
  2. We don't need more government grant schemes, we need free seating space in all government buildings. 
  3. We don't need more sluggish international programs, we need transparent access to selling through the Government (an area rigged with corruption).
  4. We don't need free electricity and water. We need all-time paid access to these basic amenities. 
  5. We don't need more government jobs, we need government operations to be privatised.

Nruthya Madappa, Head of Growth and Capital Development, 3one4 Capital

  1. Reduction of compliance burden on startups
  2. More conducive ESOP taxation norms with broader applicability of exemptions, in line with global standards
  3. Faster processing of Goods and Services Tax (GST) refunds to enable startups to unlock working capital

Vinayak Bhavnani, Co-founder and CTO, CHALO

1. Making it easier to own esops: tax esops not when they are exercised but when they are liquidated

2. Make exits easier in domestic M&A: share swap of an Startup by another shouldn't be taxed again until they are liquidated

3. Create 'Government not-to-do list' so that startups work with lesser interference and friction

4. Lower capital gain tax on Angel investments

5. Create a separate ministry focusing to help startups grow and single point for any govt - startup relationship /regulations /paperwork.

6. GST exemptions on startup delivering services for public utilities like public transport.

Vedang Patel, Co-founder, The Souled Store

  1. Easier compliances, 
  2. Level playing field for access to capital,
  3. Access to a playbook on navigating basic problems
  4. Easier hiring
  5. Courses that help in running a business - everything from MIS, to understanding CAC

Gaurav Manchanda, Founder & Director, The Organic World 

In order for entrepreneurs to continue to dare to dream big and take the plunge into the start-up world, here are some of the initiatives that would serve as a great boost:

  1. The government has worked towards enabling ease of business, for both investors and start-ups and it would be extremely important for this to continue. Further streamlining of processes, absence of bureaucratic entanglements etc would all continue to play a great role in attracting the birth of new ideas and the funding support for these ideas 
  2. Innovation in the public sector, especially towards bolstering and supporting India’s digital development will be another key driver 
  3. Startups would be extremely buoyed and benefited by a national strategy that envisages entrepreneurship/start-up innovation as the driving force at the top of a pyramid that sits atop existing sectors of the Indian economy. This will help fuel innovation and allow various sectors to work harmoniously and grow together in tandem 
  4. Incentivising investment will be a key imperative to encourage start up growth. To this end, a certain degree of tax breaks will serve as incentivising the growth of more angel investors 
  5. It is also important to create a network to link entrepreneurs and policymakers with the wider ecosystem – this will allow, as I’ve said earlier, the different sectors to work together and not in silos, thereby encouraging a consolidated direction and growth.

Udita Pal, Co-founder, Salt

  1. Better and more significant opportunities to build tech for the government. 
  2. A better tax system that benefits and motivates early-stage founders. 
  3. More diversity. 
  4. More acknowledgement of mental health and hardships being a founder comes with it. 
  5. Uplifting entrepreneurs and people from small cities.

Dr. Srikanth Sola, CEO and Founder, Devic Earth Pvt. Ltd

The Honourable Prime Minister inaugurated Startup India to boost India's startup ecosystem.  Looking into the future, what will help the ecosystem grow further?

1. Inclusivity. More women and members of minority communities will bring a diversity of perspectives that will enrich the ecosystem.

2. Better business building. In the early days when the focus is on product and traction, many startup co-founders will not have the time to understand the strategies needed to rapidly scale up. As the ecosystem matures, I expect to see more training in business building and sales skills.

3. Better exit strategies. Acquisitions, IPOs, and SPACs don't happen overnight. Startups need guidance on how to do this - years in advance.

 4. Look beyond IIT co-founders. About 45% of funded startups have at least one IIT co-founder - a reflection of the calibre of these alumni. But there are plenty of gems amongst other university graduates that I expect will soon get their day in the sun.

5. A deeper talent pool. Salaries and attrition in some roles, especially the IT specialties, are way too high. A talent shortage could be a severe dampener on startup growth.

Mabel Chacko , Co-founder & COO , Open Financial Technologies Pvt. Ltd 

1. FDI inflow and compliances need to be simplified and made efficient. Same is the case with subsidiaries funding outside of India

2. Investor taxation is an area that needs focus to attract capital and for exits

3. Share swaps in consolidation still remains a complex procedure, both from taxation and from compliances. 

4. Grants and tax holidays for technology talent development programs run by startups, a way to bridge the existing talent pool gap in new technologies

5. Credible start ups with exceptional talent backing to be able to access various new regulatory and licensing regimes with qualifying criteria for start-ups instead of net-worth, tenure etc.

Arshia Pasricha, Founder and CEO of WLTH (We Love To Heal)

  1. Launch new innovative products.
  2. Expansion into global markets.
  3. Scaling up our organisation's sustainability initiatives.
  4. Attracting passionate talent with an entrepreneurs attitude.
  5. Accelerating revenue growth and customer traction.

Roshan Farhan, Founder & CEO - Gobillion

  1. Better access to early stage funding resources
  2. Better taxation and compliance regime
  3. Single window clearance for multiple permissions/licenses at Central and State level to operate and scale quickly
  4. More seamless and uniform process to hire talent and manpower across different states

Naiyya Saggi, Co-founder Good Glamm Group, Founder & CEO, BabyChakra

Over the last few years, it has been easier than before to register and start your own venture in india. 3 things that would accelerate this momentum would be :

1. The participation of women in entrepreneurship and recipients of venture capital in India is extremely low. Open question to all of us as Entrepreneurs, venture funds and the govt : can we create structures and policies that support women led ventures in raising capital with access to tax efficient capital, mentorship. Also importantly celebrate and bring to light stories of women entrepreneurs to the mainstream and to schools and engineering colleges to inspire more Women in stem. Women participating and creating jobs in our economy will unlock our pathway to a trillion dollar economy. 

2. India has incredible talent. However the needs of a rising Entrepreneurial ecosystem are more and more qualified talent from engineering, operations, marketing and design among other fields. How we can build these and other work-ready/ entrepreneurial mindset of creative problem solving, risk assessments in our next generation and set up institutions: virtual or physical that can address this need at scale will be critical for our collective growth.

3. Create entrepreneurship hubs by encouraging talent, Manf and capital investments in regions outside of the main metros. There are thousands of talented youth in areas outside the major metros who aspire to entrepreneurship and understand the needs of Indians deeply. It is critical to invest in newer regions and build them out as hubs of entrepreneurship.

Anup Jain, Managing Partner, Orios Ventures 

1. Reduce compliance burden 

2. Shorten approval processes and weed out redundancies in compliances in the banking system for receiving and sending funds overseas 

3. Make startup investing as included in CSR to drive more domestic capital 

4. Expedite domestic participation by mandating a small but fixed percentage of pension and insurance funds to be allocated to this as an asset class 

5. Delete redundant and obsolete British era courses in our colleges and universities at the under grad level and free up space for skill based education as the ecosystem is facing a talent crunch across levels and functions that can drive companies faster

Zafar Imam, CEO, FinShell

  1. Government should think of incentivising this sector by making easy access of funding and providing them at a lower rate of interest.
  2. Tax exemption should be provide to a new startup for at least three to five years.
  3. Corporate tax should be lowered for those startups who have a turnover of less than 100 million so that they can sustain for a longer time.

Anshuk K Aggarwal, Co- founder, AdYogi

There’s no doubt that the Startup ecosystem is evolving at a rapid pace. However, for this trend to continue over the coming decade, access to high-quality talent is essential. 

 

While the Indian job market is injected with ~2M graduates each year, not many are easily employable in Startups due to a mismatch in skillset. To address this, a more acute focus should be placed on subjects such as coding among graduates across all streams.

 

Infact, coding should be made a universal skill set and should be taught across all streams including Arts, Commerce, and Sciences. 

 

Startups are usually concentrated in top metros in India due to the easy accessibility of skilled talent. Incentives can be given to startups in Tier 2 and Tier 3 cities so that more and more founders are encouraged to set up bases in those cities. This will enable graduates to work out of their hometown.

Mangesh Panditrao, CEO & Co- Founder, Shoptimize

1. To boost the investor confidence and give an edge for alternative investments an exemption  for capital gain derived from investment will help startups.

2. Start ups having a defined threshold of turnover should be given the option to file only One annual return for all compliances. 

3. Allocation of provident fund money towards startup Investments. This will reduce dependence on foreign VCs. 

4. Processing of faster refunds- Startup should be given priority while refund of taxes. 

5. Credit period for startup- Considering the importance of working capital, one more category should be created under MSME act i.e., startup. The maximum allowable credit period should be 30 days.

Sanket Shendure, Co-founder and CEO, Minko

1. Involve more startups in policy and decision making

2. Make it easier for individuals to invest micro amounts in startups / change in legislation

3. Increase promotion and awareness of the various benefits available under the Startup India Program

4. Create a sovereign fund to invest in promising hard tech startups that can aid in nation building - wealth will be generated and retained in India

5. Overhaul of our employment and zoning laws to make running a startup efficient.

Sushant Kumar, CEO & MD, AMO Mobility Solutions Pvt. Ltd.

For Amo Mobility and related EV industry, we always welcome incentives from the union government. The sustainable charging infrastructure in the country for electric vehicles is a highly contentious issue to look into at this moment. And, finally we are optimistic to see joint collaboration with other startups on critical technology and solutions.

Anshuman Narain, Vice President, CashBean (P.C.Financial Services Pvt. Ltd.)

A more responsive policy feedback system. Startup businesses almost always tend to break new ground in terms of their service or disruption. While the policymakers should keep the larger fiscal interest paramount, other countries have shown how to balance emerging business requirements with quick turnaround on regulatory changes. India needs policy in line with 2021.

The best way for startup goals to align with national interests is through continuous conversations between the two domains. The problem today is that taxation, infrastructure or policy issues are not always discussed with those who are affected the most and this needs an immediate change. 

Maybe even set up a Start-Up Commission composed of both govt officers and start-up representatives to come up with symbiotic frameworks.

One low hanging fruit that can be achieved within one month is through a complete review of state and central level regulations. One can easily find a plethora of state level orders from decades ago still being implemented resulting in hamstrung growth of the startup sector. These can be done away with without need for even legislative action.

There has been a major consolidation within sectors by the much larger startup players, which is fine. What is not fine is those larger business entities then creating copying successful models of upcoming entities without due respect for intellectual property. IP protection needs to be strengthened.

Need to take the manufacturing sector as a serious avenue for start-up instead of the perennial focus on software tech. Tax holidays can make this happen.


With inputs from Priyanka Shah and Ankit Das

Edited by Anju Narayanan

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