Start-ups
A start-up may be defined as a business typically technology oriented and has a high growth potential. It involves the development of a repeatable and scalable business model. A start-up can be differentiated from a small business as in the case of the latter, the plan is devised on the basis of an already existing strategy whereas the former, involves the process of innovation so as to disrupt the existing market with its novel product or service. A start-up essentially goes through various stages of failure so as to finally land upon a business model that will show growth in the future.
A start-up headed towards profitability must have a very strong co-founding team, risk/reward profile, and scalability, as that will ensure that more investors are attracted towards their business model and are more willing to make investments. Successful startups have a wider window of opportunities available to them than established businesses as they have a wider margin rapid profit growth in business. Start-ups can rely on several methods to generate funds, such as by opting for venture capitalists, angel investors, equity crowdfunding, etc.
India was not considered a very viable option for start-ups due to their very long, frustrating and unfriendly laws and compliance hindrances. Even exiting a market in case of failures was nearly impossible, and these factors weren't very encouraging for entrepreneurs. As a result, a lot of entrepreneurs were taking their business outside the country, and India was losing its bright entrepreneurs to foreign markets. Observing this, the government of India has decided to come up with new policies to ease the process of starting a new model and also make available to them the option of exiting the market in case a model doesn't work out.
In the recent ‘Make in India’ and ‘Start-up India’ campaigns, PM Narendra Modi along with Finance Minister Arun Jaitley announced their intention to introduce in the Budget Session of 2016 various measures which will encourage the entrepreneurs in their endeavours of bringing into the Indian markets novelty with their innovating products and services, making doing business for them way more simpler than it is currently. Some important measures that were discussed by the Central Government were: there will be self-certification based compliance for labour and employment laws, the government will hold no inspection for a period of three years, there will not be any tax levied on the profits earned for up to three years, there will be no capital gains if the money is invested in another start-up, the start-ups will e provided with an easy exit option under the Bankruptcy Act-thus making it easier for them to exit within 90 days, there will be a single point start-up hub for clearances, the government will provide a mobile app and portal for start-ups with a small form to be filled, there will be new IPR protection for start-ups and an 80% reduction in patent fee. The government also encouraged the idea of government purchases with the incentive of providing relief inexperience and turnover criteria and also announced a fund of funds with a corpus of Rs. 10,000 crores.
With such an exciting and growth-friendly atmosphere that will soon engulf the Indian markets, this is the best time to invest in start-ups. You need any help with the legal process involved in the setting up of a start-up, don’t look elsewhere. Consult LegalRaasta for a hassle-free establishment procedure.
This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.
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