Impact of startup on Indian economy in Special

reference to Lucknow

Mohd.Nawman Ata
Assistant Professor
( E-mail- [email protected])
( RAMESHWARAM INSTITUTE OF TECHNOLOGY
& MANAGEMENT,LUCKNOW)

Tamanna khatoon
MBA 1ST year
( E-mail – [email protected])
( RAMESHWARAM INSTITUTE OF TECHNOLOGY
& MANAGEMENT,LUCKNOW)

Aradhya Singh
MBA 1ST year
( E-mail- [email protected])
( RAMESHWARAM INSTITUTE OF TECHNOLOGY
& MANAGEMENT,LUCKNOW)

Introduction:
The concept of a startup is one that has evolved over time. While the term itself didn't appear in the
English language until the late 1970s, the concept of a startup has been around for much longer.
The earliest form of a startup was a small business, and while they are still common today, they were
even more prevalent in the early days of the United States. In fact, small businesses were essential to
the growth of the country, as they provided goods and services that larger companies couldn't or
wouldn’t.
One of the most famous examples of an early startup was Benjamin Franklins printing business.
Franklin was an entrepreneur who saw an opportunity to make money by printing books, pamphlets
and newspapers. He started his business in 1730 and quickly became successful. His success was due
in part to his innovative printing techniques and his commitment to quality customer service. He
became so successful that he was able to retire from his business at age 42 and devote himself to
public service.
Another early form of a startup was the trading post. Trading posts were set up by traders and
merchants in remote areas where it wasn’t easy for large companies to access customers. They sold
items such as food, clothing and tools that were not available in the area and often provided services
like repair and maintenance.
The industrial revolution brought about new forms of startups. With new technologies came new
opportunities for entrepreneurs, such as those who established factories and mills. These businesses
often had far reaching impacts on their local economies as well as on global markets, as they could
produce products on a much larger scale than ever before. As a result, many of these businesses grew
into large corporations that dominate entire industries today.
The concept of a startup has changed greatly over time, but its core principles remain the same:
finding an opportunity, taking a risk and investing resources to create something new. Today,
startups are more often associated with technology-based businesses that offer innovative products
and services, but the basic principles still apply: find an opportunity, take a risk and invest resources
to create something new. No matter what form they take, startups have been essential to economic
development throughout history and will continue to be into the future.
Funding Trends in Startups
Funding lies at the core of any startup and defines its success to a great extent. We already
mentioned this year that 29% of startups fail because they run out of money. The trend is unlikely to
change any time soon. Even more, with the global economy keeping a slow pace, we can expect this
number to grow, as investors may become pickier in where they throw their money.
Venture capital will remain a cornerstone of startup financing. However, the focus may shift
towards sectors like healthcare, clean energy, and biotechnology, reflecting societal priorities.
The DeFi sector is set to grow, offering alternative funding mechanisms through blockchain
technology. DeFi platforms will provide startups with access to a global pool of investors.
Crowdfunding like Kickstarter or Indiegogo will likely operate in the same manner, too. However,
higher considerations arise regarding the scam probability with more and more video games and
other popular fundraising campaigns turning out to be false.
Impact of startup’s in Indian economy
Startups have had a significant and multifaceted impact on the Indian economy in recent years. The
startup ecosystem in India has grown rapidly, with thousands of new businesses emerging across a
wide range of industries.
Innovation and Technological Advancements
 Disruptive Innovation: Startups are often at the forefront of new technologies and
business models. From fintech (like Paytm and Razorpay) to agritech (like
Ninjacart), Indian startups are introducing innovative solutions that disrupt
traditional industries.
 Global Competitiveness: By adopting cutting-edge technology and offering unique
products or services, startups help Indian businesses compete globally. Many
successful Indian startups have attracted international investors and have expanded
into global markets.
Contribution to GDP Growth
 Economic Diversification: Startups contribute to diversifying the economy by introducing
new sectors and industries. For instance, India’s growing IT, biotech, and space tech
sectors are heavily driven by innovative startups.
 Small and Medium Enterprises (SMEs): Many startups evolve into SMEs, which are
critical to the Indian economy. SMEs contribute significantly to GDP, and startups help
energize this segment through innovation, product development, and new business
models.
Digital Transformation
 E-commerce and Digital Services: Startups in the e-commerce sector (e.g., Flipkart,
Zomato, Swiggy) have contributed to the rapid digitization of the Indian economy. By
offering digital platforms for goods and services, startups have revolutionized
consumer behaviour and facilitated greater access to markets.
 Boosting Digital Infrastructure: The rise of digital startups has led to greater
investments in internet infrastructure, mobile connectivity, and digital payment
systems, all of which are essential for a modern economy.
Challenges and Future Prospects
  Funding Gaps: While the startup ecosystem in India has received considerable attention and
investment, access to early-stage funding remains a challenge for many entrepreneurs, especially
those in rural areas or emerging sectors.
 Regulatory Framework: Although the government has introduced supportive policies,
regulatory hurdles remain a challenge for many startups. Simplifying these regulations and
offering more transparent support could boost India's position as a startup hub.
Future of startup in india
In recent years, we have seen the startup environment fuelled the growth of the Indian economy.
From 733 in 2016-17 to more than 14,000 in 2022, newly recognised firms have risen sharply in the
past six years.
The future of startups in India looks promising. The country has a large pool of talented individuals,
a growing economy, and a supportive government promoting entrepreneurship through various
initiatives.
Additionally, the rise of digital technologies and internet access has made it easier for startups to
reach a wider audience and disrupt traditional industries.
You may wonder what is startup culture in India. Startup culture in India refers to the establishment
of new businesses. The idea behind startups is to promote entrepreneurship and provide employment
opportunities, in turn boosting GDP.
The Rise of Digital Technologies
The rise of digital technologies and internet access has made it easier for startups to reach a wider
audience and disrupt traditional industries.
This has led to the growth of several successful startups, such as Flipkart, Paytm, and Ola, which
have disrupted the e-commerce, payment, and transportation industries, respectively.
The growing adoption of smartphones and the internet in rural areas is further opening up new
opportunities for startups to reach new customers.
Supportive Government Policies
The Indian government has been working to create a favourable ecosystem for startups. The Startup
India initiative, launched in 2016, provides various benefits such as tax exemptions, access to
funding, and easier compliance procedures for startups.
The government has also set up incubation centres and accelerators to support and mentor new
startups. These initiatives have helped to create a positive environment for entrepreneurship in the
country.
Limited Access to Funding
Despite these positive developments, startups in India still face several challenges. One of the biggest
challenges is limited access to funding, particularly for early-stage startups.
This has resulted in many startups having to rely on foreign investment or venture capital firms for
funding. While the situation is gradually improving, with more domestic investors entering the
market, it is still an area that requires improvement.
Complex Regulatory Environment
Another challenge that startups in India’s face is a complex regulatory environment. The country has
several laws and regulations that startups have to comply with, which can be time-consuming and
costly.
This can be a barrier to entry for new startups and slow down their growth. The government is
working to simplify the compliance procedures, but more needs to be done to make the regulatory
environment more favourable for startups.
Limited Infrastructure in Certain Areas
Finally, the limited infrastructure in certain areas of the country can be a challenge for startups.
In rural areas, there is limited access to basic services such as electricity and internet, which can be a
barrier to growth for startups operating in those areas.
The government is working to improve infrastructure in rural areas, but this is a long-term process
that will require significant investment.
DPIIT recognized startup in lucknow
Approx 1766 startup in DPIIT Recognized startup in Lucknow:-

1. Fuzzbunny Private Limited

2. Ramendra Enterprises Private Limited
3. Dhamm Devparas Textiles Private Limited
4. Wott Technologies Private
5. Sakillion Innovations Private Limited
6. Maxware Infraheights Private Limited
7. Adveet Technology Solutions Private Limited
8. Toddlerooze Sports Private Limited
9. Tippingpoint Fintech LLP
10. HS Infratech, etc
Startup Challenges & Problems faced by The Entrepreneurs in Lucknow
The startup economy, although may be booming now but it is going through the initial nascent stages of the
growth and maturity in Uttar Pradesh and especially in Lucknow. Here are few challenges; typically faced by
UP-based startups that I have witnessed in discussions at the UPStartup Conclave 2019 with the Startups!
“Gut-feel” rather than costly Market Research
Bootstrapping is very common in India as investors cannot be wooed merely by a concept note or an MVP
(Minimum Viable Product) anymore. As a result, the founders and budding entrepreneurs have to self-fund
the initial stages for which research is a big capital investment, which is better ducked.
Hitting the Market without Evaluating enough Options
Since research is a costly affair, the startup entrepreneurs have to jump into deciding on creating the MVP
without checking it out to a broader set audience. Not testing on a larger consumer base can lead to lesser
trials thereby reducing options.
Policy of Government
UP lacks a clear long-term startup roadmap, as economic liberalization is quite new to Uttar Pradesh. Given
the size of the state and the priorities, the government seems to float the roadmap soon and shall pass
incentives to the innovating startups, as they can boost employment.
Compliance & Ease of Doing Business
Ease of doing business is the biggest problem faced by real Entrepreneurs in Uttar Pradesh. Govt. Officials -
“It will be done in a day” means it will be done in a month. “I will think about it” means I'll not do it and
block your papers”, this attitude is killing the spirits of startups in UP. Time wasted in ensuring compliance
with laws: hard to do things correctly (even if the intent is to fully comply) without having to fill out a host of
forms and requires a lot of manual intervention.
Funding or Investment
Accumulation of funding relies upon a few elements. Individual financial dependability is just as that of
accomplices, the business size, associations, and finding the ideal time to contribute. While it’s a challenging
task for most startups, a fortunate few don’t confront numerous issues with it.
More VCs, Hedge Funds and fewer Investors
For the young founders running companies and scaling them for the first time, there isn't enough support and
mentoring and the investors are creating more harm than good. The funds are in such a hurry to capture
market segments and be part of the next, big unicorn story that they are taking a betting view of the market.
Because of their ridiculous expectations of accelerated success, startups are being pushed toward short-term
solutions and unreasonable scale very early.
You are Competing with IIT’ians & IIM’iams
Whether you know it or not, you are competing with Cat – A School Graduates. An Investor by luck if you
get one will ridicule you firstly on your knowledge and then if he agrees to invest will swipe a large pie of
your equity. It might be okay for an Investor to lose an edge on Unicorns as their valuation is much higher but
you will have to face exponential growth pressures in multiplying their money X times.
Lack of Incubation Support Choices
Startups have to bootstrap from the beginning and not getting a proper space to set up their operations is a big
irony in Uttar Pradesh. With almost 70% youth population and a high percentage of fresh engineering and
management graduates passing out every year, who are aspiring for wannabe startups only 18 Government-
authorized incubators are registered. Even in Lucknow, you won’t find more than 5 incubators that are
incubating sector-specific startups.
Lack of Good Outsourcing Team
As a startup guy, if you are having an idea, it takes shape only by sound documentation, technology tools, and
good digital marketing with branding to kick off. Founders generally give a shot to non-professional
companies leading unfinished sites, and SMO with loopholes in branding. Finding the right startup coach who
can help you with legal, operations, technology, and marketing is rare but must to ladder.
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Mentorship Crisis
Standard management practices do not work well in a startup set-up, as most judgments have to be taken in a
‘data poor high risk’ situation. As a result, outmoded managers are not equipped to handle startups. Nor are
there enough industry-hardened startup mentors who can guide the young babies, as the wave of startups is
just so new, that they can make them crawl immediately.
Insufficient Talent
The education system is targeted toward making students fit for corporate jobs. Although skilled workforces
are not quite bad in Uttar Pradesh, startups just cannot afford them all the time. Often, however, the multi-skill
required to make startup success stories are very rare to find.
Branding Strategy Vacuum
When any startup initiates a radically new service or offering the real challenge goes into developing the MVP
– Minimum Viable Product. As a result, the importance of branding steps a second seat or is completely
ignored, in the enthusiasm of creating something path-breaking. Startups face serious brand identity crunches
later and are hard to catalyze then, liquidating lots of brand money.
Customer Hates You
Doesn’t matter if you deliver the products personally to the customer’s house and offer the best service - In
the eyes of the customer you haven’t done enough by giving goods for the money paid. A lot of it can be
attributed to the fact that we Indians are accustomed to bargaining and always feel entitled. However, it’s
disheartening to see bad reviews even after you have provided good and timely service.
Customer Acquisition & Retention
Everyone wants to raise funds but fewer people are bootstrapping their business and talking of real customer
acquisition on day one. Not just acquisition, customer retention equally matters as keeping the customer
delighted will catch you to gain brand loyalty from prospective customers.
Procrastination
Since startup appeals to the Newbies and given the suspicions of such a ventures industry reputed hardly look
at them as an option. Therefore, most startups have to build and grow on non-specialist managers giving way
to longer decision-making time and lost opportunities.
Not Experimenting Often or Enough
Experiments can provide answers to many questions, which are badly required by any startup. However,
either due to turnaround time or financial situations they are often omitted or stymied. Keeping innovating is
the key to success for startups!
Building the Right Team
At the heart of any successful venture lies Teamwork. Due to limited resources and the short-sightedness of
the Co-founders, good team building does not happen, resulting in cohesion-less teams.
Not able to execute: 20% Idea and 80% Execution
Success lies in skillful execution. Ideas can create a castle in the air, but the visionary has to take the blocks of
brick to build the castle.
Entrepreneurship is a Sin in Society
Everyone wants a respected social life, small businessmen are not the most respected people in our society. A
postman in an Indian post or clerk in a PWD office is much more respected than a person bootstrapping a
business. Because of this, most parents and families don't encourage their son/daughter to startup.
Recommendation for Solving issues in starting Startup
Indian startups have access to the following funding options:
1. Angel Investors: Individual investors who exchange equity for capital.
2. Venture Capitalists: institutional investors who make investments in promising early-stage
startups.
3. Government schemes: Startups are supported and funded by a number of government
programs, including the Startup India Scheme and the Atal Innovation Mission.
4. Crowdfunding: Startups can raise money from a large number of people through online
platforms.
5. Accelerators and incubators: In exchange for equity, these organizations offer startups
funding, guidance, and resources.
6. Bank Loans: Loans from banks and other financial institutions are another option for startups,
but these loans may require collateral or a strong credit history.
Tips for securing funding
Here are a few hints for new businesses to get financing in India:
1. Create a comprehensive and precise business plan that emphasizes your vision, objectives,
and growth potential.
2. Create a strong team with a diverse set of skills and a track record of success.
3. Utilize your network and look for connections with venture capitalists, angel investors, and
other potential investors.
4. Showcase your company and pique the interest of potential investors by participating in
startup competitions and pitch events.
5. Use social media and a professional website to build a strong online presence.
6. In order to reach a mutually beneficial agreement, be prepared to negotiate and flexible with
investors.
7. Look for government programs and projects that offer startup funding and support.
8. In order to gain access to resources, mentorship, and funding, think about working with an
accelerator or incubator.
9. Securing funding can take a long time and be difficult, but persistence can pay off in the end.
Be patient and persistent.
Finding and employing skilled workers is frequently a challenge for Indian startups. Because the
country’s education system does not always provide startups with the necessary skills and training,
there is a shortage of skilled professionals in certain fields. Startups also struggle to attract and keep
talented employees due to established competitors and the lure of high-paying jobs abroad.
For startups in India, the following are some options for acquiring skilled workers:
 Collaboration with educational establishments: Startups can develop programs that provide
students with real-world experience and exposure to the startup ecosystem by collaborating
with universities and other educational institutions.
 Make compensation competitive: Startups can attract and keep talented employees by
offering competitive salaries, equity, and other benefits.
 Make use of online and social media platforms: Startups can use online job boards and social
media to attract and hire skilled workers from across the country.
 Take part in work fairs and systems administration occasions: New businesses can go to work
fairs and systems administration occasions to meet expected applicants and assemble
associations with industry experts.
 Provide professional development and training: Employees can benefit from training and
professional development programs offered by startups to enhance their skills and retain them
 over time.
 Work with other startup companies: Startups can collaborate to pool resources and share
talent, addressing a skill gap in particular industries.
 Consider options for working from home: By providing remote work opportunities, startups
can reach a larger pool of qualified professionals from across the nation, which helps them in
their search for talent.
Startups in India may find it difficult to keep talented employees because there is a lot of competition
for skilled workers. Here are a few hints to assist with holding capable representatives:
 Provide growth opportunities: Your employees should be given chances to learn and grow.
Mentoring, education, and training programs are all examples of this. If employees have the
impression that their careers are developing, they are more likely to remain with the
company.
 Provide flexible work schedules: Think about providing options for flexible working hours,
such as remote employment or schedule flexibility. Employees may experience increased job
satisfaction and loyalty as a result of this, as it can help them maintain a work-life balance.
 Reward and acknowledge good performance: Bonuses, promotions, and other incentives
should be used to recognize and reward good performance. Employees will be motivated by
this and will see that their efforts are valued and appreciated.
 Give a clear path for your career: Your employees should be given a clear career path that
includes opportunities for advancement and growth within the company. Employees’
motivation to stay with your company can be bolstered by this.
Conclusion
While the world-changing potential in startups is sometimes overhyped, successful startups do have
the potential to create a significant positive impact on the world. And even when startups fail, they
still have an impact, especially through the learnings for the founders, employees, investors and other
stakeholders.
Tesla, for example, has led the way in redefining the entire car industry. Ten years ago electric cars
seemed at best an oddity, but now they look a great deal like the future of cars. Without the
pioneering spirit of Tesla, the car industry itself would have been very unlikely to take this new
direction. The positive impact of Tesla on the climate is likely quite significant directly due to their
being adopted and indirectly through the entire car industry’s shifting to more sustainable solutions.
Startups have also shaken the very foundations of our economic systems, in particular through the
now commonplace “sharing economy.” Pioneers like housing-sharing Airbnb and ridesharing Uber,
Lyft or Didi Kuaidi have led the way to a significant amount of new sharing startups enabling us to
share bikes, electric scooters and even parking spots. This has a big impact on consumption and
therefore not only the economy, but also the ecology of the planet.
Of course, there are more and more startups whose endgame itself is to have an impact. Finnish
Meru Health won the mental health category at UCSF Digital Health Awards. Other startups are
looking into climate change, education, health and food – to name a few key areas – with the aim of
combining impact and successful business.
Finally, startups have an impact also on the lives of the startup entrepreneurs themselves. By
embarking on a startup journey, the entrepreneur will learn a great deal about discovering actual
problems, innovating solutions, analyzing markets and building the organization and processes to
support these activities. This helps the entrepreneur develop an entrepreneurial mindset, through
which they can also contribute to other life activities, even if they later end up working in a more
traditional organization.
References
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https://www.startupindia.gov.in/content/sih/en/search.html/Uttar-Pradesh/Lucknow?
states=5f48ce592a9bb065cdf9fb3f&cities=5f48ce5a2a9bb065cdf9fbe4&roles=Startup&
https://www.linkedin.com/pulse/grand-startup-challenges-faced-entrepreneurs-uttar-pradesh-
saxena