Bengaluru Entrepreneurs Urge New Karnataka Govt To Address Startup Infrastructure


The super-dramatic Karnataka elections has just about settled with a new government in power. Entrepreneurs of Bengaluru-based startups are sure that the push behind entrepreneurship and digital innovation will continue with the new government. However, they all have a common demand of better infrastructural facilities. 

“The state has several policies favouring startups. But if we want to scale and create a dynamic ecosystem for startups, infrastructure has to be smoothed out. Not much has been done in that regard,”

said Raja Lahiri, Partner, Grant Thornton India.

The leading parties in the recently concluded Karnataka elections actively tried to appeal to the urban vote bank by showing support for startups

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The subsidy is one of the significant ones, under which, startups will be eligible to get up to Rs 1 crore as subsidy. The subsidy would have a grant component of up to Rs 25 lakh and the soft loan of about Rs 75 lakh at the rate of 6 percent interest. 

The manifesto also envisaged housing over 20,000 tech-based startups, including 6,000 product startups, by 2020 through its Multi-Sector Startup Policy. The party claimed that such efforts will translate into 1.8 million job opportunities for the state.

However, entrepreneurs feel there’s a lot more to achieve, which include infrastructure development, ironing out transportation issues, besides forming favourable policies around filing for an exit and bankruptcy.

Gaurav Dhawan, the founder of fin-tech startup WealthApp, feels the new government is unlikely to introduce any new schemes at least for a year of its incumbency. He thinks that a smart city vision should be created for Bangalore with better connectivity, better commutation, and employing hi-tech solutions for civic issues such as polluted lakes and damaged roads. 

Karnataka was the first state to announce a startup policy, in 2015, with a five-year time frame (till 2020). The policy aims to support startups through strategic investment and policy interventions. Rs 300 crore corpus was also set up to be disbursed in the form of grants equity to startups, and micro-and-small enterprises.

The state government has also introduced several schemes and policies to support startups through mentorship. It has gone ahead and incubated several of these startups under the Startup Cell.

Entrepreneurs agree that the concerted push from the government has helped startups in creating opportunities for new ideas and proof of concept. Karnataka government allows selected startups to work on civic initiatives taken by the State. However, awareness around the funding assistance is very low, especially beyond the metros, the entrepreneurs say. 

According to the Startup India Policy website, DIPP has till now recognised 6,096 companies in India as startups. But only 74 of these startups have been approved for availing tax benefits, as of January 2018.

Some funds such as Chiratae Trust, which was sanctioned the highest corpus of Rs 90 crore under the Funds-of-Funds (FFS) managed by SIDBI, funded just 10 startups till September. Several others including Omnivore Partners India Fund II, Aavishkar Bharat Fund, Stakeboat Capital Fund, IndiaQuotient II, and Kitven Fund III have funded a limited number of companies with the government money.

Government’s funding is for seed-stage startups, which is not enough to scale up. To do that, startups will have to turn to venture capitalists. Entrepreneurs feel that it makes sense for the new government to take up issues that make inception, funding, and exit of startups difficult.

Aniket Deb, the founder of B2B packaging marketplace startup Bizongo, says that no government can ignore the wave of entrepreneurship.

However, entrepreneurs agree that there is a need to create success stories with better promotion and execution if the government’s startup policy is to be a success. Or else, it will be limited to be an incubation platform for young startups at best. 

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