Government Support to Start-ups

Published: 16th Dec, 2020

The key objectives of the Government are as follows:

Spur entrepreneurial activity to accelerate job creation
Create enabling environment by reducing regulatory burden and introducing new policies
Build capacity through infrastructure creation and training
Provide funding support and fiscal incentives
Facilitate all members of the Startup ecosystem to connect and collaborate

Institutional and Financial support for Rural Start-ups

As per Startup Genome, Bengaluru and Delhi are among the top 40 startup ecosystems in the world.
Incubation Centres- Through the Atal Innovation Mission (AIM), around 47 incubation centres have been funded so far. While many of these incubation centres are in Tier 2-3 cities, only a few are in rural areas.

Fund of Funds - Ex. SIDBI StartUp Fund

Venture Capital Funds: In 2019, NABARD started its own venture growth equity fund, NABVENTURE5 Fund.
Seed Fund: A National Seed Fund was announced in Budget 2020-21 to support ideation and development of early stage start-ups.

Elements that feed the Rural Startup Ecosystem

Education: Education and vocational skilling need to be integrated, a practice followed by many countries. We need to train rural youth in basic English language skills.
Job creation through encouragement of tech-enabled businesses in rural areas.

Way Forward:

Given the nascent stage of rural start-ups in India, we may be better off by providing funding and infrastructure support using public resources.

Incubation/acceleration of rural start-ups
Creation of a National Rural Seed-cum-Impact fund to invest in start-ups benefiting large number of farmers/rural population.
Creation of a National Agri/Rural Start-ups Fund- make direct investments in agri/food/rural start-ups at all stages (early, mid and late).
Creation of a National Rural Fund of Funds-would make indirect investments in third party AIFs that would in turn invest in agri/food/ rural start-ups at the seed (post incubation/acceleration) to early stages.
Creation of a National Venture Debt Fund

Conclusion

Rural areas have lot of untapped entrepreneurial potential. Agriculture and rural businesses are the areas of maximum social impact but remain underinvested in India from an equity/Start-up investment standpoint.
Internet penetration in rural area will result in rise of super apps/constellation of apps which will change the face of rural banking, shopping, trading, ecommerce etc.
This is the most opportune time for India to emerge as a 'land of rural start-up entrepreneurs' because as Mahatma Gandhi put it so evocatively, "India lives in her villages".