Introduction

Change is always inevitable in life. But we always try to restrict the change by fearing the risk aftermath.

Once preference was given to the Government jobs or any public sector jobs by registering in the employment exchange.

Then the era of computer shifted the focus of jobs to software engineering and technology-based jobs.

Now over the past decade we are watching a significant increase in number of start-ups and their significant contribution to the economy.

Recently, Indian Prime Minister announced “India will celebrate January 16 as ‘National Start-up Day”.

Through this blog we will do a basic study about start-ups and I hope you guys will also enjoy it!!!

What is a start-up?

In simple terms, start-up is an initial phase of business founded by one or more entrepreneurs having a unique and innovative business model for a particular product or service that has significant demand in the market.

Example: Amazon, Uber, Biju’s

Some of the main features of start-ups are:

• The initial capital normally will be funded by the entrepreneurs and later they attract the funding from outside before they set to launch it in the market.
• The funding forms from outside include family and friends, crowd funding, venture capitalists and loans.
• The risk factor is high in start-ups.

Difference between Scalable start-up and small scale business

Types of start-ups

According to Steve Blank, there are six different types of start-ups:

1. Lifestyle Start-ups
2. Small Business Start-ups
3. Scalable Start-ups
4. Buyable Start-ups
5. Large Company Start-ups
6. Social Start-ups

Stages in the start-up

1. Pre-Seed Stage
2. Seed Stage
3. Early Stage
4. Growth Stage
5. Expansion phase
6. Exit phase

1. Pre-seed stage

In pre-seed stage, an analysis of the market in which you will enter has to be done by taking into consideration the following,

• whether the product or service you are planning to start is needed in the market?
• Are there any existing companies doing the same?
• Is the analysis evaluated after taking into consideration the cost of opportunity and other resources needed?

Answering these question helps to create a blueprint of business plan which includes objectives, mission statement and goals.

2. Seed Stage

Once the blueprint of the concept is ready, then substantiate the same by developing into a small business model and develop a methodology the start-up will follow.

At this stage the main elements taken into consideration for building business model are;

• Validation of the ideas. (Analysing the gathered facts to make risk free decisions)
• Analysing the hypothesis created based on ideas.
• Forming initial assumptions based on hypothesis.
• If hypothesis is getting rejected then repeat the process again for other alternative ideas until you achieve the ideal business model.

The funds at this stage are mostly from family and friends.

3. Early stage

In this stage, a test will be done on the business model to check whether it is Minimal Viable Product (MVP).

Minimum Viable Product is an initial stage of creating the first workable (and saleable) version of your new business concept. It’s a concept that comes from a book called ‘The Lean Start-up’ by Eric Reis and the basic principle is relatively simple.

The workable version will be first tested among the potential users in family and friends and gather feedbacks and rectify the mistakes in the product before launching to wider population.

The role of venture capitalists and crowdfunding plays a vital role in this stage.

4. Growth stage

Once your product has been successfully launched in the market and has created high demand profitably, then you are in growth stage. Now, you will start recruiting employees and form a team.

Funding is also crucial for further development in the product or service or to meet the changing dynamics in market.

The Venture Capitals and Corporate Venture Capitals take center stage, being the main difference between them that the former has a single objective: financial (the return of capital), while the second has a double objective: financial and strategic, prioritizing the generation of strategic value for the corporation.

5. Expansion stage

In this phase, once after seeing a substantial growth in the market financially and in terms of employment, then you tend to expand your market boundaries geographically, or try new product or service for the same solution.

If you are planning for any international expansion or want financial support or infrastructure support then better make agreements with larger companies for vital usage.

6. Exit stage

The final stage is the exit stage where you want sell your start-up for 3 options:

• sale of the founders’ shares to another company
• acquisition of your start-up by another company
• an Initial Public Offering (IPO)

Start-up India Scheme

Launched on 16th January, 2016, the Startup India Initiative has rolled out several programs with the objective of supporting entrepreneurs, building a robust start-up ecosystem and transforming India into a country of job creators instead of job seekers.

These programs are managed by a dedicated Startup India Team, which reports to the Department for Industrial Policy and Promotion (DPIIT).

Startup India Seed Fund Scheme (SISFS)

To boost the Startup ecosystem in India, Shri Piyush Goyal, Honourable Cabinet Minister for Railways, Commerce and Industry, Consumer Affairs, Food and Public Distribution launched the Startup India Seed Fund Scheme on 19^th April 2021.

The scheme aims to provide start-ups with financial assistance at their early stages such as proof of concept, prototyping, product trials, market entry and commercialization.

Once a start-up gets access to capital at the early stage, it improves the potential for the enterprise to scale to a level where funding can be sought from angel investors, venture capital firms, Banks and other financial institutions.

Process of SISFS

Key points of the SISFS

• ~3600 Start-ups expected to benefit from SISFS
• ~300 Virtual Incubators to be promoted for supporting start-ups
• INR 945 crore corpus divided over 4 years, starting FY2021-22, to be disbursed through eligible incubators
• Year-round ‘Call for Applications’ for Incubators and Start-ups
• Sector-agnostic
• No mandatory physical incubation
• PAN-India start-up programme
• Start-ups can apply to 3 incubators simultaneously

Source: https://www.india.gov.in/spotlight/startup-india-seed-fund-scheme-sisfs

Conclusion

Through this blog, we saw a basic outline about start-up. Hope you guys enjoyed the blog and in further blogs we can continue an in-depth learning about it.

Thank you!!!