Close, but not too close. Here is what it must do.
EASE-OF-DOING BUSINESS India is the eighth-largest economy and is still ranked 130 in the world for “ease-of-doing business.“ Ease of doing business needs to encompass all aspects of business from starting to managing to closure. Today, the law requires a company maintain books and files taxes for eight long years even when it has no business and no employees.
ACCESS TO CAPITAL Risk capital is the fuel needed to start a company. In India, almost all-available risk capital (or venture capital) is powered by overseas investors (called limited partners or LPs). LPs are primarily pension funds, endowments, family offices, and trusts. Why not allow large Indian pension funds, the EPFO, and other financial institutions to invest in Indian venture funds that will ultimately invest in startups?
RESEARCH AND DEVELOPMENT Two of the most impactful technologies in recent times -GPS and the internet -were funded originally by the US Federal government for defence purposes and then dispersed for equal ac cess by all.
Indian defence spends over a billion dollars on indigenous research and development and there will be core technologies developed that can be mined to create innovative companies that solve the common citizen’s problems. problems.
ACCESS TO GOVERNMENT DATA As the provider of public goods and services, the government is the repository of huge public data. It sits on huge amounts of data for health, transportation, and utility services. For example: If land records and transactions were digitised, and the data made available as an open source, then online real estate companies could use this data to help consumers make more informed choices.
OUTCOME MEASUREMENT Any government initiative is viewed with cynicism because government initiatives are never measured for outcomes, and even if such measures exist, they are not in the public domain. I believe that the government should measure its startup initiatives against measurable outcomes (such as jobs created) and do so in a transparent manner.
Communism failed because private enterprises are better at creating jobs than government and within private enterprises, small and medium businesses create more jobs than large enterprises.
The biggest loss to any economy isn’t startups that didn’t make it but startups that could have been but for want of support.
To paraphrase Mark Twain, The government is merely a servant, a temporary one! It can’t be its prerogative to determine what is a right startup and what is not, who can be an entrepreneur and who can’t be ….
(The writer is the cofounder of Seedfund)