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How To Start and Manage Startup Companies in India, A Case Study Approach
How To Start and Manage Startup Companies in India, A Case Study Approach
Abstract - Startup is defined as “an entrepreneurial venture or a new business in the form of a Company, a partnership or
temporary organization designed and search of a repeatable and scalable business model.”Start-up is one of the scorching
event this era which everyone is talking about .Start- up India Campaign which was started on 15th August ,2015 is
particularly based on enhancing the start-ups to encourage the entrepreneurship and job availability. The start-ups are the
kind of companies which are innovative in their course of development, analysis, evaluation, research for the target segment.
The purpose of this article is to put some light on establishing a start-up and managing the startups and the initiatives taken
by government of India with the help of some of the start- up case studies in India.
INTRODUCTION
On 15th August 2015, PM Narender Modi announced this initiative at the Red Fort as Start-up India and on 16th Jan 2016 it was
officially flagged by Finance minister Arun Jaitley. The main aim of the Govt is to provide maximum help and support for the new
emerging businesses and ideas. The support will be in the form of finance, technology, economic, social as well as environment.
As it is a known fact that when someone starts a new enterprise or tries to get into entrepreneurship they face many problems like
finance, land permissions, environmental clearance, foreign investment proposals, family support etc. It is one of the much needed
initiative plan of Govt of India.
An idea can be converted into a start-up. Even sometimes the crisis becomes the opportunity and it gives birth to the start-ups. Many
times we have seen that we have an idea but we do not dare to initiate it or we do not find it worthy. On the other hand other people
take that idea as an opportunity and mobilise into reality. But sometimes the idea and opportunity taken and started if not managed
properly they will lead to failures
STARTSUPS IN INDIA
In recent years, the Indian startup industry has really taken off and come into its own—driven by factors such as massive funding,
consolidation activities, evolving technology and an burgeoning domestic market. The numbers are telling—from 3,100 startups a
projection of more than 11,500 by 2020, this is certainly not a passing trend. It‘s a revolution. And it‘s going to change the way the
markets are working today in India. Between 2010 and 2014, the infusion of VC and PE increased from $13 million to $1,818
million. Angel investment too has multiplied almost 8 times from $4.2 million to $32.2 million. Based on data published by
YourStory, in 2014, Helion Venture Partners was top of the investors list going by the total number of deals made, followed b y
Sequoia Capital, Blume Ventures, Kalaari Capital, and Accel Partners. In 2014, 43 startups were acquired; so far this year the
number has been 41, with startups themselves being the most acquisitive of the lot. Of the 41, merely two deals were struck by large
corporates, with Godrej and Mahindra & Mahindra as the buyers. In January 2014, Facebook had acquired Bangalore-based little
eye labs–a startup that made a software tool for analyzing the performance of Android apps. Zip Dial is a ―missed call marketing‖
platform with an impressive client list including Unilever, Disney, Gillette, Amazon, Facebook. Startups in India have given rise to
more startups.
LITERATURE REVIEW
Paul Graham says that "A startup is a company designed to grow fast. Being newly founded does not in itself make a company a
startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit". The only
essential thing is growth. Everything else we associate with startups follows from growth.
A startup business is defined as an organization:
• Incorporated for three years or less
• At a funding stage of Series B or less
• An entrepreneurial venture/a partnership or a temporary business organization
• New and existence for not more than five years
• Revenue of up to INR 25 cr.
• Not formed through splitting or restructuring
Thomas Hillmann and Manju Puri (2000) examine the empirical evidences on the impact that the venture capitalists can have on
the development path of new firms. Their study suggests that there is soft facet to venture capitalists in terms of supporting
companies to build up their human resources within the organization.
Christopher A Pissarides (2001) in his paper studied that the role of company starts up costs for employment performance. This
paper is highly theoretical one. The conclusion is the factors that can explain the differences in Labor Market performance are
structural and should be sought in the institutional structures of the countries.
Omid Sharifi, Bentolhoda Karbalaei Hossain (2015) in their paper stated that the various financial challenges faced by the
Startups in India. It also depicts the difficulties faced by the startups at the initial stage. The major findings are major leap in
technology have led investors to raise the bar in terms of how much leg work entrepreneurs are expected to do before even pitching
their companies.
1. Self certification: The main objective of the govt is to reduce the load on the start ups hence allowing them to
concentrate fully on their business and keeping the low cost of adherence. It will include labor laws and environment
related laws.
2. Start-up India hub: A single contact point will be created for the start-ups in India, which will enable them to exchange
knowledge and access to funds.
3. Register through app: An online portal, will be available in the form of a mobile application, which will help
entrepreneurs to interact with the govt and other regulatory officials.
4. Patent protection: A monitoring system for patent inspection at reduced costs is being created by the central
government. It will enhance perception and acquisition of the Intellectual Property Rights (IPRs) by the entrepreneurs
5. Rs 10,000 crore fund: The government will develop a pool with a starting aggregation of Rs 2,500 crore and a total
aggregation of Rs 10,000 crore over four years, to help new entrepreneurs. The important role will be played by the Life
Insurance Corporation of India in blossoming this collection. The fund will be managed by a group of professionals
selected from the start-up industry.
6. National Credit Guarantee Trust Company: A National Credit Guarantee Trust Company (NCGTC) will be created
with a budget of Rs 500 crore per year for the next four years to help the drift of funds to entrepreneurs
7. No Capital Gains Tax: Investments through venture capital funds are exempted from the Capital Gains Tax. The same
policy will be executed on start-ups.
8. No Income Tax for three years: Start-ups would not pay Income Tax for the first three years. .
9. Tax exemption for investments of higher value: In case of ventures of higher amount than the market price, they will
be exempted from paying tax.
10. Building entrepreneurs: Creative study plans for students will be implemented in over 5 lakh schools. Apart from this,
there will also be an annual businessman grand provocation to develop high class businessmen.
11. Atal Innovation Mission: This Mission will be propelled to revitalize ideas and motivate creative youngsters.
12. Setting up incubators: A private-public partnership model is being considered for 35 new incubators and 31 innovation
centres at national institutes.
13. Research parks: The government plans to lay seven innovative research parks, including six in the Indian Institute of
Technology campuses and one in the Indian Institute of Science campus.
14. Entrepreneurship in biotechnology: The government plans to construct 5 advanced biotech nests, 50 advanced bio
incubators, 150 technology transplant offices and 20 bio-connect offices in the country.
15. Dedicated programs in schools: The government plans to inculcate transformational programs for scholars in over 5
lakh schools.
16. Legal reinforce: A committee of moderators will give legal help and reinforcement in complying patent applications
and other papers.
17. Rebate: An exemption value of 80 percent of the total value will be given to the start ups on filing the patent
applications.
18. 18). Easy rules: Standards of communal acquisition and mandate of switching have been easier for the entrepreneurs.
19. Faster exit: If an entrepreneur is unsuccessful than the government will help him to get a particular resolution for their
complication.
2) Venture Capital
Used to scale the company’s business model.
Comes from larger institutional funds.
Focus is on building the sales force and establishing a global presence,.
3) Public markets
Late stage startups can feel the need to expand more aggressively or actively innovate the products which require
larger funds.
Private equity funds together with public markets provide large amounts of liquidity to late stage startups.
5. PROPER MARKETING
A well marketed product can sustain whole business as seen in the case of many successful ventures. Knowing the
target audience and pulling their attention and convert them into leads.
6. PRICING STRATEGIES
Pricing is the most important attribute which if set wrongly can be detrimental to the start up. To survive in the
competitive market they should adapt different pricing strategies which will attract customers towards their product or
service.
Vision
To expand to more 50 countries
Milestones:
Number of listed restaurants: in 2008 it was 4000 restaurants which increase to 94000 in 2013 and currently 384,100 in
Q1 of 2015.
Monthly visitors of Zomato increases to 35 million in 2014 which was 11 million in 2013 and 0.015 million in 2008.
Yearly revenue of Zomato in 2008 was 0.06 crores which increased to 11.3 crores in 2013.
Spread in 21 countries worldwide.
Success Factor:
First mover advantage
Strong content platform
Efficient employees
Good rating mechanism and social platform
Funding from experienced source
Strategy of Zomato: Zomato works with keen interest on various strategies to achieve their goal. It includes
Financial strategy: To increase their fund and revenue
Marketing strategy: To tap their customers from across the globe
Growth strategy: To grow continuously and increase their customers and page traffic
Globalization strategy: To expand themselves across the whole globe as a leading service provider
Marketing Strategy
Featured and user friendly website
Global mobile app
Focusing on digital marketing channels for potential customers
Acquire the competitors: To be the largest resource in food supply market, Zomato bought urban spoon for $52 million to
enter US, Canada and Australia
Simpler review and rating system
Integrating other tools in their marketing strategy has given them wonderful hike in their business.
Sales promotion: Coupons and price-offs
Direct Marketing: Phone call and direct mail
Investments
In August 2010, Zomato got its first round of funding of $1million from Info Edge, India. And in September 2011, got its second
round of funding of $3.5million from the same financier. Next year Zomato upraised its third round of another $2.5 million from
the same investor and again in early 2013, Info Edge funded fourth round worth $10 million which gives them a 57.9% stake in
Zomato.
Seeing the future and growth of Zomato, Sequoia Capital and Info Edge, India in November 2013 funded Zomato with $37 million.
Info Edge now owned 50.1% of Zomato on an investment of INR 143 crores. The total funding raised by Zomato till November
2013 stands at $53.5 million.
In November 2014, Zomato came up with a fresh round of funding of $60 million at a post-money valuation of ~US$660 million.
This round of funding was jointly headed by Info Edge India Limited and VY Capital, with involvement from Sequoia Capital. This
made a total funding of over US$113 million for Zomato.
Recently in a fresh round of funding in April 2015, Info Edge, India has invested an amount of Rs 155 crore in Zomato.
Info Edge said in a statement “Being Info Edge’s fair share of Zomato’s recent fund raises of USD 50 million”. Upon completion
of the allotment of shares, Info Edge’s aggregate investment in Zomato will be about Rs 484 crore.
As the website was launched, it became popular soon and expanded rapidly, covering many important regions of India including
Kolkata, Mumbai, Bengaluru and Pune by the year 2010. Apart from being a service provider within India, Zomato.com now has
branched to overseas in the regions of Philippines, New Zealand, Qatar, South Africa, Sri Lanka, the United Arab Emirates and the
UK as well.
The website covers a list of over 1, 20,000 restaurants across all these regions catering to more than 15 million customers
worldwide. With its headquarter in New Delhi, Zomato.com is providing career opportunity to over 350 employees all across the
globe.
Social media Strategy
Zomato uses different platforms to engage their customers with them.
There is a huge engagement of customers on Facebook. Zomato has more than 600k strong Facebook community.
Twitter
Twitter is a place where Zomato is sparkling. It has more than 114 k followers there. Used as a conversation platform with the
customers, Zomato is doing a great job in engaging their customers on their page. They answers all the queries raised over the
platform by the customers.
Blog
Sharing and updating with all the latest updates is a key point for any organization. Zomato uses their blog as their mouthpiece to
share all the latest updates.
Pinterest
The platform shares the food experience with great content to attract their customers. The company needs to do a lot of job to make
its followers on this platform which will certainly work in their promotion.
Instagram
This platform lets the user share the foodie photographs just by sharing it using the tag # Zomato. The image automatically gets
shared on the microsite.
Success Story
The key factor for Zomato success is its marketing strategy and in-depth knowledge of their competitors.
Zomato aims to be a place where the foodies hangout. The company has spread in 20 countries with its headquarter in New
Delhi, India providing service to over 35 million values customers per month. The list of registered restaurants on the
website has increased to 384,100 till March 2015.
Facebook, Twitter and Pinterest are the 3 main platforms which made the base for the success of Zomato with a deep
presence among their customers.
Zomato has extensively invested a lot over SMO’s, SEO’s and has worked a lot to improve its UI and make it more user
interactive. Side by side with a goal to branch globally, they also invest much on TV ads to bombinate Zomato.
Pankaj Chaddah, the co-founder of Zomato said that “ads on the mobile app have changed the revenue game for them”.
More than 50% of their total traffic comes from their mobile apps. “Using location-based services to target ads around a
consumer’s physical location helps make this decision easier”.
CASE STUDY 2: RED BUS
Phanindra Sama, the chief executive officer of RedBus.in, is an engineer who chucked his lucrative job to start
an enterprise of his own. It was started in August 2006 with a few seats from one bus operator, RedBus today is one of the
most successful online bus ticket booking agencies. Today, it has 700 bus operators, 10,000 buses listed on it, works in 15
states and sells around 5,000 tickets every day.
The idea
• The founder Phanindra Sama during his Diwali vacation of 2005 was on the way to his home town Hyderabad. Making
the plan in last moment left him with a single option to take a bus to reach his home.
• Phanindra roamed the whole city and looked everywhere for a ticket, but it was all sold out before he reached the travel
agents. He then realized some major issues with the then-existing model level agents don’t have all the information
regarding all the possible bus operators. This lead to a gap and customers had to take decisions based on limited
information.
• Most of the agents were not able to sell return bus tickets.
To penetrate the market red bus needs to expand its network of bus operators
Attract new operators by show casing them the advantages they will avail
Explain them the benefits by showing the results of their partners
Increase the customer retention by increasing customer satisfaction
Bus lounges for redbus travelers
Travelers will be relieved from extreme weather India.
Travelers satisfaction with the services will help in winning their loyalty
It will also improve visibility of Red bus helping in increasing its awareness
Launch loyalty programs to retain existing customers
CONCLUSION
For any new idea to become successful venture it requires appropriate support and mentoring. At present day, start ups are
growing like a grapevine. Indian start-ups attempt to build the start up environment with important education, talent,
innovation and incubators with correspondence to funding agencies. Now the govt is also supporting the Start-ups.
According to Nasscom, India ranks third in global start-up ecosystem. More than 68% growth is seen in the year 2016.Start-
up is an opportunity for an entrepreneur to educate and inspire others while some are thinking of how to do and what to do.
Although, entrepreneurs are facing problems but still they are rising like a sun. They have the determination to setup and
divert their energy to plan, support and execute their dreams and contributing to the growth of the economy. This new
initiative of start-ups pledge rapid approvals for starting the business, easier exits, tax rebates and faster registration for the
patents made easy for startups.
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[8] https://en.wikipedia.org/wiki/Start-up_India
[9] http://www.iisermohali.ac.in/Start-upIndia_ActionPlan_16January2016.pdf
[10] https://www.speakingwalls.in/blogs/speaking-walls/85632515-eight-challenges-faced-by-an-indian-start-up
[11] http://www.iamwire.com/2015/10/biggest-roadblocks-faced-start-ups-india/124312
[12] http://indiatoday.intoday.in/education/story/start-up-india-stand-up-india/1/573128.html indiatoday.in New Delhi, 2016.
[13] http://yourstory.com/2015/12/india-100-top-start-ups-2015/
[14] 14.startups.in/sights/on-getting-published/
[15] http://www.indianstartups.com/
[16] indianexpress, 2016
[17] thehindu, 2016