Often startups are end up registering abroad due to complexities of India regulatory structure as they take 27 days to register a company, though the govt was working to reduce it to a single day, but it is not expected to come in near future. The challenges faced by startups in book building processes and related to new-age payment modes were addressed in a recent meeting. These issues push entrepreneurs abroad due to hostile business environment here.
Following all the hardships faced by startups in India they find it easy and lucrative to relocate to Singapore, the US or the UK as their government realises potential of these startups and welcome them with red carpets. iSpirit has estimated that 3 out of every 4 tech startups which comes out to be whooping 75% will be domiciled outside the country. Statistics further reveal that 9 of the top 30 B2B software product companies in terms of market capitalisation have already relocated to the US, the UK and Singapore. These 30 companies are worth about $6.2 Bn, employing around 18,000 people.
Foreign country’s investor lure these startups by offering them humungous amounts and ease of business environment. For instance, a Singapore-based investor offered $100 Mn in funding and infrastructure costs for 10 years to InMobi on condition that it increases its decision sciences team from 25 to 200 in the island nation.
To eradicate this mass exodus, U K Sinha, chairman of Securities and Exchange Board of India met a group of entrepreneurs, over day-long closed-door sessions last month in the city to voice issues faced by them and also understand the regulator’s concerns around new-technology companies.
Startups highlighted problems they face at time of raising funds from foreign investors and during an IPO. He saw presentation of several startups about the hurdles faced by them and was willing to help. In addition, it was decided that a team from SEBI will have monthly meeting to continue discussion that would aid both the regulator and startups. He also expressed interest in engagement with startups to make use of innovative technologies.
The meeting was organised by software product think-tank iSpirit and was attended by top exceutives of Eztap, Exotel, HotelLogix, InMobi, Paytm, Quickheal, Deck.in and iViz.
“It was an industry-regulatory interaction to understand and collaborate on issues that concern regulators on one side and startups on the other,” Manju Nanjaiah, chief executive officer of startup SchemesCentral, who attended the meeting. Following propositions were made by SEBI Chief:
- SEBI will put in place a framework for crowd-funding
- SEBI will facilitate fund raising by startups
- SEBI team will meet industry representatives every month to discuss and solve issues
Indian Government has learned that they require a completely new paradigm of evaluation and approvals for these new age companies.