The Indian startup ecosystem is the third-largest in the world. It began to evolve rapidly after the recession of 2008. In India, a business can be characterized as a startup if it meets three criteria:
- registered in India
- younger than 7 years
- annual turnover less than INR 250 million
Of every 50,000 startups launched in India, roughly 9,000 belong to the tech industry. Today, there are 83 Indian unicorns in total, including 44 startups added in 2021. Among recent startup launches, some of the well-known brands are Paytm, Flipkart, Zomato, Ola, and Cure.Fit.
Registering a startup in India
Before registering your startup, you should find reliable and motivated co-founders. If you lack them, it makes sense to search for candidates on LinkedIn, Naukri, Indeed, Glassdoor, and Placement India.
Available ownership models
When creating a company in India, you can choose from 4 ownership models:
- Proprietorship. You’re the only person who owns your company, and you can’t transfer the ownership to anyone else. You don’t need to register your business, but you also can’t ask foreign investors for financial support. Your income will be taken as taxable income. This type of ownership can’t be classified as a startup.
- Partnership. To launch this type of business, you need at least one partner. Your partnership can be classified as a startup only if you incorporated it less than 5 years ago.
- Limited Liability Partnership (LLP). Such a company needs to be registered under the LLP Act of 2008. To launch it, you need to have two or more partners. Compared to other types of ownership, LLP has to comply with fewer limitations and can benefit from greater operational flexibility.
- Private Limited Company (PLC). These are registered under the Companies Act 2013. Your business will need to have 2 or more directors. You’ll be allowed to hire up to 200 staffers. After registering a PLC, you might get access to perks from the government.
In India, you can register a startup online by incorporating your business and signing up for the Startup India Program. This way, you’ll get the Digital Signature Certificate, the Directory Identity Number, and the Certificate of Incorporation/Partnership.
Registering your startup online
To register with Startup India, follow this step-by-step guide.
- Visit the official website.
- Click the icon with a human head in the top-right corner.
- Click the Register button.
- Type in your name, email, phone number, and password, then send the form.
- Check your inbox to find an OTP and enter it on the Startup India website.
- Provide additional details about yourself (type of user, name and stage of your business, etc.) and click Submit.
That’s it, your startup profile is ready to be used! Now, you can benefit from the full functionality of the Startup India website: apply for mentorship, accelerators, and incubators; get income tax exemption; receive grants; check states ranking; take part in national startup awards, and so on.
Receiving the Recognition document
Next, it’s time to get the Recognition from the Department for Promotion of Industry and Internal Trade (DPIIT):
- Sign in to the Startup India website.
- Click the Schemes & Policies button in the top horizontal menu.
- Click DPIT Recognition for Startups in the dropdown menu.
- Click Get Recognized.
- Let a new page open, scroll a bit down, and push the button that says Click Here for Submitting Your Application for Recognition as a Startup.
- Fill in the form with the information about your entity (postal address, partners and directors, activities and certifications, and so on).
- Accept the terms and conditions and click Submit.
Thanks to Recognition, you’ll get access to the following list of perks.
- Fund of Funds
- Tax exemption on investment above fair market value
- Tax exemption for 3 consecutive years
- Self-certification under labor and environment laws
- Relaxation of public procurement norms
- High-quality intellectual property services and resources
- Easy wind-up of a business
Documents necessary for registration
To complete the registration of your startup, you should provide these documents.
- Incorporation/Registration certificate
- PAN Number
- Proof of funding
- Authorization letter of the authorized representative of your business
- Proof of concept
- Patent and trademark details
- List of awards or certificates of recognition
Don’t worry if you lack some papers — you’ll still be able to register your startup. Not all companies need to raise funds, and only selected businesses have awards and patents. Proof of concept is relevant at the early stage of a startup’s development; it can be a video file, a link to your website, or a pitch deck.
Over time, the list of required documents has changed. Here are the papers that used to be necessary for registering a startup in India but are not relevant anymore:
- Letter of recommendations
- Letter of funding
- Sanction letters
- Udyog aadhar
- MSME certificate
- GST certificate
Typically, you can expect to receive the recognition number within 2 days after submitting the papers. Accidentally, you might submit wrong or low-quality papers. This might be regarded as a forge or fraud attempt. In this case, you’ll need to pay a fine of at least INR 25,000 and up to 50% of your startup capital.
Consult about intellectual property rights
It would be wise to hire or outsource an accountant or a certified lawyer for your startup. They will help you set up operations as well as avoid fines and penalties. Intellectual property rights for software in India only apply to the code and the final product. You won’t be able to file a patent application for software unless it’s integrated with hardware. However, you might be able to get a patent for your user interface and/or experience if you manage to prove that they are unique enough.
29% of startups close because of a lack of funding. That’s the second most common reason for startup failure. Here are the most common sources of funding that can keep your business alive:
- Borrowing from friends and family members. This approach can only work for small startups. If you’re planning to launch a tech business that requires huge investments, friends and relatives won’t be able to help you.
- Bootstrapping. This term means that you’ll be funding your business from your own pocket. You can launch a startup with your own savings. As it begins to generate income, you’ll be reinvesting all the revenue in business to facilitate scaling. Again, this method only works for small companies.
- Incubators and accelerators. These two types of organizations help startups take off. If you opt for an accelerator, you’ll be receiving intense informational and financial support for a few months. If you prefer an incubator, you can stay with it for a longer time, up to a few years — but the support will be focused on knowledge rather than money. Consider applying for 500Startups, TLabs, Cisco Launchpad, GSF Accelerator, Microsoft Accelerator, iCreate, Google Launchpad, Amity Technology Incubator, and Angel Prime.
- Angel investors. They act as private persons and can support you not only with money but also with expertise and industry contacts. To find the right angel for your launch in India, check the Indian Angel Network.
- Venture capitalists. In India, most VCs are foreigners who have relocated to this country forever or for a limited time period. To make a VC believe in you, you should come up with a revolutionary product, compose a solid business plan, and deliver an outstanding pitch. Here are the names of the most prominent VCs that are eager to support Indian startups: Sequoia Capital India, Accel, Helion Venture Partners, Nexus Venture Partners, Kalaari Capital, Intel Capital, Blume Ventures, Inventus Capital Partners, SAIF Partners, Chiratae Ventures, Matrix Partners, Bessemer Venture Partners, Canaan Partners, 3one4 CAPITAL, Naspers, Unicorn India, Fidelity Growth Partners, and Norwest Venture Partners.
- Crowdfunding. To impress consumers, you should record a high-quality video. It needs to emphasize how attractive your product is and teach people how to use it. Indian entrepreneurs typically launch crowdfunding campaigns on Kickstarter, Wishberry, Indiegogo, FuelADream, Fundable, Ketto, Catapooolt, Milaap, and Crowdera.
- Bank loans. In India, many banks provide dedicated loans to startups — for example, you can try your luck with HDFC Bank, TATA Capital, Kotak Mahindra, and Fullerton India. To boost your odds of getting funds, you’ll need to provide a business plan and collateral (for instance, your car or house).
- Government grants. The Startup India Scheme definitely deserves your attention. It’s a flagship program under the Startup India Initiative. It will facilitate your initial business setup, grow your network, and exploit opportunities presented by the government. In addition to financial support, you might be able to get intellectual property benefits and tax exemptions. Alternatively, it would be wise to turn your eyes to the scheme of the National Bank for Agriculture and Rural Development (NABARD), Pradhan Mantri Mudra Yojana, Credit Guarantee Scheme, Stand Up India Scheme, Coir Udyami Yojana, Market Development Assistance, Bank Credit Facilitation, Sustainable Finance Scheme, and Udyogini.
If you attract investors to your startup, you’ll need to share parts of your business with them. The more investors you have and the more funding rounds you complete, the more diluted your own business share will become.
Open an offline office
Think twice whether you need an office at all. Depending on your niche, you might be able to start a business at home and avoid rental expenses. For example, some types of service-based businesses enable you to visit clients in their locations.
It might be reasonable to open an office in distant areas where people have unstable Internet access. For example, outside of the largest Indian cities, electricity outages are common to disrupt online connection. With an actual brick-and-mortar office, customers will be able to physically come to you and make purchases.
Launch your Indian startup
When choosing an optimal date for your launch, you should stay clear from other big brand events. The best way of announcing your opening date is by sending out press releases to profile media.
To attract consumers’ attention in India, you can organize entertainment for people and give out freebies. For instance, consider setting up a small entertainment zone in a mall and running contests there, all while promoting your brand. Alternatively, you can collaborate with local artists.
Once you’ve launched, you should announce it on your website and social media.
Business ideas to launch a startup in India
If you’d like to launch a startup in India but lack a clear business concept, these ideas might provide you with food for thought.
Social impact investment funds
The primary goal of every business is to generate profit. But if you set up a company that makes people’s lives better, the surrounding community will be much more enthusiastic about supporting you.
Consumers are becoming increasingly savvy. They want to know how the goods and services that they purchase can impact the environment and society. Your task will consist in raising money from investors for a fund to run socially-responsible ventures, making a positive impact.
Building Internet infrastructure
At the start of 2022, Internet access in India was 47% of the total population, so there is a huge place for growth. Even large corporations would love to improve the speed and quality of their Internet connection, let alone farmers from remote areas.
This business idea requires heavy investments — but you’ll be able to make a large income and contribute to the national economic welfare.
Cheap setups for home solar energy
Indian residents can generate cheap power by installing solar equipment on their balconies and roofs. To fund your business efforts, you can find a community that requires this type of energy and sign a pre-sale contract with them. These people will provide you with money that you’ll use to build solar panels for them.
Ecommerce niche store for Indian culture
You can purchase goods from local vendors and organize shipping to any part of the world. The target audience of such a startup is not Indian residents but foreigners who are interested in the Indian lifestyle and heritage.
To expand your audience and maximize your income, it would be reasonable to build your own ecommerce website and/or sell these goods on marketplaces.
Around 65% of Indians live in rural areas. Businesses might struggle to deliver their products to such consumers because of poor road infrastructure.
To accelerate the delivery process and make it cheaper, you can set up a warehouse on the edge of the city limits. The shipping company will bring the goods to the warehouse. To transport these items from the warehouse to end consumers, you can rely on drones or a fleet of scooters or trucks.
Rural drone delivery company
If the previous business idea seems too complicated for you, you can focus on one of its elements — namely, drones. Today, this concept might seem a bit too futuristic. But as Internet access increases and becomes better, drones will quickly become commonplace.
Building and managing drones is cheaper and easier than improving the road infrastructure in India. To facilitate the launch, consider offering your services to companies that regularly deliver goods to remote areas.
Mobile wallet solution
The value of digital transactions in India is projected to almost quadruple between 2020 and 2026. During the financial years 2021–2022, the volume of digital payments in India has increased by 33% year-on-year.
To create a mobile wallet payment solution, you’ll need to hire skilled IT specialists. The IT sector in India employs over 41 lakh professionals, so it shouldn’t be a problem for you to find the right individuals.
Online conversion specialist
Poor conversions are a common problem for online store owners. Consumers visit their websites but fail to finalize their purchases.
You can help your clients fix this problem by improving the layout of their websites, building popups, offering discounts, providing better customer support and new payment options.
To impress your potential client from the onset, you may analyze their websites and strategies for free. Compose a list of issues that you’ve detected and suggest solutions only when these businessmen sign a contract with you.
Compliance and regulations management for ecommerce stores
In 2022, the size of the Indian ecommerce market is expected to reach $74.8 billion. Compared to the previous year, that will be a 21.5% growth. By 2030, the size of the market is projected to reach $350 billion.
As new businesses enter this niche, they have to learn how to comply with regulations, so you can consult them. To start doing so, you need to get the necessary knowledge and promote yourself as an expert in the field.
This startup idea requires minimum investments — but on the flip side, it lacks scaling opportunities. You may launch a consultancy agency and train your staff members. In this case, the major challenge will be to make sure all your employees have an equally high level of expertise.
Warehouse/inventory management for ecommerce
As online store owners purchase products to sell, they need a place to store these items, as well as trucks for transportation. Organizing the logistics also requires time and effort.
You can help Indian online stores by taking care of all these challenges. To do that, you’ll need to purchase a warehouse or land where you can build it, buy means of transportation, and hire staff.
Mobile ads specialist for businesses
In 2022, the share of mobile in digital ad spending is expected to reach 77% across India. To become an expert in mobile advertising, you can complete short-time courses. Alternatively, you might be able to find all the necessary information online for free. Your task will be to help companies build a mobile presence and boost their ROI.
Website to app conversion
Mobile apps created in India account for 5% of the global apps market. 39% of them bring income to their developers through ads. Indian companies might want to build apps to boost their brand awareness, strengthen brand loyalty, and offer improved user interfaces to their clients. Besides, apps are less dependent on the speed and stability of one’s Internet connection, compared to websites.
Disaster alert mobile app
This is a particular case of an app that you can focus on. In urban and rural areas, there are many sensors. They are installed on tectonic plates, tall buildings, and in territories that are prone to hurricanes. As a disaster approaches, these sensors can send an alert to your app so that people can take measures to protect themselves.
Users should be able to notify their dearest and nearest through the app so that they take action too. The most obvious way of making money on this product is by introducing paid subscriptions.
International trade consultant company
International trading is just as important for local businesses as online presence. You can consult Indian businessmen about which products generate the highest demand abroad and how to deliver them there. Your clients will want to know about foreign laws and regulations, logistical opportunities, and ways of maximizing their margins.
Vinyl record manufacturing
In 2021, vinyl record sales were the highest they’ve been in 30 years. Consider setting up a small warehouse where you could manufacture, store, and sell vinyl. Most probably, you’ll be able to export your products.
Ecommerce vinyl store
To monetize the above-mentioned trend, you can try selling vinyl online. To make a profit, it makes sense to purchase cheap records in India and resell them with a margin to foreign customers.
Since it’s a niche market, you don’t need to specialize in any music genre. To expand your audience, it would be wise to include both new and vintage albums in your product range.
Mind that people buy vinyl not only for the sake of purchasing music on a physical carrier. They also want to meet like-minded individuals and talk about their hobbies. To turn your shop into a go-to destination for vinyl fans, consider sharing your expert knowledge with clients and recommending music to them.
The Indian economy is large and quickly evolving. Thanks to the density of the talent pool, it shouldn’t be a problem for you to find employees with the necessary skills. You can try to get financial support from the government, crowdfunding, angel investors, venture capitalists, or one of the banks that fund startups. If you select a niche that you’re genuinely passionate about and stick to a well-thought-out business development strategy, you’ll have good odds to succeed.