Should Government Allot Funds Or Create An Enabling Environment For Start-Ups?

Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) Government, in its first Budget presented earlier this month, announced a Rs 10,000 crore fund for entrepreneurs.

BoomNews's show #IndiaHangout discussed the Government's idea with Sanjay Swamy, managing partner, Angel Prime, Mahesh Murty, founding partner, Seedfund and Kanu Doshi, Dean (Finance), Welingkar's Institute of Management, to understand the plan and the likely impact on the start-up culture in the country.

Swamy said while the Government has a lot of role to play, "funding start-ups is the least important role at this stage. Government should open up a lot of its programmes and buy goods from start-ups."

Murthy said the idea should be that the Rs 10,000 crore should be a Fund-of-Fund i.e invest in venture capital funds. "The idea should not be a pure venture fund. Babus talking exits and scaling up would be disastrous."

While Murthy said compliance is tough for start-ups, "Government should stop being an obstruction. More than equity, what is needed is collateral-free debt."

Doshi was of the view that the fund is a symbolic view of the Government. "Apart from the money, there will be other inputs from official agencies."

Murthy also pointed out that Indian corporates don't like to buy Indian start-ups. "It seems we don't like our own start-ups." He added that while the VC industry has moved around Mumbai and Bangalore, it has ignored Delhi.