As per the report by NASSCOM, India is the 3rd largest start-up ecosystem in the world. Whenever there is a company registration in India, we term it as business and not start up. To put it in simpler words, any business in India is just a business and not a start-up company. This is because the start-up business is very different from regular business. In this article, we will list out a few points that define start-up companies in India.
Legal Definition of Start-Up in India
A business entity is a start-up for 7 years from the date of its incorporation. However, the eligibility period is 10 years for the biotechnological sector.
Growth
In India, the biggest difference between traditional business and start-up is growth. The traditional business functions on a lesser scale whereas the start-up companies have the capability to grow at a rapid pace. Start-ups have the ability to capture a larger share of the market in a small span of time.
Business Funding
Any type of business requires funding to operate. Traditional business have finacing options such as bank loan or loan against security to fund their business. Whereas, start-ups in India have many options to fund their business like a bank loan, funding by angel investors or venture capitalists in exchange for security, etc. Start-ups easily acquire loan as the investors expect huge returns from their funding and they continuously mentor the start-ups until it’s a success.
Exit Plan
Traditional business and start-up business both have a different exit plan. In case of a traditional business, the entrepreneur can exit the business when he suffers loss or finds an alternative idea of business. Whereas in the case of a start-up, the business does not close when funding is done by a venture capitalist or angel investors. The exit strategy of a start-up in such cases is via merger, IPO, or acquisition by other company.
Working Culture
The working culture in traditional businesses and start-ups are drastically different. The traditional business functions like any other business in India and have normal offices. While the start-up offices are lavish and attractive. The working culture in a start-up is very professional. Furthermore, the start-up companies provide their shares to the employees of the company at lower prices which acts as a big motivation for the workforce.
Unique Selling Proposition
The traditional businesses in India work on pre-defined guidelines and strategy. On the other hand, start-ups sell their products using innovative tools and methods. The start-ups focus on creating such technological tools that attract the customers to purchase its products. Therefore, by using innovation and technology as USP, start-ups try to capture the market.
We hope the above points help you in understanding about the start-ups in India. IMC Group is a professional firm offering services of company registration in India. If you want to register a company or avail any other company related service, just drop us an e-mail to know our quotations.
