India is among the world’s top three startup ecosystems. The country has witnessed a massive entrepreneurial boom, registering an eye-popping 15,400% rise in the number of startups — from just 471 in 2016 to 72,993 in mid-2022. This growth has been supported by several government initiatives, including Prime Minister Narendra Modi’s flagship program called Startup India.
But the startup euphoria is also leading many entrepreneurs to ignore the risks and pitfalls of starting a business, Shrijay Sheth, founder of Legalwiz.in, which offers business professional services and legal compliance assistance to startups, told Rest of World. Globally, data shows that most startups don’t succeed — some estimates say that nine out of every 10 startups fail. Sheth, whose company has over 7,000 clients, says the Indian government can play a role in ensuring that people think twice before diving into this risky territory.
This interview has been edited for clarity and brevity.
What’s the one thing the government should do to support the tech startup community?
From my personal experience, one area that the government really needs to focus on is to show people that opening a startup is not for everyone. My position is like that of a doctor, wherein your earnings are dependent on how many people fall sick but at the same time, you don’t want people to fall sick.
With the whole hype of incentives like supportive state policies, national policies, Nidhi Prayas schemes, etc., a lot of people are incentivized to open startups at a very early age — right out of college or even while in college. Owning a startup during your college days has now become a fashion statement.
Now, everybody is not going to be Flipkart. In fact, everybody is not even going to be Legalwiz, which is a mid-sized startup — I’m not even talking about being a unicorn. At least 90% of startups shut down. I believe that if you were to build a very robust startup ecosystem, you also need to talk about the other side of the coin.
What do you think can be done to stop this hype?
While there is a lot of effort to bring the whole startup culture up, it is also important to make people understand that living the startup owner’s life is not that easy. So when people just commit to that because their friends are also doing it or because the government has added a lot of flamboyance to it, I think, if they also have the other perspective, it would definitely help a lot.
What can the government do to bring about a more rational perspective?
Ideally, the government should not stop people from starting up. But just as aggressively as education is being imparted about how quickly you can become a unicorn, there should be sensible talk about what it takes to run a startup. As an entrepreneur, are you committed enough?
There should definitely be some government involvement in this. There is a lot of government involvement in building incubation centers, so at the same time, these government-funded incubation centers should then also own up a role to educate people on whether you are a right fit. Everybody is not an entrepreneur — and that’s okay.