In an era fueled by innovation and entrepreneurship, India has emerged as a shining beacon in the global startup landscape. With its robust and rapidly growing startup ecosystem, India has become a hotbed for entrepreneurial ventures across diverse sectors. The timing couldn't be more opportune as India takes the helm of the G20 presidency, presenting a unique opportunity for startups to transcend borders and catapult onto the global stage.
This convergence of India's thriving startup landscape and its leadership role in the G20 sets the stage for startups to flourish and embrace global expansion like never before.
And to make the best out of this time, Indian government is working to establish a common definition of startups for G20 Nations! But why? How will it help your startup? How will it even make a difference for entrepreneurs? And how startups really want to be defined? Let's explore!
Common Definition For Startups in G20 Nations
According to Indian government officials, G20 nations are poised to reach a consensus on a common definition for startups by July. This significant development holds the potential to address crucial issues related to startup valuation and taxation while fostering effective policymaking among member nations. By establishing a shared understanding of what constitutes a startup, G20 countries aim to streamline regulatory frameworks, promote investment, and create a conducive environment for the growth of these dynamic enterprises. The anticipated agreement on a common definition signals a proactive approach by G20 nations in addressing the challenges faced by startups and unlocking their full potential in driving economic growth and innovation.
India under its G20 presidency is so passionate to make its startup program to the world that it has established a dedicated initiative “Startup20”.
Startup20 is an important program making entrepreneurship and innovation an important part of India's G20 Presidency.
In an exclusive conversation with TICE, Anish Somani, Program Director, G20 Sherpa Office said, Startup20, as a separate engagement group, has become even more critical as G20 countries not only comprise of leading economies but also emerging ones that rely on growth drivers such as digital innovation and disruptive startups to address rising consumer demands. Startups contributed more than 3% to the global GDP and received funding of over $600 billion in 2021. This has only been possible due to frugal innovation, growing market demands, and positive development of the funding ecosystem. As G20 nations, we will also have to acknowledge the role of women and persons with special abilities in the startup ecosystem and facilitate unlocking the potential to achieve equality and inclusion.
Further sharing how a global definition of startups will help the G20 nations, he highlighted that Startup20 will not only be a platform for building synergies but also enable a culture of collaboration to build capacities of member nation startups, provide avenues to access capital, enhance employment opportunities, build inclusive and resilient communities and march towards achieving the SDGs along with a sustainable response to climate action.
Why India Aims To Establish A Common Definition Of Startups For G20 Nations?
A common definition of startups among G20 countries is poised to deliver a multitude of benefits to both the participating nations and their respective startup ecosystems. Let us delve into the various ways in which this harmonization could positively impact the G20 countries and foster the growth of startups, supported by data and evidence.
Streamlined Regulatory Environment
Aligning the definition of startups across G20 nations would result in a streamlined regulatory environment. Currently, startups face varying regulatory frameworks and definitions in different countries, which can create barriers to entry and hinder cross-border operations. By establishing a common definition, G20 countries can simplify and standardize regulations, making it easier for startups to navigate legal requirements and expand globally. According to the World Bank's Ease of Doing Business Index, countries with clearer regulations and streamlined procedures tend to have more vibrant startup ecosystems and higher levels of entrepreneurship.
Enhanced Cross-Border Collaboration
A unified understanding of startups would facilitate increased collaboration and knowledge exchange among G20 countries. Startups often thrive on cross-border partnerships, access to global markets, and sharing of best practices. With a common definition in place, G20 nations can create platforms for startups to connect, collaborate, and exchange ideas, fostering innovation and driving growth. According to a study by the Global Entrepreneurship Monitor, increased internationalization and collaboration can significantly boost a country's entrepreneurial activity and startup ecosystem.
Access to International Investment
A standardized definition of startups would attract greater international investment to G20 countries. Investors often seek clarity and consistency when evaluating investment opportunities. By aligning definitions, G20 nations can provide a clear framework for investors to assess startup potential and risks. This, in turn, would boost investor confidence and attract more capital to the G20 startup ecosystems. According to data from Dealroom, G20 countries collectively attracted over $148 billion in venture capital investment in 2020, and a common definition could potentially increase this investment flow.
Global Networking and Knowledge Sharing
A common startup definition would enable startups from G20 countries to tap into global networks and benefit from knowledge sharing. International events, conferences, and innovation programs become more accessible and relevant when there is a shared understanding of startups. This facilitates the exchange of ideas, experiences, and expertise, enabling startups to learn from one another, leverage global insights, and accelerate their growth trajectory. Global startup networks, such as Startup Genome and Techstars, would be able to facilitate collaboration and provide targeted support more effectively with a common definition in place.
Economic Growth and Job Creation
Harmonizing the startup definition would foster economic growth and job creation across G20 countries. Startups are significant drivers of innovation, productivity, and employment. According to a report by NASSCOM and Zinnov, Indian startups alone have created over 600,000 direct jobs and contributed to the country's GDP growth. With a common definition, G20 countries can unlock the full potential of startups, encourage entrepreneurial activity, and harness the economic benefits that startups bring, including job creation, increased productivity, and sustainable development.
What does the 'G20 Common Startup Definition' mean for Indian Startups?
According to Kalyan Kumar, CEO and Co-Founder, KlugKlug, which is a global influencer marketing startup based out of India, feels that the Indian government's efforts to establish a uniform definition of startups across all G20 nations represent a significant step towards global collaboration and harmonization.
A unified definition of startups would be extremely beneficial to the entrepreneurial environment, particularly in the field of SaaS B2B platforms. It would promote uniformity, facilitate cross-border investments, improve market access, and stimulate innovation, so establishing a fair playing field for entrepreneurs to prosper and leave a lasting influence around the world, said Kumar.
Sharing what does a common definition will really mean for root level startups, Mridul Ranjan Sahu, Co-founder, CuriousJr said, we believe this initiative will bring about clarity and consistency in defining startups, leading to more effective policymaking and addressing the current challenges faced by startups worldwide. A unified definition will not only streamline regulations but also foster innovation, encourage cross-border collaborations, and attract greater investment opportunities.
Tushar Chhabhaya, Director, Aarya Automobiles also thinks that a common definition of startups across G20 nations holds immense significance, it will streamline regulations and enable a level playing field for startups in terms of valuation and taxation.
As an automobile entrepreneur, Chhabhaya believes that this step will attract more investors and boost funding opportunities, ultimately fueling the growth of the startup ecosystem. The harmonization of norms will create a conducive environment for futuristic mobility solutions.
How Entrepreneurs Define Startup?
It is a long debated question, and as India make efforts to establish a common definition of startups among G20 nations, it is imperative to understand how startups really want to be defined?
Sharing his idea of how a startup should be defined, Bharat Bansal, CEO & Co-founder, Nirmalaya said, "I believe every business formed or started with an objective to rapidly disrupt the market or change how people perceive a particular product is a startup, which differentiates a startup from a conventional business. As Mukesh Ambani says, Reliance was also a startup that disrupted every industry it entered. Every business that aims to scale up swiftly bootstrapped or funded is a startup.
According to Garima Luthra who is the co-founder of an Indian startup called Vaaree, “Team size and company age don't define a startup; it's the attitude and agility that truly matter.”
“A startup's identity goes beyond the size of its team or how long it has been around. It is shaped by the attitude and agility it embraces. What matters most is the passionate commitment of every team member to solve the problem they are dedicated to. Success isn't determined by traditional measures but by the relentless drive and resourcefulness that propels them forward. Challenges are seen as opportunities, and limitations are catalysts for innovation. In this ever-changing world, a startup's spirit is defined by their unwavering dedication to making a positive impact, no matter their size or age,” she added.
But COGOS CEO & Co-founder Prasad Sreeram feels that the legal construct of a startup definition cannot be igored.
He said, a startup is a young company founded by entrepreneurs to address market problems through innovation and unique products or services. It is also defined legally in each country, such as in India where it refers to a company less than 10 years old with revenue under 100 crores.
Thus, a common global definition would benefit startups by providing country-specific benefits and facilitating faster and more efficient solutions. This is advantageous for Indian companies as India is emerging as the world's startup capital, elaborated Prasad.
How will a common G20 startup definition help Indian Startups?
The establishment of a common definition for startups among G20 nations will have a significant impact on Indian startups, offering a multitude of advantages and opportunities. Here's how it is expected to make a difference for Indian startups:
Clarity and Consistency
A unified definition will provide Indian startups with clarity and consistency when operating in global markets. With a common understanding of what constitutes a startup, Indian entrepreneurs can navigate international jurisdictions more easily, ensuring compliance with regulations and leveraging standardized frameworks for expansion. This will simplify cross-border operations and reduce barriers to entry, enabling Indian startups to explore new markets with confidence.
Access to Global Networks
A common definition for startups will facilitate stronger integration of Indian startups into global networks and ecosystems. As G20 countries align their perspectives, Indian startups will gain enhanced access to international platforms, events, and collaborations. This exposure to global networks will open doors to partnerships, mentorship programs, and funding opportunities, allowing Indian startups to tap into global expertise, expand their knowledge base, and foster valuable connections.
Attracting Foreign Investment
Harmonizing the startup definition will attract foreign investment to Indian startups. Investors often seek clarity and uniformity when evaluating investment prospects. With a common understanding among G20 nations, Indian startups can present a more consistent and compelling case for investment. The streamlined regulatory environment resulting from a common definition will instill confidence in investors, potentially unlocking new funding avenues and fueling the growth of Indian startups.
Facilitating Cross-Border Collaborations
Indian startups will benefit from increased opportunities for cross-border collaborations with their counterparts in other G20 countries. By aligning the startup definition, G20 nations aim to foster an environment conducive to international partnerships and knowledge exchange. Indian startups will be better positioned to form strategic alliances, engage in research and development collaborations, and share best practices with startups from diverse regions. This cross-pollination of ideas and expertise will accelerate innovation and drive the growth of Indian startups.
Strengthening Government Support
A common definition for startups within the G20 framework will encourage governments, including the Indian government, to enhance support measures for startups. The standardization of definitions will facilitate the development of targeted policies, programs, and incentives that cater to the specific needs of startups. This can include initiatives such as tax incentives, regulatory reforms, access to funding schemes, and incubation support. As governments align their approaches, Indian startups can expect a more conducive ecosystem that nurtures their growth and provides the necessary support for success.