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1,300 startups were born in India in 2019, making it the 3rd largest startup ecosystem in the world. In this guide, learn from A to Z how to start a startup in India!
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There is a thin line of difference between the dreamers and the Doers. Today, if you have taken an interest in how to start a startup in India, you have taken that leap of faith to become a Doer.
A startup is just growing a crop. You need to sow the seed, nurture it, give it the right set of conditions, and take good care. In the end, you will reap the fruits of your labor.
This brings us to the question, how to start a startup in India?
Don’t worry, that is exactly why we are here. What follows is a comprehensive guide listing all the steps to do it. We will talk about ideas, networking, partnerships, legalities, funding, building your startup, and growing it.
In every section, you will find a load of links to useful resources. More importantly, the whole debate will be focussed on the Indian Startup Ecosystem.
Surely, India may not be the first choice of starting a startup, but it is certainly rising to the occasion. With this in mind, let’s begin our amazing journey together from the first step, The Basics.
According to Indian startup governance, a startup is an entity that is younger than 7 years with an annual turnover of less than INR 250 Million. More importantly, it must be registered in India.
Behind every startup, there is a story. This story has one or more than one person who is inspired to bring about a change in society. Startup founders are connected with their idea very deeply. They work on this idea, mold it, and shape it to form a useful product or service.
In technical terms, a startup personifies a young company that is established by entrepreneurs. These entrepreneurs are looking for various sources of funding to launch their product and develop it into a business.
But, how did the startups come into existence? The first evidence of startups is linked to Silicon Valley. But the fact is that we cannot place the pin on a particular year.
Defining startups is not straightforward. Different economies have accorded a different definition to a startup. Where India has set 7 years as the benchmark, Europe has set it at 10 years. In the USA, startups are called a shoestring operation, meaning something that starts with a tight budget.
Similarly, there is no direct way to tell when was the first startup launched. A book named Silicon Valley Fever traces the startup origin to 1976.
But, the word startup was used first in a Forbes article back in 1976. So, all things point to the era of the 1970s as the origin of the concept of startups.
Since we are on the topic of how to start a startup in India, it is important to know when India saw the emergence of these young companies.
The emergence of startups is linked with entrepreneurship. In India, the entrepreneurial spirits were low before Independence. Those who wanted to go down this road were confined to several impractical rules and regulations.
After Independence, the Indian economy’s dream to become self-reliant did act as fuel for the entrepreneurs. Added to this, the newly found freedom provided confidence and cleared a path for the entrepreneurs.
However, in this era, the primary focus was on developing large scale industries so that the economy could thrive with the help of the Trickle-Down Effect.
But after the Liberalization reforms, the concept of startups began taking shape. As the Indian economy started to realize the benefits of privatization. Interestingly, the real spike in the startup ecosystem was realized after the 2008 recession.
Here are some facts you must know about the Indian Startup ecosystem:
Moving forward, when we talk about the top startups in India, names like Paytm, Flipkart, Zomato, Ola, Cure.Fit cannot be missed. These are the applications that have picked India up from a lower position and taken it to the top spot in the startup ecosystem of the globe.
Every startup that has become successful was not able to achieve it overnight. Becoming a success and transcending from every single stage of a startup is a gradual process. An amazing anecdote for this gradual expansion is Salesfusion.
The founder of Salesfusion shares his success story of how he failed 3 times before building a startup that generates $400K per month in revenue today. Harishanker’s story is one of the aptest personifications of how to start a startup in India.
Did you note the point where it said that Harishanker failed 3 times?
In every startup ecosystem, failure is as much a part as it is a success. But, don’t be discouraged or disheartened. You can ask any entrepreneur, and they will proudly tell you their failure story. Before a success story, there is always a failure story.
If you treat failure like a stepping stone, you will always know how to move up.
Now that we have established the outer lining of building a startup company in India, let’s move on to understand the innate fabric. Before you hire people, or rent a space, or even ask for funding, what you do have except for one idea.
Every startup begins with one idea backed by a vision, and with that vision, we can build an empire. But, let’s focus on the idea first.
The key to every successful business lies in a unique idea. Now, how can you get an idea about beginning a startup? What made Jamsetji Tata go on finding one of the best motor giants in the world? What led Dhirubhai Ambani into setting up a company whose current value is in billions?
You will find one thing common if you take a closer look at all these industries and their founders and that is they understood an issue that many people around them had. They analyzed the problem and worked on a solution. That’s how they started!
Here’s a quick 3-step process to identify great ideas for your startup company in India, similar to the process Tata and Ambani probably carried out:
You have found a problem: people love downloading videos from Instagram but it’s hard to do it. You’ve thought about a solution: an app that helps them do that.
How do you know that solution is the correct one? Here’re some things you should continue to research:
Well, the very first thing that you need to check is what your product offers the people. There might be some similar products in the market that tend to offer the same services as you. Hence, as mentioned above, you need to make your product or service a bit unique. India is a densely populated country, so your product quality matters a lot.
For example, if you are developing a video download app for Instagram, you can also add other platforms. This means that you can add the ability to download videos from Youtube, Facebook, Vimeo, etc.
This is also one of the crucial questions to ask yourself. After all, if your product or service is not liked or required in the market, it will be a dead-end for you. So, you need to make sure that your product or service is essential for the people.
If we take the same example, a lot of people love to download and share content from Instagram. So, if you conduct a comprehensive research of the market (included in detail in the next section), you will get an idea about the demand for the product you are about to develop.
At last, all of this is not going to last long unless you love it by your heart. Many of us have tried to work on a startup but could not carry it forward. The only reason behind this is the lack of interest and passion for it.
For example, if you are not fond of coding, then building an app may not work well for you. So, try working on developing a product or service that you are passionate about. Here are some benefits of doing something that you love.
So far, you have thoroughly analyzed your solution. Now, it is time to closely analyze the market. This means that you need to make absolutely certain how your product will perform in the market.
This section includes all the necessary measures to make sure your product or service in the market is new and unique. Here are some of the key points.
This is the most fruitful aspect of the process. You will get to know some new things from the customer’s point of view.
There is no perfect trick to know how your idea will perform in the market. You can only test and check if it works. Some of the budding entrepreneurs have faced a lot of failures before getting to the point they are today.
To get a more clear picture of it, here is a perfect validation story. This guy started pre-selling his product to know if people were interested in his solution or not. Through this method, he made a whopping $4000 without even having the product!
Finally, here is the part where you will be actually working on your product. Now, the first question most of you will be having is:
An MVP is expanded as a Minimum Viable Product. It is actually the most basic version of your product (which should be built quickly and cheaply) which aims to validate if there’s interest and people are willing to pay for it.
Some of you may confuse an MVP with Prototype. While an MVP is actually a product that will be used by your audience, a prototype is just a draft of your idea.
It brings several advantages:
We have a detailed article explaining how to build an MVP.
If you don’t like coding, there is no need to worry. You can easily build an MVP from your business idea without coding. Here’s a course that teaches how to do it.
A business plan plays an indispensable role when starting a startup. It is business plan is a written document that includes all the necessary aspects of the business, like, business goals, business strategies, the time frame of goals, details about profit and loss, finances, marketing methodologies, etc.
Some of the detailed aspects of a business plan include:
Naming your startup may seem like an easy thing, but it is not. Here’re some considerations:
Here is a 12-step guide on naming your startup.
Startups and companies are run by people. You need to be careful while choosing people for your firm. The coming chapter will explore all the necessary factors that you need to keep in mind while choosing people for your firm.
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As a startup founder, this question might have popped up in your brain. Who can I ask to be my partner in crime? Sometimes, when two people come together, they bring in a great amount of value and experience to the team.
While finding a great co-founder assure that he/she has a different skill set as compared to yours. This way, both of you can contribute equally to the startup. The combined contribution of both the co-founders will ultimately benefit the startup.
Let’s consider that you are a developer and have an idea for an innovative product. But, when it comes to negotiations, understanding the legalities, or even hiring people, you may not be too good there.
If your co-founder is also bereft of these qualities, both of you will end up spending the limited amount of capital on hiring new people. And capital is one of the most important factors that play a role in the startup’s survival.
India is gradually becoming a startup-friendly nation and there are several factors to portray the changing scenario. As we progress, more and more youngsters are eager to launch their own startups.
Parenthesis over here: The question of how to start a startup in India has nothing to do with age. Anyone who has a basic understanding of managing things can do it. There are a plethora of options out there, no matter if you are a school/university student (here are some business ideas for you if you’re a student), a graduate, a part-time worker, etc.
More and more people are entering the startup ecosystem which means that it’s every year easier to find another person willing to run a startup along with you. Global Entrepreneurship Index (GEI) portrays the entrepreneurial environment of a nation and the 2018 GEI puts India at 67th position out of 137 nations. This may be a lower rank relative to other nations, but when compared to India’s position in 2017 (96), it is somewhat better.
Some considerations you must take when looking for a co-founder:
Both you and your co-founder will have to build a strong and balanced working relationship. If you want to see the end of the line, it is important to trust each other.
So, for you, the first question is, “Can I trust this person?”
There is no easy answer to this because building trust or taking someone as trustworthy does not come with one look or meeting.
But a great thing about humans is that we have something called a “Gut Feeling.” This particular emotion will certainly help you answer many questions along the startup journey.
So, if you meet a potential co-founder and find that something is not right or feel that you cannot build a strong working relationship with this person, back away.
We have already talked about it in brief above. Keep an eye on the skillset of your potential co-founder and ensure that they complement your skillset.
If you have some weaknesses, your co-founder must be able to balance it out. The right balance does not mean that you need to choose someone entirely opposite from you. Rather, choose a person who aligns with your personality along with having a different skill set. This brings us to the next point.
Your personality should match with your co-founder, and there are many reasons for this. Establishing a startup company in India is taxing and stressful.
In that case, you will need someone with whom you can fraternize in those tough times. And that will only be possible if both the founders have a matching personality within and outside of the office.
There was a time when people used to believe in “Honesty is the best policy.” Things are somewhat different today.
So, it is important to know the honest levels of your co-founder before starting to associate. There are many other things apart from leaking cash out of the company funds.
As a company’s founder, you need to have some morals, some values that personify your vision and mission. Swaying away from these also amounts to dishonesty and a breach of trust.
Now that you know the primary considerations you need to consider when looking for a co-founder, let’s move on to the process of actually finding one.
It is entirely possible to co-found a startup with your friends. But there are risks involved.
“The secret to successful hiring is this: look for the people who want to change the world.” This quote by Marc Benioff summarises the process of hiring good people to work with you.
A great team is vital for your startup’s growth. A 2013 study found that 60% of startups have to face the dust because the team was not right.
While building your dream team that will help you reach the apex level of success, you need to consider these points.
Interns can also play a role in your startup. They may lack experience, but they do bring some fresh ideas to the table, and most of them are ready to work just for the experience.
However, finding good interns who are as invested in the process as any other employee is a bit complex. More often than not, interns would want to work with high profile organizations to bolster their experiences.
You can find some good interns at Acadium. Here’s a full review of the tool.
After team building, the next step is looking at the legal side of the venture.
Understanding the legalities of starting a company in India has to be done at the proof of concept stage. Some startups do not take these considerations seriously and end up making legal mistakes that hurt them badly.
Indian startup registration can be done both online and offline.
There are two things to note here: one is incorporating your startup and second, registering it under the Startup India Program. Incorporating a startup or a company includes obtaining the Digital Signature Certificate and Directory Identity Number.
Once your startup is incorporated, you become eligible to enlist it with the Startup India Program. We will talk about the program in further sections. But, for now, you must understand the process required to register your startup with the program.
You can choose one out of 4 kinds of ownership models. Your choices are:
Here’s a dynamic video explaining the models:
As long as you are in the POC stage or until the time you are not gaining some traction, not registering the company is fine. But once you enter a stage where you are ready to register, the real complexities begin.
From compliances to taxation, labor laws, environment laws, and other legal requirements are meant to be fulfilled.
Getting recognition for your product or service is indeed deserving because you took an idea and built it into something actionable with your own innovation. And to keep that light burning, you need the protection. However, the Indian startup scenario for IP is a bit different.
IP Rights for software in India are such that they only apply to the code and the final product. In other words, if you get your copyright, it will protect the form and not the final substance.
Another important thing is that you cannot file a patent application for software in India. What you can do is get a patent on software and hardware integration. This means that if a software is dependent on any form of hardware, then you can get a patent. But software alone cannot be patented.
As for your User Interface/Experience, You can get a patent provided it is unique. Its level of uniqueness will decide whether or not you can get a patent for it.
You may have found your ideal co-founder. But, have you gone through the requirements and legal considerations it requires? Majorly, a co-founder agreement lists the equity ownership, initial investments and the roles and responsibilities given to each founder.
Surely, there has to be a legal contract listing all the guidelines. This type of contract ensures that both the founders have an apt understanding of their functioning in the company.
You need to carefully examine each and every term associated with the partnership and set the boundaries. Even if the venture is at an initial stage, you need to set these boundaries.
You will find that there are a few other legal documents that you need to check out while operating a startup in India.
Be very careful with the legal considerations. If possible, take assistance from a certified lawyer and an accountant to set up your operations properly. The penalties and fines of not following them are high. Moreover, they can also become a reason for shattering your dream startup to pieces.
Talking about penalties and fines, money is also a critical factor for any startup. Basically, you cannot fully understand how to start a startup in India without looking into funding options.
90% of the startups fail in the first five years of their launch and many of these are because of the money crunch. Sometimes, the founders do not get enough fuel to keep the engine running, while others fail in using it optimally.
Therefore, getting your startup funded is important, but gaining the ability to utilize that money smartly also matters. Right from the beginning, you need to start making a startup budget that is well within your limitations.
Once you have gained the funding, start spending it smartly and on those things that help you grow. But before discussing how to use the money, let’s first know how to acquire it.
There are various methods to raise money for your startup in India (here’s a detailed guide):
The Startup India Scheme is a flagship program under the Startup India Initiative. This scheme was launched with the motivation of bolstering the innovation of new products and services in the Indian economy. Under this scheme, the startups have to undergo DPIIT registration and complete other formalities to get certain benefits, some of which are:
In the latest statement by the DPIIT (Department for Promotion of Industry and Internal Trade) it was stated that about 28000 startups have registered with the DPIIT until the 1st of February, 2020.
It does not matter what kind of startup you are trying to build, funds will be essential. Added with the funds, it is equally vital to build your brand. In the next sections, we will take up how to build your startup’s brand and how to ensure its growth.
Once the funds are arranged for your startup, then comes the actual work of building your organization on different levels. Until now, your work was just revolving around an idea. But now it’s time to start the real work from ground zero.
This chapter will cover some of the essentials of building a startup. It will lead you to the knowledge of various aspects of building an organization from its brand name to the website to its launching.
Branding your startup essentially means to establish an identity for your business. The identity of your brand holds your uniqueness amongst other competitors in the market. A brand has its own voice, image, and personality that makes it recognizable for the people.
For instance, when you hear the name Pepsi, what jumps right to your mind? Certainly, their blue ribbon, logo, advertisement, or something related to that drink. This is the power of branding. When people start visualizing your brand when they hear its name, that’s when it can be considered established.
Building your brand identity is a long term plan (here’s a detailed article on the topic). There are several organizations that initially avoid this step and are eager to jump directly into the operations. When you build a brand identity from the start, it gradually makes its name in the marketplace. Once it acquires a significant amount of attention, then whatever product you launch, people are bound to show their interest in it.
The best is to outsource the logo designing process to a professional branding agency. While designing the brand logo, there are various parameters like the color palette, typography, and graphics that need to be taken into account. Professional agencies have the expertise to understand the mechanisms of color combinations and graphics that can attract customers.
xVS Creations, Ascent Web Portal, DesignHill, and Indesign Elements are some of the prominent branding agencies in India. They can help you with all your design needs with premium quality results. There are many global online platforms too that where you can find masters in this field like 99designs (recommended) and Fiverr (recommended). You must explore all the options before picking a suitable choice for yourself.
Creating the website for your startup is crucial. A website is the best platform for the interaction between you and your customers. It helps you to stay active in the competitive market and it also is a fantastic way to attract a lot of potential customers to your business.
A website plays a significant role in creating a potential business market for any startup company in India or outside. The given steps are involved in the creation process of a website:
The domain name is usually named after your brand name to achieve singularity in your brand identity. There are multiple domain providers through which you can purchase a domain name for your website. Some of the popular domain registrars are as follow:
The work of a hosting company is to connect your website with the internet. You can think of it as a hard drive where all the information is stored for the usage.
While picking a host, check for their customer support reviews, functioning of other websites that are being hosted by them, and do they provide all required features.
GoDaddy (recommended), Hostinger, BlueHost, etc. are some of the Indian hosting companies that you can work with to run your website. Some global ones are Amazon AWS, Cloudflare, Rackspace, and Unified Layer.
Majorly, there are three types of hosting plans.
Shared hosting is one of the most popular and cost-effective hosting plans. It involves sharing your server with other websites. This plan is usually limited to one domain. Most small organizations and startups pick this plan for the start of their website.
It gives them a space to start their websites and also does not get heavy on their pockets. However, note you get limited data storage and bandwidth, which may affect the speed of your website.
This is an expensive hosting plan as it gives you a dedicated server for running your website. The range of bandwidth is comparatively very high and it doesn’t put pressure on your website, as much traffic may arrive. The website under this hosting plan has significantly greater speed than others.
Note: You may choose a shared hosting plan and later transition the hosting to a dedicated server.
The reseller accounts are usually for the people who wish to run multiple sites under a single account. This type of hosting plan is mostly taken by the people who are running eCommerce websites.
Getting your website built by hired professionals may be a more expensive option than building it yourself, but it definitely produces some fruitful results, unless you have the required knowledge and expertise in the field.
Building the brand name and website is a relatively easier task than establishing a physical office. If you have the required staff and budget to open an office for your startup, nothing can be better (here’s a detailed guide on how to do it).
Having a professional space hugely enhances the growth of the business as customers see it as a more reliable source. Having your own office is one of the essential milestone for your startups.
In these modern times, you must also focus on building stylish and innovative office spaces for your work. This positively impacts the people working in the office and also puts a good impression on the incoming customers.
There are several good interior designers in India that can provide the professional looks to your office as per your business profile. Some of the most popular ones are Urban India Design, Kinzaa, De Panche, and D5 Design Factory.
On completion of all the above-given parameters, your startup will be all set to launch. Before you launch and present your business to the world, you must prepare the launching campaigns. These are some of the essential steps that will help you make a better launch in the market.
Creating a hype at the last minute won’t make much difference. It is essential from the very first day of your startup building process, you start to create a fuzz about yourself in the market.
Start sharing your brand name and the services in social media, start writing blogs and articles. Until the time of its launch, you must have a significant population waiting for the service to be launched.
One of the best ways to seek the attention of the Indian audience is to provide them with free stuff and entertainment. Collaborate with some renowned artists that you can afford and start promoting your brand through them.
You may also set up a small entertainment zone in a mall where you can entertain the people through various activities and promote the name of your brand.
Do check out the launching dates of other brands. You do not want to clash your launch date with some big brand. It may lose an ample amount of attention to your brand.
Nothing can be better if you have the required budget and potential to launch the startup through a press release. The media will provide sufficient attention to the world about your service. If you are willing to opt for it, make sure your teams are all prepared with the set of questions that may be asked about the product and the service.
The launch of your startup is not the end of the process but just the beginning. Once the launch is done, then it comes the phase of making your startup grow to its full potential. You may have to create several marketing strategies and post-launch campaigns to make your brand grow bigger. Go through the next chapter that will guide you through the approaches you need to hasten the development process of your startup company.
Let’s talk about growth now. Once you have established a basic foundation of your startup, you can think of growing. More importantly, you need to know the right time to grow or scale your startup.
But before we go there, you must be prepared to scale your startup. How to start growing is a different debate? Initially, you need some solid footwork on the ground.
Also, remember that knowing when to be bearish is as important as being bullish in your startup. As a founder, you need to know when not to scale your startup.
Scaling is like work in progress and you need to leverage foolproof marketing strategies for keeping up with the growth momentum. Apt marketing strategies ensure user engagement and convinces them to take the desired action.
One of the most important things to understand in how to start a tech startup in India is practicing foolproof marketing strategies. With apt marketing, you will gain the attention of the audience and excite their thinking neurons. And if the product is something that the customers really want, they will engage and reach out.
Starting an email marketing campaign is a great way to attract new customers. Email marketing holds a better engagement rate and can be used for almost all kinds of businesses and products.
If you are solving a pain for your customers and they are looking for ways to solve it online, you need to have your blog. Blogs are one of the most organic ways to attract an audience and potential customers that will help you grow.
4.57 Billion. These many people are active on social media every month. And out of them, Facebook has 2.4 billion users, Instagram has 1 billion, Youtube 2 billion, and the list goes on.
Creating a social media marketing strategy is your answer to growth-oriented startup plans in India. Social media is a big game, so you may need the assistance of expert social media marketers to get the desired results.
You can implement other suitable marketing strategies for your brand growth and scale. Measures like sponsoring an event or PPC advertisements can also help you gain some traction.
More importantly, setting a marketing budget for your startup is also important. You cannot flood loads of money that you have acquired either from bootstrapping or via startup India loan or any other way.
It is evident that you cannot hire a top-notch sales team right at the nascent stage of starting a startup in India. That may come later, but presently, you may need to look at things yourself or hire a couple of guys to look after it.
To this end, it is important that you also partake in this activity and try to manage the sales part effectively. Building your sales team is an essential part of growing the startup.
Apart from building a team handling sales means that you need to handle the account well. Hiring a dedicated chartered accountant at this juncture can be a costly affair. However, you can utilize cloud-based tools like Quickbooks, Tally, and Zoho Books to keep the account up to date. All the online tools have tutorials to guide how to use them and work with them.
Sometimes humankind is faced with situations that are completely out of our control. It can be a natural disaster, a war-like situation, or even a pandemic. The important thing is to understand that these situations may be temporary, but their effects can be permanent.
So, on your part, you need to prepare yourself beforehand to mitigate the risks related to such situations.
At present we are facing a pandemic, and nobody was prepared for it. But we can only change our strategies after we are in this kind of turmoil. For instance, take a look at how these 10 Indian startups are dealing with the COVID 19 pandemic.
These startups are using technology to their benefit and also helping the nation fight. Some are helping make ventilators, hospital beds, while others are creating tech solutions for monitoring and tracking.
Apart from this, you need to prepare an emergency plan in case the pandemic has direct effects on your startup and revamp its protection strategy.
This brings us to the end of how to start a startup in India guide. We have talked about everything that you need to follow, understand, and practice to run a successful business.
And if you are thinking about when you should start your startup, understand that “any time is a good time to start a company,” something very well said by Ron Conway.
We have tried to include everything that you need to know about starting a startup in India. If you have any questions, let us know by sending an email at firstname.lastname@example.org.
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