STARTUP FAQS

What is innovation?

A very simplistic definition of Innovation usually means doing something new or novel, different or better with the aim that it will lead to a positive difference. Innovation can be big or small and does not necessarily have to be something ground breaking. Often there is a dynamic relationship between innovation activities and R&D to drive technology breakthroughs.

What is technology innovation?

Technology innovation is essentially a subset of innovation and generally encompasses innovation derived from new applications of existing technology, deployment of new technologies and developments in research through which improved technologies are expanded and brought forth for extensive application.

What is business innovation?

Businesses provide products, services or a new experience to attract and retain customers. Depending on the nature and scale of business operations innovation can mean different things to different business setups. Successful business innovations are often backed by strong intellectual property protection. The exact definition of business innovation would depend on what the business is trying to achieve yet asking the following questions will prove useful:

• What type of new thinking is needed to deliver the strategy?
• Where exactly does the business need to excel?
• How critical is the new product design for the success of the business?
• Is the business venturing into new markets?
• Has the business identified all the intellectual property?
• What about challenging the status quo?

What is a startup?

Startups are often a nascent company that is built around to test business models based on fresh ideas evolved by their entrepreneurial founders. One of the essential attribute of a start up is its ability to grow quickly. Typically they have a very few employees. The capital for the startups is raised by multiple rounds of financing known as funding.

What are the different types of funding available to startups?

Startups can raise capital through a plethora of options. Some of the important ones are discussed here.

Venture Capital Investing: Venture capital investing is one of the most popular ways of raising funds by startups where investors (venture capitalists) provide financial capital (venture capital) usually through private equity investments at an early-stage but shows potential for a long term growth prospective.

Angle investing: The term angel investing refers to the process where investors provide financial backing to startups in return for shares in the business. In addition to the capital, they also provide their knowledge and expertise in helping the company to grow and achieve success. The capital (angle capital) can be one time investment of seed money or continuous support to weather through difficult times. Unlike venture capitalists angel investors are not averse to take on the risk of a brand new entity.

Crowd funding: Crowd funding is a relatively new phenomenon where startups raise capital from a relatively large number of people by asking for small amounts. This new platform has given entrepreneur founders of startups a unique chance to sell their idea directly to the public.

What is seed funding?

Seed funding is a term that can be applied to any finance received at the outset of a new venture to begin operations. Usually it comes through family, friends or even through the personal assets of the investors.

What is incubator?

Incubator refers to a facility designed to nurture entrepreneurship and assist startup companies to grow by making use of shared resources, management and technical expertise and intellectual capital.

What is an accelerator?

Accelerators as the name sounds are institutions which “accelerate” growth of new ventures. Acceleration programs are usually time-limited and provide specific services, resources and contacts with the precondition that the startups must provide a working prototype as well as initial traction on the market. The start-ups ‘graduate’ at the end of the accelerator program.

What is a spin-off?

Spin-offs are companies created from a bigger organization such as university, corporation to act as independent entities. However from a legal perspective a spin-off is like an ordinary business enterprise.

How to register a start up in India?

One can choose from the following kind of business structures in India depending upon the nature of work, size of business, requirements and demands of the start-up.

• Sole Proprietorship
• Partnership Firm
• Limited Liability Partnership
• Company

What is mentoring?

To help the first time entrepreneur’s stride ahead with confidence, mentors by way of mentoring assist the start up teams to structure their business and business models to have a firm foothold in the market. Generally it’s a repetitive process.

What is equity?

Equity refers to the capital invested in a firm by its owner(s) or holder(s) of common stock (ordinary shares). In the normal course of the business, this is returned only when the owners sell their shareholdings to others.

What is loan?

In financial parlance, a loan is an arrangement where debt is provided by one entity which can be an organization or individual to a borrower generally with the consideration that it must be returned with an interest.

Courtesy: DeitY, Ministry of Communication & IT, GoI.