Separator

How Startup Funding Can Help In Economic Growth

Separator
Risers Accelerator is a startup accelerator that promotes promising startups; irrespective of industry or sector they belong to. Constituting of a well-integrated team of 35 successful entrepreneurs, it facilitates startups which have a globally scalable business framework, salable offerings, and capability to foster social growth.

Startups are the backbone of a country’s economy – especially one like India that is still in its development phase. There are several ways in which startups help drive the economic engine. From bringing cutting edge technology to the forefront of generating employment opportunities and augmenting the GDP, startups help in economic growth in a myriad of ways. To understand why it is important to fund the startups, let us first understand the role they play in economic growth.

However, arranging to fund is often quite a difficult task for new startups. And while it may seem that this is a bad time for investing in startups, nothing could be farther from the truth. Although the market situation is somewhat unstable due to the pandemic, the government has called for self-reliance and has also encouraged people to go ‘vocal for local’ by supporting homegrown companies. This means the venture capitalists that decide to invest in local startups would get full support from the government.

Advancement of Technology
The companies that have already established themselves as big players are more interested in investing in R&D on existing technologies and innovating incrementally. Contrary to this, the startups are always focusing on the latest, cutting-edge technologies that are on the horizon.

The bigger an organization is, the more rigid it is. Startups, on the other hand, are quite flexible and they can quickly convert an idea into a product and then keep on improving that product according to the feedback they get from the customers. Startups provide freedom of expressing ideas and a platform for innovation. This is, perhaps, the reason that the graduates from the most prestigious technical institutes that get hired by the leading tech giants do not make as big a difference as those who do not get hired and launch their startups. This is why the startups must be armed with seed financing for the economy to get more technological innovation.

Opening of New Markets
Startups run on the fuel of innovation and the whole concept of launching a startup is to find a problem that people are struggling with and provide an efficient solution for it. By following this ideology, the startups create new markets or completely transform old markets by introducing products that change the world. Once a product has established itself as being useful, it spawns a market of its own.

Generate Employment Opportunities
According to several independent pieces of research and surveys, it is the startups and not the big multinational companies that primarily add to net job growth in the country. Since the startups are growth-oriented, they continue to generate more and more jobs as they keep on evolving. The bigger a startup becomes the larger number of employees it needs to manage the business.

Direct Impact on the Standard Of Living
If the startups become successful, they can influence direct change in the cities where they are located. Compare what the city of Redmond looked like before Microsoft and what it looks like now, and you’ll understand the difference. By generating job opportunities and generating wealth, the startups can change the face of an entire city.

Startups Drive the Economic Engine
Startups drive the economy and prevent it from stalling. Therefore, we need to come up with methods that would help us create a nurturing environment for startups.

One of the most important things needed for creating a good startup ecosystem is support from the central and state governments. Instead of simply easing the regulations, we need to take a proactive approach towards startup building. Individual cities need to foster programs that encourage entrepreneurship. The startup industry has unlimited potential for driving economic growth; all we have to do is set up an infrastructure that can help us tap that potential.

One way of making it easy for startups to become successful is to help them with funding. Funding is an extremely significant aspect in line with meeting the vision of a business. These days, we have options like crowdfunding, angel investment, venture capitalists, incubators and accelerators, etc., which we didn’t have earlier; therefore, it should be relatively easier for the startups to get the funding that they need.

Yet, there are plenty of startups in the country struggling with liquidity issues, and they’re finding it hard to generate funding. Due to the Covid-19 pandemic, many investors have become stingy and the foreign investment has also seen a sharp fall. In light of these facts, PM’s call for “self-reliance” could prove to be the catalyst in the growth of homegrown companies – and in effect, the entire economy.