StartUp India and Viacom18 join hands

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Viacom18, the television media house that owns and runs channels Colors and MTV, has signed an agreement with the Union government’s department of industrial policy and promotion’s Start-Up India project.

It will launch a year-long ‘outreach programme’ for entrepreneurs, called MTV Kickstart. The initiative will include activities on-ground, digital communication and a TV reality show.

While the Viacom18 brand attached to the programme is MTV, the network’s youth brand, all entities under the former’s umbrella will be mobilised.

The multi-platform initiative is to reach out to young and aspiring entrepreneurs through multiple touch-points across 300 colleges. Around 10 Start-Up Festivals, two-day events in tier-1 & 2 cities, will be organised, allowing youth to interact with top entrepreneurs and investors.

Amitabh Kant, secretary of the government’s department, said: “This will help us engage with dynamic youth and inspire a new generation to follow their dreams and become successful entrepreneurs.”

“The programme will look at a variety of start-ups — in tech and engineering, in the social space, in art and culture and, could be, in the media, too. We are working on the amount of seed money. It will come from a combination of entities across sponsors and VC (venture capital entities). One of the things we want to do is provide mentorship. It becomes critical in making the ideas commercially viable,” says Sudhanshu Vats, group chief executive of Viacom18.

The reality show will go on air in the third quarter of this calendar year. The format would mostly be developed in-house by the network and include a competition, where shortlisted start-ups or entrepreneurs from various on-ground activities under the programme are to compete before a jury for home seed funding.

“Through a process of auditions, we will shortlist the contestants, who will then be participants in the televised reality show. We’ll end the process with an awards show, also televised. The idea is not to make it too formal and intimidating. The MTV brand will help with this. While it’s not frivolous, it will help ease the contestants. It can be quite intimidating for anyone with an idea who does not know much about setting up a business (to present the idea). So, we are looking at people who don’t yet have a start-up but have ideas that can be turned into businesses,” says Ferzad Palia, head of youth and English entertainment at Viacom18.

The network is in talks with brands which want to market to youth and will soon announce the commercial partners. These brands will get visibility on all platforms the outreach programme is present on and across the Viacom18 network.

In December 2015, Zee Bangla, in association with the West Bengal government, launched Egiye Bangla, a start-up reality show. The format was similar to Shark Tank, a reality show for start-ups on the ABC television network in America. Each round had five contestants and each pitched his idea to investors. The latter included Anjan Chatterjee of Speciality Restaurants; Chandra Shekhar Ghosh, managing director of Bandhan Bank, and Ashok Banerjee, a professor at IIM-Calcutta. The show was aired in the 6–7 pm slot on Sundays and launched with 744,000 impressions on television viewers on December 6, 2015, and clocked 441,000 average impressions or TV viewership through the season, according to data from the Broadcast Audience Research Council of India.

Source: http://www.business-standard.com/article/companies/startup-india-and-viacom18-join-hands-116021800787_1.html

RBI proposes easier access to foreign capital for start-ups

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The Reserve Bank of India (RBI), in its sixth bi-monthly monetary policy statement, has proposed steps to improve ease of doing business for start-ups through easier access to foreign capital and by enabling smoother transfer of ownership. RBI Governor Raghuram Rajan said the central bank wants to simplify the process and will create an enabling framework for attracting foreign venture capital (VC).

“We are supporting the start-up process by making it easier to raise (capital), often from abroad, but also simplify the compliance with regulations, including putting forms online,” Rajan said during the post-policy press conference on Tuesday.

For easing cross-border transactions, RBI has proposed (in consultation with the government of India) that in case of transfer of ownership of a start-up, permitting receipt of the consideration amount on a deferred basis could be done. It has also proposed to enable escrow arrangement or indemnity arrangement up to a period of 18 months.

In addition, RBI has also proposed (in consultation with the government) to permit start-ups access to rupee loans under the external commercial borrowings framework with relaxations of eligible lenders. It is also looking at issuing innovative foreign direct investment (FDI) instruments like convertible notes by start-ups. Further, RBI is looking into the proposal of issuing shares without cash payment through sweat equity or against any legitimate payment owed by the company, the remittance of which does not require any permission under the Foreign Exchange Management Act (Fema).

Harish H V, partner, Grant Thornton India LLP, said these measures are for helping start-ups in their operations and fundraising. “We look forward to further relaxations around convertible notes as promised. These steps, together with the start-up action plan and more initiatives expected from the ministry of corporate affairs and the Budget, should help the cause of the Stay In India and creating value in India… Every step counts,” he said.

RBI said the aim was to enable start-ups, irrespective of the sector, to receive foreign VC investment and also enable transfer of shares from foreign VC investors to other residents or non-residents.

The central bank has also proposed simplifying the process for dealing with delayed reporting of FDI-related transactions by building a penalty structure into the regulations. The notifications/circulars under Fema, wherever necessary, will be issued shortly.

The regulator said electronic reporting of investment and subsequent transactions will be made on the e-Biz platform only. Here, submission of physical forms will be discontinued with effect from February 8.

Source: http://www.business-standard.com/article/finance/rbi-proposes-easier-access-to-foreign-capital-for-start-ups-116020200565_1.html

Foreign firms rush to India’s online marketplace

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India’s booming online marketplace business has attracted a new wave of merchants and sellers from countries such as China, South Korea, Japan, Singapore and the US. In fact, thousands of sellers are getting into tie-ups with Indian e-commerce players to kick-start operations in the country.

 

According to industry insiders, around 50,000 sellers from China, South Korea and Singapore are planning to enter India through online marketplace players.

 

“In business-to-business (B2B) segment, there is no online organised player in the country right now. The market is being created for the online businesses,” said Sanjay Sethi, co-founder and CEO of Shopclues. The company has brought in DHgate, the second largest player in China after Alibaba, on to its platform. It’s also getting 25,000 South Korean merchants on board. Tie-ups are also in process with Singapore Traders Association to enable them to sell on Shopclues.

 

American retail major Walmart is also exploring ways to tie up with leading e-commerce companies in India, including Flipkart, Snapdeal, ShopClues, Grofers and Bigbasket. It is learnt that German wholesale giant Metro Cash and Carry is also in talks with e-commerce marketplace players to sell its products online.

 

Meanwhile, e-commerce giant Alibaba is looking to make a big bang entry into India’s marketplace via One97 Communications-owned Paytm.

 

Alibaba is expected to be the support behind Paytm’s China product portfolio. With that in place, Paytm will aim to become the biggest Indian player insofar as the number of sellers on the platform is concerned. With eight million sellers, Alibaba has the widest seller range as well as product portfolio.

 

This is not for the first time that Paytm is planning to sell Alibaba’s product range. During Diwali last year, Paytm had the whole product catalogue sourced from Alibaba and merchants from China were directly shipping products to customers in India, saving Paytm the hassle of finding warehouses.

 

As for the second top player in China, DHgate, online B2B would be a gateway into India and an opportunity to get connected to 350,000 sellers through the Shopclues portal.

 

DHgate plans to list its products across categories, including electronics, accessories, beauty products and sports. “From China we are getting around 10,000 SKUs (stock keeping units) listed. It is not a retail business and the target audience for this business are other businesses in India,” said Sethi.

 

The foreign investment rules vary across retail platforms and companies often resort to complex structuring to bypass policy. While foreign direct investment (FDI) is capped at 51 per cent in multi-brand retail with states having the last say on whether international players would be permitted to operate or not, there’s no limit of foreign investment in single-brand and business-to-business or cash and carry.

 

In e-commerce, however, FDI is not permitted. But, e-commerce players are mostly run with foreign money by operating marketplace platforms, where rules have not been framed yet.

Source: http://www.business-standard.com/article/companies/foreign-firms-rush-to-india-s-online-marketplace-116020100015_1.html

Startups enjoy 3 years tax holiday over a five year window

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If a startup claims benefit in first year & does not make profit in next two years, it can still enjoy tax exemption on profit in fourth and fifth year

The three-year tax holiday proposed for startups in India will be available over a five-year window, ensuring that innovators won’t lose the benefit even if they make a profit later, the government said.

Those seeking the income tax exemption, announced in the Startup Action Plan on Saturday, will need to get approval by March 2019, in line with the government’s policy to weed out exemptions and bring down the corporate tax rate to 25%. Startups approved until March 31, 2019, will enjoy the benefit for up to five years. The government has proposed that a high-level, inter-ministerial committee should vet startup proposals to validate the innovative nature of the business for granting tax-related benefits. The details of the tax benefits will be announced in the budget.

“The benefit will be available for three years over a five-year period, “a senior government official told ET. If a startup claims the benefit in the first year and does not have a profit in the next two years, it will not lose out on the exemption. If profits are made in the fourth and fifth year, they will still be eligible for the tax break.

“All startups incorporated in India not prior to five years as per the definition of startup and starting the operations before 2019 can get this benefit for three years,“ said Amitabh Kant, secretary in the Department of Industrial Policy and Promotion, which piloted the startup initiative.

With the deadline for seeking exemption set for March 2019, the scheme will effectively run till March 2024, a period of eight years from now.

“This fiscal exemption shall facilitate growth of business and meet the working capital requirements during the initial years of operations, “according to the action plan document.

The policy imposes only one condition on startups claiming the benefit, apart from seeking approval from the appropriate body and meeting eligibility criteria: it should not distribute dividend while getting the tax exemption.

Tax-friendly Regime Need of the Hour for Startup Investors

The devil is in the details. The tax incentive package for startups will be clear in the Budget. But open-ended tax breaks won’t be possible as the government has already signalled a phasing out of exemptions to lower the corporate tax rate. Investments in unicorns would typically be long-term. So, it makes eminent sense to spare investors from paying capital gains tax when they sell their unlisted shares in startups after holding them for over a year. A tax-friendly regime will encourage many of them to relocate to India from, say, Singapore. The government, as promised, should end its Inspector Raj to boost the startup ecosystem.

Source: http://epaperbeta.timesofindia.com/Article.aspx?eid=31816&articlexml=Startups-May-Get-5-Year-Window-to-Avail-18012016015013

 

Primarc Group sets up venture capital fund for start-ups

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PrimarcKolkata-based Primarc Group, which is into real estate and retailing, has set up a venture capital fund targeting start-ups.

According to Sidharth Pansari, Director, Primarc Group, the fund – Primarc iVenture – will look to fund start-ups at an angel stage or even at advanced ones.

“In the angel stage, funding will be between  Rs. 5 lakh and  Rs. 15 lakh, while in the advanced stage it will be  Rs. 25 lakh to  Rs. 1 crore. Focus will be on West Bengal-based start-ups, ones with social impact, or unique ideas,” he told media persons.

Pansari, however, did not mention the corpus of the fund.

Initiated some three months ago, the fund is controlled by the Pansaris, and has funded some 9-10 enterprises that include the likes of Ketto and Catapoolt (among crowd funding platforms); Sampurna Earth and iKure (among projects that seek to create social impact).

While there are no immediate plans to set up an incubation centre, Pansari said the group was also open to picking up stakes in companies (start-ups) that are a strategic fit with its core businesses of retail and real estate.

Such stakes may be taken up through the respective arms of the group.

Kolkata-based Primarc has an annual turnover of around Rs. 350 crore, most of which comes from retailing and real estate projects.

Currently, it has around 30-40 lakh sq feet of residential projects under construction, mostly in Kolkata and the suburbs.

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/primarc-group-sets-up-venture-capital-fund-for-startups/article8069988.ece

SEBI puts in place new form for ASBA

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With a checklist regime kicking in for initial public offerings (IPOs), capital markets regulator the Securities and Exchange Board of India (SEBI), has put in place a new form for ASBA (Application Supported by Blocked Amount) facility.

ASBA facility has become mandatory for all categories of investors applying for a public issue for making payment from Friday. The facility allows the bid amount to remain in the applicants account till the time the shares are finally allotted.

In a circular, SEBI said that the application form for ASBA would be printed in a booklet form of A4 size paper.

Besides, SEBI has prescribed white colour form for Resident Indian, NRIs applying on a non repatriation basis and blue colour form for NRIs, Foreign Venture Capital Investor, Foreign Institutional Investors, their Sub-Accounts (other than sub-accounts which are foreign corporates or foreign individuals bidding under the QIB Portion), on a repatriation basis.

It further said that top of the application form will have a coloured identifier strap incorporating the name of the issuer, ISIN (An International Securities Identification Number) and type of form (Repatriation, Non- Repatriation). Besides, the main application should have information about eight digit application number, PAN number, bidders depository account details, investor category, among others.

A confirmation by the applicant (on behalf of joint bidders) that he/she has read, understood and agrees to such confirmations is also required.

The regulator said that application should also highlight about different category of investors (retail, non-institutional and QIBs), number of equity shares (reservation if applicable), percentage of issue available for allotment, basis of allocation in case of over-subscription, mode of allotment and terms of payment.

The new circular will be applicable for all public issues opening on or after January 1, 2016, SEBI said.

The regulator, in August, had made ASBA facility mandatory for all categories of investors applying for a public issue.

In order to enhance the points for submission of applications, SEBI had also allowed Registrar and Share Transfer Agents (RTAs) and Depository Participants (DPs) to accept application forms (both physical as well as online) and make bids on the stock exchange platform.

This will be over and above the stock brokers and banks where such facilities are presently available. The number of bank branches with ASBA facility has now increased to about 95,500, from 9,800 when this facility was introduced.

Source: http://www.thehindu.com/business/Industry/new-form-for-asba-in-place/article8055065.ece

Uber valuation put at $62.5 bn after new investment

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Uber’s fund-raising efforts are showing no signs of slowing down. The company, based in San Francisco, is close to completing the raising of a $2.1-billion round of venture capital, according to people briefed on the company’s plans, the company’s single-largest round to date.

Once completed, the investment will value the company at $62.5 billion, according to three people briefed on the plans, securing Uber’s place as the world’s most valuable private start-up.

Tiger Global Management participated in the newest round, led by its partner Lee Fixel, as did T Rowe Price, said the people, who spoke on the condition of anonymity because the terms are still private.

Talks of the funding plans were previously reported by The New York Times in October. On Thursday, Bloomberg News reported the $62.5-billion valuation.

Uber declined to comment on any fund-raising talks, as did T Rowe Price. A Tiger Global spokeswoman declined to comment.
Competition is intensifying in the global ride-hailing market, as rivals like Lyft, Didi Kuaidi and other companies raise billions of dollars in to expand as quickly as possible. Lyft, another ride-hailing start-up, is in talks to raise a further $500 million in funding, according to four people briefed on the round, which could value the company at roughly $4 billion. Didi Kuaidi, to date, has raised more than $4 billion in private investment.

The participation of Tiger Global, however, is particularly interesting. Tiger Global is an investor in Ola and GrabTaxi, two of Uber’s largest competitors in India and Southeast Asia.

It is perhaps the first time a major institutional investor participated in the rounds of both Uber and its major competitors. And on Thursday, Ola and GrabTaxi announced a strategic partnership with Lyft, which is also based in San Francisco and is Uber’s major competitor in the United States.

source: http://www.business-standard.com/article/companies/uber-valuation-put-at-62-5-bn-after-new-investment-115120500045_1.html