5 Suggestions To Accelerate Bihar Startup Growth To Next Orbit

Arvind Jha
4 min readDec 18, 2024

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Next Orbit For Bihar Startups

As we look at wrapping up the year, here are 5 suggestions to the policy makers and Bihar startup ecosystem leaders based on my experience in mentoring / investing in 10+ Bihar Startups through 2024.

1. Matching Grant/Soft Loan Policy — Extend and amend policy to make all startups who achieve Rs. 5 cr ARR eligible for loan regardless of funding raised

I have mentioned the gap in Bihar startup matching grant policy many times at multiple forums. Its disappointing that decision making on this critical and much needed “capital access” tool has been much slower than what was promised by minister.

By now, the administrators of the Bihar Startup program should have realized that the expectation of AIF funds coming into Bihar Startups is premature and they are hurting their best startups by keeping startups who are angel funded out of the policy ambit.

If the objective of the matching grant / soft loan is to provide access to capital to growing startups, one key metric can be revenue. A startup that has scaled to Rs. 5 cr ARR can be trusted to use the funds wisely and have the capacity to pay back. Since bank loans need 3-year financials, profitability and are still a big hurdle for Bihar Startups, making loan accessible through this change in matching grant policy will help the best startups get stronger.

2. GST subsidy to Bihar Startups

One major area for helping startups retain cash in their hands and use the cash to grow faster is GST rebate / subsidy. Central and state govts have been offering GST rebates to encourage investments with the hope that bigger enterprises will lead to bigger GST collections over time.

The Bihar Startup Policy has currently no incentive linked to GST collected by startups or paid by startups. By offering incentives on say SGST, the Startup Policy can address a critical need of capital access to startups.

3. Extend and amend Startup Policy to make Bihar startup policy benefits at par with Bihar IT policy 2024

The Bihar IT Policy offers a range of benefits to IT units registered post Feb 2024 and even pre-existing units. The idea is to invite investments, create IT jobs locally.

In the first 10 months of the policy, no major IT units have been setup, although a few announcements have been made. Clearly the objective of the IT policy is lagging the expected velocity of adoption.

Meanwhile, the 650+ startups that have been funded have created around 1500 jobs and have emerged as the real job creation engine. To spur their growth further, IT Policy benefits such as GST subsidy, interest subvention, employment generation benefits, CapEx subsidies etc can be extended to all startups. This will make additional cash available to founders to invest in the startup and accelerate growth further. Growth will drive further employment, valuations and attract external capital leading to a virtuous cycle.

4. Branding, PR and Promotion Support to Top 20–25 Bihar Startups

One the biggest challenges Bihar Startups face in scaling is lack of capital and lack of access to agencies that can help them improve their “discoverability”. I have first hand experience of how “RodBez” went from somewhat known in Bihar to well-known across India after the Shark Tank feature.

If Bihar Startup and Industries Deptt decide to feature their top 20 startups at every Bihar Startup event, whether in Patna or Delhi, Mumbai, Blr etc, it will solve the financial constraint face by the startup in branding itself, add government voice and muscle to brand-building and kick off promotion by the press, influencers and social media. The result will be increased traffic, lower CAC and higher growth rate for the top 20 startups. And growth rates will attract the external capital that is missing in the ecosystem even now.

5. Priority in Government Purchases for Bihar Startups who have achieved say 1 cr revenue stage

The Bihar Purchase Preference Policy 2024 does give preference to local businesses, SME/MSME but what is lacking is active/proactive reach out by government departments, state PSUs to buy from recognised Bihar Startups.

To enable faster adoption of startup products and services, Deptt of Industries (coordinator for Bihar Startup program) can create a co-ordination/liaison wing that connects buyers and sellers and facilitates transactions.

Handicrafts, Gift items, processed food items, taxi cabs, ambulances, medical services etc can be consumed in good bulk by government agencies given their need for events and promotion. This will help startups ramp up revenues and grow faster.

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Arvind Jha
Arvind Jha

Written by Arvind Jha

Innovator. Entrepreneur. Mentor. Investor. Learner. Love technology, sports, arts and literature. Strive to be fair. http://t.co/UFEkCAnU

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