A Suggestion to Accelerate Growth of Bihar Startups Thru Innovative & Enabling Policy Implementation

Arvind Jha
4 min readAug 4, 2023

The Bihar Startup Policy 2022 has kick-started the startup culture in Bihar in ways not seen before. From the minister to officials, everyone is talking about startups, creating co-work infra, organising events, inviting experts, even travelling to meet investors overseas.

As an early investor with a deep emotional connect to Mithila region (north Bihar), I have personally invested in 10 startups so far. My insights from working with the early stage founders, speaking with the external investors and looking at the pace of execution lead me to believe that a simple change of policy interpretation by the Department of Industries (that is leading the Startup Bihar initiative) can and will help accelerate the growth of Bihar’s homegrown startups significantly. The delay on implementing a key component of the policy that provides debt capital to early stage startups may be hurting their growth which clearly is not the intent or interest of the Bihar Startup team.

I appeal to the officer on the Bihar Startup tea to make a quick decision on the eligibility of startups that have raised equity from Angel Networks towards Matching soft loan under Bihar Startup Policy 2022. Without capital, startups will struggle and external capital is not yet ready to invest in Bihar.


Bihar Startup Policy 2022 provides for “Support startups by seed funding as well as matching grants to increase their viability”. Towards this, Govt of Bihar has introduced the YUVA framework under which section 12.5 deals with the issue of “funding support to startups”. Under the funding clauses, section 12.5.2d states:

Matching Support: A financial assistance up to an amount equal to the amount invested in start-ups by the Angel Groups and Category- I Alternate Investment Funds may be given as loan to the Start-up. The rate of interest and terms and conditions of the loan shall be notified by the SMIC from time to time.

Issue / Confusion

While the policy clearly mentions “Angel Groups” and Category-1 AIFs separately, in few cases, the department has taken a view that only investments by AIFs are eligible for matching grant. This is against the spirit of the policy and also hurting the overriding objective — ‘increase the viability of startups’.

Startups that have raised equity from Angel investors/Angel Networks should be eligible for the matching support.

Towards this, I met the the hon Secretary, Department of Industries, who asked me a pertinent point — how to determine the genuine Angel investors? How to prevent family members from making small investments which are used to apply for loan and then getting refund on their angel investments?

Fortunately, Startup India and SEBI/Tax authorities have given one definition of “qualified angel investor” that may be used in this context. This is reproduced below.

Qualifications of an Angel Investor in India

  • An individual investor with net tangible assets of at least INR 2 crore, excluding the value of his or her primary residence., and
  • An individual who has early-stage investment experience, or is a serial entrepreneur or is a senior management professional with at least 10 years of experience a body corporate with a net worth of at least INR 10 crore, or
  • an AIF (Alternative Investment Fund) registered under SEBI AIF Regulations, 2012, or
  • A Venture Capital Fund (VCF) registered under SEBI AIF Regulations.

If the Department follows the above guidelines / definitions and keeps the qualifying criterion as say min 5 qualified angel investors have invested in a certified fund-raising round (funds have been received, shares issues and uploaded to RoC) then the startup may be considered as eligible for matching grant as per Bihar Startup Policy.

This will unlock the funding ecosystem and the Bihar diaspora will enthusiastically invest in Bihar startups that show good promise.

Examples of Funds-raised by Bihar Startups from Angel Groups

1. Jhaji Store, a pickle with taste of Mithila, startup has raised nearly Rs. 2.5 cr from Angel investors including Shark Tank investors. KareKeBa and Jharkhand Angels who engage angel groups for fund raising did the fund raise.

2. Hanuman Ambulances, an emergency medical services startup that is rapidly becoming the partner of choice for hospitals across the nation to operate and manage the ambulance fleet has raised over Rs. 3.5 cr from KareKeBa and other Angel groups.

3. Mithila Angel Network, a community of 750+ professional Maithil diaspora, has invested recently in RodBez, Bihar’s fastest growing one-way-fare based taxi service for inter-city transport. A total of Rs. 46 lakhs has been raised. Multiple “qualified angels” have invested in this round.

Suggestion / Appeal

It is suggested that in the true spirit of the startup policy, startups that have received angel funding from angel networks and those that have at least 5 “qualified angel” as per Startup India/SEBI definition should be eligible for matching support at the same terms as when funding is received from Cat-1 AIFs.

This will enable startups to grow their business faster and make Bihar startup policy a success. Even the recently introduced DeepTech policy talks about the need for early stage / risk capital to bring long-term changes. With a Rs. 500 cr corpus and less than Rs. 60 cr used, Bihar Startup is clearly not at a fund constraint and delays in making a bold, innovative interpretation may be hurting its best home-grown startups by not providing the capital in time that may accelerate business growth. A bit of calculated risk will lead to significant returns over a 5–8 year period through this change.



Arvind Jha

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