Three years on, Is the art of juggling numbers by Ramesh Abhishek that has kept his failures hidden from the PM?
Numbers speak for themselves but dissecting them further can often spring more surprises. As in the case of the Department for Promotion of Industry and Internal Trade (DPIIT), which has been aggressively marketing its claim of recognizing 19,857 start-ups in India since 2016. It will seem all rosy if your observation, like the mainstream media, is limited to the numbers thrown by Ramesh Abhishek (Agrawal), the DPIIT Secretary on start-ups. But a further look at how many of these got actually funded or managed to get tax exemptions could reveal a starkly contrasting picture and put Prime Minister Narendra Modi’s pet project on the funding of Start-ups to shame.
Funding of Start-ups is the key. Do you know how many have been funded so far in three years by DPIIT’s hard work? Less than 200. Can the all-powerful Babu Abhishek answer how a trillion-dollar economy that India is, has funded only 200 or less than 1% of the start-ups recognized by DPIIT?
Hold your horses. The story does not end here. Do you know how many start-ups recognized by DPIIT have managed to get tax exemptions so far? Less than 100 or 0.5%. Can such dismal numbers lead to job creation that the PM has been so desperately and sincerely trying to achieve?
The fact that such a less number of start-ups were found to be eligible for tax exemption raises questions on DPIIT’s recognition drama. Abhishek has some serious answering to do. Can he give the number of Start-ups that have been a success story in three years? After all, 20,000 have been recognized by Abhishek’s department. Forget a lot many start-up success stories; there are no numbers in the public domain to determine at what stage of process or progress are various Start-ups that have been recognized by DPIIT. How long can the Babu fool around?
In fact, a probe in those who have been recognized in the past three years will reveal hugely inflated numbers in the absence of proper data to segregate companies, persons, entities or individuals or any other structures. Can Abhishek give any of this bifurcation for the 20,000 odd Start-ups registered so far?
Three years is a long time without funding for the majority of them. How many of these 20,000 start-ups are still working and how many have vanished or died? How many have started earning?
SIDBI funding routed through 40 VC funds
In fact, Start-up funding seems to be bitten by nepotism when seeing how government money via SIDBI goes to 40 different venture capital funds, which in turn fund Start-ups. It is these private venture capital funds that really hold the patronage. Data shows that around 200 Start-ups have got close to Rs.2,000 crores of SIDBI funds via venture capital investors. Meaning on an average one start-up has eaten up close to Rs 10 crores? Are there enough checks and balances in place here? What is the commission for a Venture Capital Funds, who have become the crucial middle-man in the game?
Thinking Legal— A Start-up of a different kind
It has also come to light that Abhishek’s daughter Ms. Vaneesa Agrawal, a lawyer, is now actively involved in advising some of the key players in the Start-up eco-system. This is a clear case of conflict of interest as DPIIT is the supreme authority on Start-up funding and holds power over venture capital funds and angel investor network and start-ups, who Vaneesa Agrawal advice. She has earlier worked with SEBI in Mumbai but her keen interest in advising Start-ups seems to have come mainly after her father became the DPIIT Secretary and she moved to Delhi.
Following description of Vaneesa Agrawal’s law firm Thinking Legal, will give you a complete insight into how Abhishek is directly conflicted.
“The Firm (Thinking Legal) works with a number of Start-ups and angel investors. We advise start-ups on setting up and structuring their business, regulatory compliances, registration of trademarks and patents, structuring ESOP arrangements and executive compensation. We also assist in drafting contracts with co-founders, advisors, employees, vendors, distributors, customers and investors. We also conduct due diligence on behalf of angel investors and angel funds investing in start-ups, and assist in drafting and negotiating the shareholders agreement and the share subscription agreement.” (http://thinkinglegal.in/about )
DPIIT is the ultimate final authority of approving all these procedures stated by Thinking Legal. Abhishek is the top boss of the department and his command can move mountains there. It will be interesting to know how many of the 200 start-ups funded so far in three years or the deals sealed were on advice of Vaneesa Agrawal. Think legally.