Startup enterprises are the dreams of every young and adventurous youth of Nepal who wants to take the first step in the business world. These youths have the creativity and desire to be unique among their circle by solving the burning problems of the community. They are eager to monetize the problems of the community by adding value to the consumers. Startup enterprises can deliver products or services to consumers. We can have a look at how Esewa, Pathao and Daraz have positively affected our lifestyle for a few years. They have had a great influence on our lives during the period of COVID-19 when people of Nepal were isolated at home in the name of Lockdown.

Startup enterprises are the solution presented by the entrepreneur to the existing problems of the community and consumers are the judge to accept or reject the ideas. Those who provide the perfect ideas are the winners in the business world. Although Startup is the fancy name popular among the youths of today, we must consider the harsh reality that 20% of Startup enterprises fail in the first year of operation, 50% within five years and 65% in ten years of operation.

Booming sector for Startups in Nepal

Service sector is the booming sector for the startup enterprises in Nepal. It is supported by the facts of concept of the Sixteenth Plan (FY 2081/82-2085/86) published by National Planning Commission of Nepal. In the base fiscal year 2075/76, Agriculture sector, industrial sector and service sector has contributed 25.6 percent, 14.3 percent and 60.1 percent respectively in GDP of Nepal whereas Agriculture sector, industrial sector and service sector has contributed 24.6 percent, 13 percent and 62.4 percent respectively in fiscal year 2079/80. This clearly demonstrates the increase of contribution of service sector in the national economy. The Per Capita Income of the people of Nepal is 1,460 US Dollar in fiscal year 2079/80.

Progress made by the Government for Startup enterprises in Nepal

Ministry of Commerce and Supplies of the government of Nepal has approved the Startup Enterprise Credit Fund Guidelines on 10th Falgun 2079 which shall be implemented immediately. It will provide 2.5 million rupees for the eligible startup enterprise as loan. Nepal Rastra Bank will provide the funds allocated by the ministry on a timely basis.

The Startup Enterprises having not exceeding seven years of establishment or operation must comply minimum of three criteria from (a) to (d) and a minimum of two criteria from (e) to (g) to be eligible for the Startup Enterprise Credit Fund. 

a) Paid-up capital not exceeding fifty lakhs rupees,

b) Annual gross income of the enterprise not exceeding fifty lakhs rupees,

c) Fixed capital (excluding house and land) not exceeding two crore rupees,

d) Full-time employee of the enterprise not exceeding ten,

e) Use of information technology and creative ideas for solving the problems faced by consumers during the production or distribution of any product or service,

f) Five percent of the total annual expenditure is made on product development, market development, research and development,

g) Patent or Design or Software of the Intellectual property of the Enterprise is registered or eligible for registration.

The following startup enterprises are not eligible for Startup Enterprise Credit as per this policy:

a) Not registered in Nepal as per the prevailing laws,

b) Import of products or services without the use of information technology and innovative ideas,

c) Incorporated by splitting the existing company or business or operated as the subsidiary company or firm,

d) Blacklisted in the Credit Information Centre or operated by such person,

e) Not receiving Permanent Account Number for tax purposes,

f) Enterprise which is a holding company categorized as cottage or big Industries as per the Industrial Enterprises Act,

g) Other matters restricted by the prevailing laws,

We can discuss how Startup enterprises can get the taste of success in Nepal which are highlighted in the points below:

1. Vision/ Idea:

Vision is the first element to be right for the success of the Startup enterprise. It must be generated by observing the burning problems of the community closely. Every Startup enterprise are focusing on the Niche market so they can create a new customer base and deliver the product or service that normal businesses fail to provide. If the vision is right, it can satisfy the customers and the startup owners are motivated and determined to work on their ideas. But, keep in mind, that patience is the key in every Startup enterprise to get success.

2. Business Team:

The business team comprises the investors and the workforce in the Startup enterprise. We all know that investors themselves are the workforce in the startup. We have to assemble the team from various backgrounds like marketing, information technology, accounting and expert in the business we deal with. We must have a team member who has the experience and can guide the team in the struggle phase. The team members must have the belief to prove the vision to be right one day by offering everything they can to the business.

3. Business Registration:

Business registration determines the legal boundary for the Startup enterprise for operation. It determines the number of investors, tax regulations to be followed and other legal prospects of the business. It will create the trust of the customers for after-sales support. The Startup enterprise should determine which form of legal registration are they willing for. Businesses can be incorporated in the form of proprietorship firms, partnership firms or companies. Also, they need to be registered in the inland revenue department for tax purposes and take the separate permanent account number except for the proprietorship firm.

4. Capital Investment:

Investment is the blood of the day-to-day operation of the business. The Startup investors should determine the required funds for the business. We know that the startup will not generate cash flows immediately after incorporation. Capital is required in the form of fixed and working capital. Funds can be generated from shareholders in the form of share capital or financial institutions in the form of loans. Investment should be collected by considering the worst scenario of the Startup enterprise so that they can operate when the business hits low.

5. Business Plan and Feasibility:

Every Startup enterprise should have a clear written business plan and feasibility report which can be presented to the investors and financial institutions for required funds. The business Feasibility report contains the vision and mission, the team members, capital investment and future cash flows from the business. It helps to pitch the idea to the stakeholders and generate trust. Additionally, it helps us to review our plan regularly and correct the deviations during implementation. It is the roadmap of the Startup enterprise from incorporation to success giving clear direction during every phase of business. We will have a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of the business.

We can summarise the future of startup enterprise is satisfactory in Nepal inspite of many challenges faced by the country due to geographical challenges and the global pandemic of COVID-19. We should not deny the fact that COVID 19 has opened the gate for many enterprise of success.