Top priority of start-ups is more and quick revenue but if the government turns in as the customer, the dynamics change drastically. It is hard to get the government as a client but this is the best option ever as it gives a huge access to market. Working with the government depends on the business model of the startup because margins vary from time to time and from customer to customer.
With frugal innovations being limited to start-ups, Telangana Government is bridging this gap of technological advancements by betting on these dark horses for technologies, including Block Chain, Artificial Intelligence, Virtual Reality, Deep Analytics, among others. More than 14 start-ups are working with the government, not only with IT Department but various other departments such as Transport, Health, Tourism and Industries.
While youngsters may find it bureaucratic and time intensive to work with the government, the perks it has to offer is by far large. “A start-up could have ignored working with the government three to five years ago because they were not buying them much. If a person gets a breakthrough in any government project, the market access is outsised. The private sector cannot give such large volumes,” said B.V.R. Mohan Reddy, founder and executive chairman of Cyient and founding director of T-Hub.
To facilitate taking services from start-ups on cutting edge technology, the State Innovation Policy bypasses some rules such as track record which are followed in the conventional process of taking services from private agencies.
Dileep Konatham, Director of Digital Media, Telangana Government said, “To encourage start-ups, as per the State Innovation Policy, the government is bilaterally procuring products of relevance, bypassing the existing rules for procurement.”
Entrepreneurs pointed out that with faster implementation of technology, the start-up wave could be sustained. Furthermore, there are differences as working with bureaucrats is different compared to working with private players, especially in terms of functioning and research-level that is required.
“Getting access to government bodies has really become very amenable, especially after the startup wave has begun in India. What will help these start-ups is making the implementation as agile as the start-ups themselves with some checks and balances. When the government can implement them faster to check how it will work, that will be a real encouragement to the start-ups and the ecosystem as a whole,” Pavan Adipuram, who developed T-Chits, block chain solution for chit fund companies, said.
Minister K.T. Rama Rao had previously pointed out that it becomes expensive when a work is given to an established company but giving it to a start-up is a win-win situation. However, slow payments by the government create a trouble for start-ups after the project is delivered.
A founder of a start-up, on conditions of anonymity said, “Start-ups tend to face difficulty in raising funds for government projects. They cannot afford to invest own money as most of them are in a growing stage.”
Apart from money, continuous changes to the scope of the project, entrepreneurs believe in private companies. They have more freedom and can take over the product. But with the government, you have strict rules and regulations. The whole effort is more in government when compared to private companies.
“The scope of the project keeps changing which is called scope creep. Everything cannot be defined at the initial stage. Bureaucrats should understand the changes and pay accordingly, instead of rephrasing the words. Additionally, there are problems of payment, while everything gets done, payment doesn’t come on time,” Reddy said.