#FounderWoes: Tackling banking issues and shifting goalposts
Entrepreneurs lament that the net effect of such issues is innovation drain.
In the ‘Founder Woes’ series, we talk to different entrepreneurs to highlight the common issues they face while running a startup in India.
July of 2021 was a momentous month for Saad Jamaal, a young entrepreneur in Uttarakhand running his year-old EdTech startup Serri Tech Solutions. Malaysia-based Indian-origin businessman U.R. Unnithan had come on board as an angel investor and had just released the first tranche of Rs 13 lakh.
Saad, all of 20 years, should have been focusing on growing his startup. Instead, he spent the next month – extremely critical time for a young startup – figuring out why the funds had reached his bank, but not his bank account. It took venting on Twitter for the funds to finally reach Saad’s account.
Saad’s tale of banking woes is emblematic of the issues of running a startup in India.
Working with banks leads to challenges of grappling with unclear rules or because the bank employees do not know what needs to be done, like in Saad’s case.
Saad’s local branch in Bareily did not know what processes to follow when foreign exchange was coming into an account. Saad says after numerous escalations over the course of the month when his funds were stuck and the final Twitter outburst the whole issue was sorted in a matter of a day. “Because of the delay, we had to postpone our hiring plans and had to change a lot of our other product and marketing plans,” recalls Saad.
Sudden changes in rules
It is understandable that laws need to evolve, but sudden shifts in rules can have a devastating effect on businesses.
A recent example is the RBI rule stopping automatic recurring payments with credit cards and debit cards on October 1, 2021. Recurring payments were always a challenge in India. But the recent rule has caused chaos, with startups in sectors as diverse as SaaS and EdTech suddenly finding subscribers cancelling.
Most startups use a host of subscribed services, like cloud hosting, to run operations. Everything ground to a halt.
“I must be using about 100 utilities every month. Since October I have been waking up to nightmare emails from providers saying they are suspending our account because of non-payment,” says Varun Krishnan, Founder of Chennai-based mobile phone and gadgets focused website FoneArena.
Entrepreneurs lament that the net effect of such cumbersome rules is innovation drain.
Shiju Radhakrishnan, who sold his first startup iTraveller in 2019 to Europe-based Lastminute.com, asks: “Are we trying to create a culture of innovation or of control? Building a product that consumers want is itself a herculean task. While doing that, do you want to also learn the job of a CA?”
This is why his company is registered in the United States and he is moving to Canada. Can we as a country afford to lose our most innovative minds?
To share your own experiences, write to firstname.lastname@example.org or leave a comment.