At NASSCOM's product conclave in Bengaluru, where the body released its report, one of the participants was Hyderabad-based Hug Innovations, which makes low-cost fitness trackers and safety products, and a zombie-killing game that uses hand motions that do not need to be captured by a camera. However, Raj Neravati, the Founder and CEO of Hug Innovations said, that 'killing zombies is much easier than getting seed funding'.
"For three years I tried to get funding but all my work experience in technology and my achievements counted for nothing. I wanted $10 million but got zero. I finally had to go to family and friends and got together $1 million after three years. It hurt that my own investments were taxed," Mr Neravati told NDTV.
NASSCOM President R Chandrashekar said angel investors were discouraged by the current tax rules. "Investment in startups is taxed like income. Indian companies should have the same ease as companies abroad . Elsewhere, companies can start in a day and can even be started remotely. That is not happening here."
Startup founders said that setting up a business and complying with regulations remain big concerns.
The report also put the year-on-year growth of startups working on social challenges at 18 per cent. These startups are working on a range of issues like education, health and clean technology.
The number of women entrepreneurs is also growing, although by a modest 1 per cent a year, stated the NASSCOM study. The number of campus startups is also increasing.
India remains the world's third largest startup hub - but actually getting a funding for a new startup and negotiating rules is no cake walk.