With the growth of these startups, there is a significant upturn in the economics of their cities and regions, attracting more firms to these regions and creating a virtuous cycle of innovation, economic growth, and employment generation
Startups play a significant role in the economic growth of a country. They drive innovation and create new competition for the existing businesses, thereby reducing costs and increasing efficiency.
With the growth of these startups, there is a significant upturn in the economics of their cities and regions, attracting more firms to these regions and creating a virtuous cycle of innovation, economic growth, and employment generation. Look at how Infosys transformed Bengaluru, Microsoft transformed Redmond and Google changed Mountain View. As they scale and go public, they also generate immense wealth for their employees and shareholders.
Interestingly, startups are not only accelerating our economy, but they are contributing to sustainable development goals. Some startups are building technology and solutions to solve the world’s key issues – climate change, clean energy, good health, and education. While others, through their innovation, are improving quality of life and, through their growth, driving large-scale employment. In a way, startups and sustainable goals co-habit, as startups focused on direct and indirect impact can find a lot of support from the ecosystem – government, investors, banks, and talent and customer loyalty.
Investors across the board have become increasingly focused on investing in companies that are ESG compliant. Mainstream investors are conducting ESG audits as a part of their due diligence. Also, many developmental financial institutes like IFC and CDC only fund companies that are creating some form of impact.
Consumers are nowadays increasingly sensitive to businesses that show awareness of social and environmental causes. Nine in every ten Generation Z customers believe that organizations have a responsibility to address these issues. They are of the opinion that environmentally and socially focused organizations are a better bet as employers, and the vast majority say they would be more loyal to companies aligned with those values1.”
Employment generation is one of the core SDG goals influenced by startups. As a nation grappling with employment generation for the masses, we must realize most of the new employment has to be created by the private sector. It is in this context that promoting startups and entrepreneurship can play a crucial role in our economy.
According to a report on the National Startup Awards 2020 by Startup India last year, 12 jobs on an average have been created per startup2. As per IVCA report 2021, startups funded by VC investments have played a pivotal role in bolstering employment – they have created more than 3 million jobs directly or indirectly over the past eight years.
Not only in key cities, but startups are driving jobs across the country. Contrary to popular perception, over 40% of the new startups are being incepted outside the main metros . Though Bengaluru, Delhi NCR and Mumbai continue to lead as the main startup hubs, newer hubs like Jaipur, Thiruvananthapuram, Chandigarh, Ahmedabad, and Pune are fast emerging.
Source: IVCA report
As ESG awareness increases, there are increasing numbers of startups contributing to UN Social Development Goals:
A transformational opportunity for entrepreneurs
If entrepreneurs want to drive impact and benefit from it while giving back to society, here’s a to-do list for an entrepreneur:
1. Identify and commit
● identify SDGs which the business can impact
● Outline targeted goals; decide levers for impact at scale
● Publicly committing to the SDGs
2. Develop impact targets and KPIs
● Establish targets and KPIs that are closely aligned with the relevant SD
3. Align sustainability and corporate strategy toward targets
● Identify opportunities to adjust business models, supply chain, products, or services
4. Create business opportunities
● Identify communities that could benefit from innovation
● Invest in education, capacity building and work opportunities
● Increase the link between economic growth and efficient utilization of resources
● Identifying collaboration opportunities to achieve mutually beneficial solutions – partner with governments, cities, and civil society to deploy resources
6. Measure, assess, report, and communicate
● Aligning reporting with the SDGs to establish a common dialogue among stakeholders
● Developing systems to integrate SDG issues into everyday business decision-making
Source: BW Disrupt