Address Challenges Of Nepali Startups

Startups are very important for driving innovation, creating jobs, and contributing to the overall economic growth of any country. There has been a dramatic increase in the number of startups in Nepal in the last decade, but many difficulties still lie in the way of their success. For example, they suffer from lack of funding, limited access to resources, inadequate infrastructure, societal attitudes towards entrepreneurship, poor market research, a weak workforce, etc. Nevertheless, startups are a vital prerequisite for Nepal's economic development. This article attempts to highlight some reasons why startups are important for Nepal's economic development, along with the challenges and obstacles that come with them. 

Most startups have a hard time raising capital because not all of them are financially ready from the start. In Nepal, startups require substantial capital — funding, loans, or investments — to kick-start their businesses. However, securing these funds has been difficult for them due to several reasons. They often struggle to secure funding from investors or banks, which limits their ability to grow and scale their businesses. Banks in Nepal are averse to taking the risks associated with startups, and approaching venture capitalists for funding is a daunting process that only a few startups undertake. Moreover, many Nepali startups do not meet the banks' basic compliance requirements to qualify for a loan grant. In some cases, startups must be well-established and have been operating for several years before being eligible for a loan.

Regulatory hurdles 

These regulatory hurdles have made financing an arduous task for startups. Additionally, most startups lack the expertise and capacity to inspire confidence in venture capitalists, while Nepal lacks proactive and risk-taking venture capitalists. Thus, finance is a prevalent challenge that startups in Nepal face. In any startup, employees can be either the greatest asset or the greatest liability. During the initial phase of a business, human resources play a crucial role. However, several constraints, such as a weak budget and poor mentorship, etc., make it challenging to gain employees' trust and loyalty. Workplace conflicts and other skill-related issues pose significant challenges for startups to function effectively. Therefore, it is crucial to establish a good startup culture and develop the necessary skills of employees while also hiring competent individuals with the right mindset. 

Cultivating an entrepreneurial mindset among all, from employees to CEOs, is vital. Vague laws and policies have become a major source of discouragement for many startups. Nepal's legal system is ambiguous, which makes it hard for new businesses to run well. Research and surveys have shown that legal ambiguities and vague laws make things harder for new businesses than they do for older businesses. Moreover, many startups encounter corrupt bureaucrats during the registration process, which further complicates matters. Additionally, high taxes are a well-known issue for startups in Nepal. Implementing policies such as tax exemptions or incentives for startups during their early stages would be beneficial for entrepreneurs as they establish their businesses. 

Effective guidance and mentorship are crucial for the success of any startup. It can help startups translate their vision into reality and navigate challenges that could have otherwise been avoided. Every aspect of a startup, from conceptualisation and registration to operations, requires guidance and mentorship. While the trend of mentorship and information exchange has been on the rise in recent times, many startups still lack the necessary guidance to succeed. Also, due to the lack of market research and customer knowledge, many startups may fail to understand the market and their customers, which can lead to incorrect assumptions about the market.

There is a societal stigma associated with pursuing entrepreneurship. It is typically associated with failure to pursue proper government jobs. Such a belief is deeply embedded in our society. Entrepreneurs are often discouraged from pursuing entrepreneurship or starting a business, and they get persuaded to pursue more conventional career paths like becoming a doctor or engineer. This lack of family support and societal perceptions can undermine the self-confidence of many aspiring entrepreneurs. People, who pursue non-traditional paths, are often mocked in their community. The society’s negative attitude impels some entrepreneurs to give up their business venture. But it's important to remain resolute and focused on the entrepreneurial journey ahead.

Abundant prospect  

Startups are essential for Nepal's economic development and for addressing its challenges. By supporting and encouraging entrepreneurship, Nepal can create new job opportunities, drive innovation, and contribute to the overall economic growth. In recent years, there has been a growing interest in and support for startups. Government initiatives, private sector investment, and entrepreneurship development programmes have helped create a more supportive ecosystem for startups. Despite the challenges, there are numerous opportunities for entrepreneurs. 

COVID-19 has led to an increase in digital literacy, resulting in a surge in the e-commerce business. This presents an excellent opportunity for individuals with the vision and mindset to take advantage of this growing sector. Nepal is regarded as an unexplored market with limited businesses and abundant prospects for those willing to work hard. Foreign products dominate our local market, and e-commerce businesses are booming. Instead of fixating on the challenges, entrepreneurs with a visionary outlook should view this situation as an opportunity.

(Karki a LL.B Graduate from, Kathmandu School of Law.)