Nepal’s Startup Policy

Where do we stand globally?

Sagun Baba Shrestha
June 26, 2024

Overview

A startup policy is a set of guidelines and frameworks established by a government to encourage the establishment and development of new companies. It helps governments better govern startups through standardized processes. This fosters an environment where more people are encouraged to start their businesses.  The governments can diversify revenue sources and create employment opportunities by investing more in the country’s startups. This is particularly important for developing countries like Nepal, where technological advancement has just started. It has been about a decade since Nepal began taking startups seriously and incorporating some aspects of startups into its annual budget, plans, and policies. Historically, Nepal heavily relied on subsistence industries. The emerging trends to promote and invest in startups will likely help Nepal smoothly transition from traditional economic activities to modern ones. All the countries in the world feel the dire need for the startup policy owing to the current trend.

Start-ups have experienced a positive trend and substantial expansion in recent times. The Global Entrepreneurship Monitor has collected data from 100 nations, revealing that almost 613 million individuals aged 18 to 65 are currently involved in entrepreneurial activities. These countries collectively account for around 90% of the global Gross Domestic Product (GDP) and have a population that represents approximately 73% of the entire world population. A total of 613 million individuals, who are willing to take risks, attempt to establish 396 million enterprises. According to Moya Mason's Worldwide Business Start-ups, there are around 133 million start-ups per year, with a success rate of 33%. Slightly more than one-third of these are newly established enterprises in the technology industry. Annually, there are a total of 1.78 million newly established technology enterprises. According to Forbes, only 0.05% of projects reach the basic fundraising threshold, which falls between the range of 90,000 to 1,00,000 dollars. The United States offers assistance to around 50,000 of these individuals.

Key Aspects of Startup Policy in Nepal?

Nepal's Startup Policy 2080  prioritizes the creation of a conducive atmosphere for emerging enterprises by implementing several key strategies (Nepal Startups Policy, 2080).  The government aims to develop a favorable ecosystem by preparing legal, institutional, and infrastructure frameworks. This includes updating current industrial rules and laws, formulating new ones (if needed), and facilitating access to business incubation centers, accelerator programs, resource persons, instructors, and capacity development programs. The policy seeks to increase production and job creation within the country by promoting startup-based entrepreneurship and incorporating regional and international research and best practices. It encourages investment by attracting both national and international funds, including foreign direct investments (FDIs) and investments from Non-Resident Nepalis (NRNs), with amendments to laws to ease their entry into the capital market.

Additionally, the policy promotes collaboration between the three levels of government, academic institutions, and the private sector to support innovative ventures. Financial instruments such as tax subsidies, seed funding, subsidized loans, cash dividends on exports, technical assistance, and financial and non-financial services will be utilized to make startups more competitive. Lastly, the 'Nepal Startup Fund' will be created to offer financial assistance to startup entrepreneurs.

 

Sagun Baba Shrestha
Research Officer - Center for Research and Development, King‘s College Nepal

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