Startups Blog

India: The World’s Third-Largest Startup Ecosystem? Here’s Why

While many people will likely associate San Francisco as the startups capital of the globe, there’s excitement out east. Statistics show that India is undergoing incredible entrepreneurial growth! This is to the extent that, as of the start of 2022, there are now at least 83 different unicorns. That’s a massive boost in fortune for small enterprise owners nationwide.

India Startups

 

But what exactly is happening in India? India is cutting a close third, with the US and China leading all others in global venture success. Let’s look at why this is the case and what we can expect from their unicorns in time to come.

What is Happening in India?

It is easy to imagine that India’s startup scene has seen a recent revolution. However, the country’s enterprising goes further back than many might imagine. We can trace India’s thirst for venture growth back to the 1980s.

It was during this time that India kick-started its entrepreneurship in the IT industry. Leveraging cost-effective IT services through enterprising professionals, India rooted itself on the technological world map.

Since this period, the country has expanded dramatically concerning venture diversity. While India’s roots may be in IT, its ecosystem is now inspiringly varied. They’re seeing tens of billions in capital funding regularly - and there are scores of specialized incubators working regionally.

This all adds up to an ecosystem fuelled by ambition and determinism. Online and mobile demands have driven more and more people towards India’s central specialisms, too. Therefore, it is hardly surprising the seeds they planted in the 80s are starting to blossom into impressive trees.

Record-Breaking Growth

The past is one thing - but the future looks more impressive and exciting for India. According to NASSCOM’s Tech Start-Up Report (titled ‘Year of The Titans’), India’s venture growth in 2021 was unparalleled. For example, Indian startups raised more than $24 billion in equity across 2021 alone.

The cumulative growth, or CAGR, for the past decade, is also eye-opening. Indian ventures witnessed an increase of 39% over ten years. That accounts for up to 26,000 new tech businesses founded between 2011 and 2021.

However, we also need to look at the tech boom in 2021 alone. NASSCOM’s figures further show us that more than 2,250 Indian tech ventures were established over the period. That’s adding in 42 unicorns, too - an increase of 3.5x year on year!

The statistics are rather staggering. India’s immense tech boom in 2021 firmly positions the country’s ecosystem in third place on the global venture scale. That’s ahead of Israel in fourth place, the United Kingdom in fifth, and Germany in sixth.

On average, it takes an Indian venture a year less to reach unicorn status than it does in the US. This figure pivots India at the same growth efficiency as China and Germany. Meanwhile, the US, Israel, and the UK see much slower growth.

We also need to consider the diversity and inclusion evident in NASSCOM’s data. For example, up to half of all Indian tech ventures are pivoting to income groups one and two. What is more, almost a third of businesses start life outside of ‘the hub.’ Therefore, while technology is a firm sphere for India’s enterprises, there is still much niching down.

Broadening in the spheres includes new ventures created in Agritech, social media, automotive, etc. There are now more than 80 different innovator programs active in the country. This leads us to anticipate that corporate interest is broadening nationwide.

Altogether, this data is equally astonishing as it is promising. What, however, can company founders expect from the Indian ecosystem in the years to come?

What Should Startups Expect? 

Indian ventures, while emerging through an exciting time of growth and development, still have concerns. 2021 was a crucially successful year for the ecosystem. Therefore, many founders are keen to see further support the state offers. There may not be a clearer beacon to suggest that ventures are at the heart of India’s future success!

Innovators looking to start up in India should know that pushes for tax reform are still ongoing. While the ecosystem already supports small companies to a broad extent, ESOP taxation reform only caters to a handful of ventures. Further, founders request a flatter plateau for capital gains taxation on unlisted shares.

Those working in the ecosystem also request a greater focus on national education. Also, MSMEs are pressing for inclusion in credit schemes following global financial woes.

Building an enterprise in India revolves much around research. With technology providing the nation with its foundations for business success, knowledge of national competition is prioritized. Experts advise that starting up in India takes time. Despite the immense unicorn growth over the years, finding a problem people need solving is key.

However, as mentioned, India is home to various incubators and venture accelerators. Providing your concept is well-researched, and you have clear plans of action, it is worth pursuing these avenues.

It is easy to assume that India’s enterprise growth means anyone can make it big here. However, it simply means competition is fiercer! The ecosystem is markedly different from the US - so always undertake research as intensively as possible.

2021 was an exciting year for India’s venture ecosystem

Enterprises and innovators broke extensive records this past year to bring the nation into the global top three! However, while the hunger for enterprise innovations is high, there is still intense competition. A superb place to start may be to read deeper into the history of the ecosystem!

Data on various startups branching into global markets is available in real-time through Fundz. Could the next big US ventures compete against emerging tech from India? There is no more ideal time to start researching than now - India still has room to grow, too!

 

SOURCES USED

https://www.failory.com/blog/how-to-start-a-startup-in-india

https://timesofindia.indiatimes.com/business/india-business/india-becomes-third-largest-startup-ecosystem-in-the-world/articleshow/85871428.cms

https://www.livemint.com/economy/economic-survey-india-becomes-third-largest-startup-ecosystem-in-the-world-11643626506129.html

https://www.timesnownews.com/business-economy/industry/article/india-becomes-the-worlds-third-largest-startup-ecosystem-follows-usa-china/807316

http://media-publications.bcg.com/bcg-sift-1-3-indias-startup-story-unlocking-true-potential.pdf

https://www.zdnet.com/article/indias-is-home-of-tech-unicorns/

https://inc42.com/features/5-things-indian-startups-are-looking-out-from-union-budget-2022/

 

Topic: India Startups