India is well positioned as a startup country in the light of other famous startup scenes such as the US, Israel, Singapore. India’s startup ecosystem has been interacting and collaborating actively with the ecosystems of the aforementioned countries and these synergies have contributed significantly to India’s economy, which currently has a GDP of $2.59 Tn.

ndian Startup Ecosystem: Growth Drivers and Opportunities

Growth in terms of numbers Even though India experienced a brief slowdown in 2016–17, India’s start-up ecosystem is again set for a blooming phase, post-2017. Investments into start-ups have increased by over 100 percent, from $2.0 Bn in 2017 to $4.2 Bn in 2018.

The total number of start-up funding deals especially in the late stages (Series C, D, E, and F) witnessed an unprecedented growth of around 250%, from $847 million in 2017 to $3.0 billion in 2018. Even though the amount of seed stage funding raised stood at $151 million, the larger number of late-stage deals rose sharply, which signifies a renewed investor confidence in the Indian start-up ecosystem.

New players in the startup fray Indian unicorns in the B2C space continue to garner global funds. Many of the newer players are expanding their horizons to other markets stirring up the competitive landscape. Creating a benchmark in the global start-up ecosystem, the year 2018 saw an addition of as many as 8 Unicorns, the highest in a single calendar year.

With the vision of build in India, built for the world, India saw more than 400 cross border start-ups in the year 2018. The disruptive innovation in technology and process is creating newer Indian start-ups and foreign investors are showing immense interest in these start-ups. This has also led to the creation of than 40,000 new Direct Job opportunities and another 4–5 lakhs Indirect Jobs. This takes the total Direct Job base to 1.6–1.7 lakhs.  

Scope and Characteristics of the Indian Market

Growing at an average of 50% year-on-year, most advanced tech start-ups focused on creating solutions in segments like Artificial Intelligence, Analytics, Augmented Reality/Virtual reality, Blockchain and Internet of Things. Startups in these new segments have witnessed a momentous growth in 2018; increase in internet penetration, better infrastructure for digital transactions, Govt.

push on financial inclusion and innovative tech accelerating the pace of payments, lending & digital banking being primary drivers for growth.

You must not miss out on the implementation of artificial intelligence, which is also becoming a norm, growing at 5-year CAGR of 54–58%, witnessing over 120% growth in funding for AI Start-ups ($150 Mn invested in 2018). Also, Blockchain start-ups have seen a significant inflow of funding ($2 -$11 million USD), growing over 500% year-on-year.  

New opportunities for growth, new jobs on the radar In the coming years, we will see as many as 2,000 new startups. Job creation from these entrepreneurs will go up from 65-75k as of today to 250-300k by 2020. New job roles like data engineer, data analyst, data science analyst, will be very much in demand. The Indian subcontinent which is showing significant signs of growth has also witnessed city-wise growth in the years to follow.

The top 6 cities are trusting 90% of the technology scene. Bengaluru and the New Delhi area account for almost 28% and 24% of the startups in India Mumbai, Hyderabad, Pune, and Chennai are following in tows. Want to add something? Do you have a story to tell? We would love to hear. Comment below.

The 2018 Finacial Express Online digs through existing startups in India that excellent valuation jumping anywhere from 2x to 7x in their last funding rounds. Some of these might even turn unicorns in 2019 on the back of high valuations.

As many as eight new startups were catapulted to the hallowed unicorn club in 2018. Fundraising activity in startups again picked up the pace in the year 2018 in mid and late-stage deals, after slowing down in 2016-2017 from the frantic deal-making in 2015 and early 2016. Consequently, eight new startups were catapulted to the hallowed unicorn (valuation of a privately held company at over $1 billion) club in 2018 — the highest number in any year so far. However, the challenges for Indian startups are very much the same, as last year. Here, we take a look at some of the top startup challenges in 2019.

Funding:

Funding continues to be one of the biggest challenges for Indian startups. Earlier banks used to refuse business loans for small ventures. The complex of the loan terms and conditions and endless paperwork often frustrates small business owners. Kiran Mazumdar Shaw’s Biocon too faced funding issues initially.

The situation is improving now. With Angel investment and seed investment, first-level funding (with a small amount) is no longer a big worry. But it getting a large amount of funding is a major challenge, especially in the later stages. Very limited funding is available in forms of larger cheques in India. My thoughts on this are that entrepreneurs should set the goals for the next 5 years before they roll up the sleeves for raising funds.

Government Policies:

India is one of the few developing nations where the government often plays the role of a deterrent in entrepreneurial ventures.

Even though government policies are slowly and steadily increasing, India, by and large, maintains dismal ease of doing business raking as per the World Bank report. Due to a maze of laws and regulations, it takes more of an effort for an entrepreneur to start a business in India than most other countries in the world.

Once you have set up a business, it takes an even greater effort to comply with the sector, department, state, and central laws. The government has taken proactive measures for funding and developing the eco-system, however, we witnessed a slowdown in the start-up space, as there was a dip of almost 50% in the registration of new start-ups in 2016 as compared to 2015; this trend has proved that the policy change has not really given a push to aspirants.

Insufficient Market Research:

An inadequate market is another major business challenge for startups in India. It is very important to know your product/service and your target audience. But it is more important to identify the need for your product. If you can find that, selling your product/service becomes much easier. Know your market, before you start a business. Most startups try to create a product/service that already has plenty of competitors (with better offerings) and overspend on its promotion.

Both naukri.com and shaadi.com were a huge success because the founders identified the need for an online job portal and an online matrimonial site. They understood the need of the mass, and offered them something they have always wanted, but never got.

Lack of Innovation:

Probably the worst of all changes startups face is overdoing the same thing. Most startups in India are afraid of innovation. They are too scared to try anything new or explore unknown territory. But as we know, mediocrity kills. Differential thinking is the first and foremost thing a startup needs to grow as a brand.

Shortage of Talent:

Startups in India or elsewhere need talented resources, more than anything. But this is something difficult to find. Very few people are not willing to leave their well-paid white collar jobs to join a startup.  Skilled talent is hesitant to join start-ups, as they are not often willing to take a risky step, by compromising on their compensation and job security.

Many have witnessed in the past mass firing and downsizing. Also, early stage or pre-series-start-ups have lesser pay than their corporate peers. As a result, most start-ups in a bid to outgrow, hire inadequate talent without processes, and finally end up on the losing side.

Wrong Business Model:

A major cause of startup disappointment in India is an improper business model. New business owners are often so much over-enthusiastic about their product; they overlook the ROI it will bring back. The revenue model is either too complicated for the end users to understand or draws too much from the investor. The business model should be such that maximum return is assured with a reasonable initial investment, without compromising on the quality. The revenue model should be simple and easy to follow.

Despite all the oddities and challenges, Indian startups are growing in number. According to a 2018 Economic Times report, currently, there are 39,000 start-ups (in India), with nearly 5,000 startups being added on a yearly basis.

Make in India, offers an opportunity for the Indian start-ups, especially the non-residential or returning Indians, who want to start something indigenous.  India is a more closed economy as compared to China, and we do have substantial exports to the US, but this will be unaffected, although de-globalization could have an adverse effect on larger corporations who will scale down operations and become more frugal, this would also present opportunities for start-up companies to fill the

Deep Tech startups, especially businesses driven by artificial intelligence (AI), machine learning (ML) and the Internet of Things saw record funding. The biggest was robotics startup GreyOrange’s $140 million led by Peter Thiel’s Mithril Capital.

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