An Overview on India's Startup Ecosystem: A Study By Allied Market Research

The government of India defines a start-up as an entity less than seven years old with an annual turnover of less than 250 million and headquartered in India. The Department of Industrial Policy and Promotion of the country started an initiative "Start-up India," which helps to build a positive, effective ecosystem in the country, turning business ideas into a reality for a flourishing startup environment. Following the initiative, states and union territories across the country introduced startup policies.

India is witnessing unprecedented innovations that benefit the start-ups ecosystem by providing transformative products, business models, and huge capital investments. According to Start-up India Hub, India has become the third-largest start-up ecosystem, globally after the U.S. and China, and it is expected to grow at a consistent CAGR of 12-15% YoY.

The country has established more than 15,000 startups, owing to emergence of internet, which helped companies to provide mass visibility. Furthermore, changing reforms and policies of India toward start-ups, along with various government initiatives, have helped Indian start-ups to scale up.

However, emergence of the COVID-19 pandemic has caused an irrevocable loss to the ecosystem, both in terms of mankind and economy. It has severely affected different sectors, including agriculture, healthcare, education, infrastructure, and tourism. The consumer electronics sector witnessed a marginal dip in 2020, owing to the global health crisis, with restriction on movement and lockdowns across various countries. Hence, shortage of equipment and disruptions of supply chain forced market players to explore new opportunities by leveraging various technologies.

Indian startup landscape is driven by digital acceleration, owing to increase in smartphone penetration and rise in awareness regarding various technologies. As Indian business models are adopting entrepreneurship, the startup ecosystem is expected to provide vibrant growth to the market with introduction of new technologies and innovations. This creates huge employment opportunities for masses and propels growth of entrepreneurship in the country. For instance, according to the government statistics, in past few years, startups in the country have been able to create estimated 40,000 new jobs, taking the total jobs in the start-up ecosystem to 1.6 to 1.7 lakh.

Drivers of Startups Ecosystem in India:
Enterprises are realizing the potential of start-ups and are increasingly partnering/investing in the same. Factors such as corporate connect, government support, and partnerships with countries play a crucial role in determining growth of this ecosystem.

1. Corporate Connect:
a) 10,000 women program by Goldman Sachs is provide women entrepreneurs in India with business and management education, with mentoring & networking and access to capital.
b) The Microsoft Ventures Accelerator Program in India has recently picked up 16 startups.
c) Facebook has partnered with Start-up India and has disbursed cash grants of $50,000 each to top 5 selected start-ups in the country.
d) Wipro has setup a $100 million fund to invest in startups.
e) IBM decided to partner with 100 Indian big data and IoT start-ups.

2. Government Support:
a) The government of India has understood the value of working with disruptive innovators across the value chain and uses their innovations to improve public service delivery.
b) The Department of Animal Husbandry and Dairy conducts a grand challenge in association with Startup India every year to award top start-ups in 5 categories for a cash prize of INR 10 lakh.
c) Development Bank of India launched a scheme to provide assistance to existing small and medium businesses who are in need of capital for growth.
d) Changing reforms and policies toward start-ups and various government initiative save helped in growth of Indian start-ups.

3. Partnerships with Countries:
a) India and Korea entered into a partnership to co-fund collaborative enterprise-led joint R&D projects in new-age technologies in digital transformation, future manufacturing, future utilities, and health care, through its newly-formed body, the Korea-India Future Strategy Group.
b) Government of the UK has invested up to $48.4 million in the Indian start-up ecosystem under the UK-India Fast Track Fund. These funds have invested in fintech, edtech, agritech, health, and technology-driven manufacturing startups in India.
c) Indian trade bodies such as NASSCOM, TiE, and CIIE India, IIM-Ahmedabad have set up a bilateral startup exchange and collaboration program in the Silicon Valley, since 2016, to highlight strength of the Indian startup ecosystem. This event selected more than 30 Indian startups for their programs and exhibited products, prototypes, and achievements to investors and other potential Valley partners.
d) In 2018, India and the Netherlands have officially launched the Indo-Dutch Startup Link platform, which aims to open-up markets in India and the Netherlands to startups from both countries that are looking to expand to international markets.
e) Israel Innovation Authority (IIA), an investment arm of the government of Israel, has launched a new pilot program for Israeli startups to test their products in India.
f) In recent years, SoftBank, a Japan based investment joint has been investing aggressively in India. Majority of leading startups in India including Ola, OYO, and Paytm have Softbank as a major shareholder.

"India's startup ecosystem has undergone a radical change due to the union of increased risk capital funding as well as regulatory and business environment improvements"

Some Interesting Facts about Indian Startups:
1. India is the most young startup country as 72% of business visionaries here are under 35 years old.
2. 90% of the startup activity in India seems to be happening in top 6 cities, such as Bangalore (28%), Delhi-NCR (24%), Mumbai (15%), Hyderabad (8%), Pune (6%), and Chennai (6%).
3. Bangalore has been listed as one of the top 20 leading startup cities in the 2019, Startup Genome Project ranking. It is ranked as the fifth fastest growing startup cities across the globe.
4. The amount of about $1.33 billion was approved by the Cabinet of India to provide a boost to the Indian start-up ecosystem.
5. In 2021, 42 start-ups were launched and 2 listed companies touched a billion-dollar valuation.

Conclusion:
Increase in startups in sectors such as health and education is expected to be a game changer for India for job creation and revenue generation. The current business scenario is witnessing an increase in demand for automation in electronic devices and wearable devices, particularly in India, owing to increase in demand for internet. Companies in this ecosystem are adopting various innovative techniques such as mergers and acquisitions to strengthen their business position in the competitive matrix. R&D activities and adoption of various technologies across various equipment and is lucrative for its growth in the coming year.

Growing from a nascent stage to a flourishing ecosystem of the current stage of maturity and stability, Indian startups have some of the best market conditions to take advantage of with adoption of digital products and services. It is estimated that by eliminating the medium and long-term pandemic impact, Indian startup ecosystem is expected to witness new possibilities in the coming years.

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Allied Market Research (AMR) is a full-service market research and business-consulting wing of Allied Analytics LLP based in Portland, Oregon. Allied Market Research provides global enterprises as well as medium and small businesses with unmatched quality of "Market Research Reports" and "Business Intelligence Solutions." AMR has a targeted view to provide business insights and consulting to assist its clients to make strategic business decisions and achieve sustainable growth in their respective market domain.

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