In a recent report by StartupBlink, the Indian startup ecosystem was ranked 17th globally. It has more than 39,000 active startups (a 108% jump from 2017) that have amassed total funding of $11 billion (2018). The ranking was based on the data from startups, accelerators and co-working spaces registered on the platform. Inputs from platforms like Crunchbase and SimilarWeb were also considered.

The country has achieved major entrepreneurial milestones in the last several years. So, it’s safe to say that India has become a hotbed for new and inventive ventures.

For most founders, the cost of doing business, along with the proximity to customers/vendors makes for a compelling incentive to take on bigger problems and penetrate the global landscape. Additionally, India produces 7 million college graduates per year. Surprisingly, 55 percent of them prefer joining startups over corporates. So, the country has a readily available, and diverse domestic talent pool that can be leveraged to accelerate growth. As a result, startups are currently responsible for generating 40,000 direct jobs. And, have heavily contributed to a three-fold increase in indirect jobs in the last two years.

causes of growth of indian startup ecosystem
Reasons for the boost in the Indian Startup Ecosystem
Source: Yes Bank

That being said, the ecosystem itself is backed by an increasing number of investors, government initiatives (like Startup India and Digital India) and other support organizations (such as incubators or accelerators) that continue to create an environment for innovative ventures to thrive in. From the country’s first incubator — The SINE (launched in 2004) to — Morpheus, the first accelerator launched in 2008, the number of ecosystem enablers has continued to be on an upward swing.

Learn more about Indian tech talent and how they are gaining importance in the Southeast Asian Startup scenario.

Active investors and unicorns

India proudly houses 26 Unicorns (a startup valued at over $1 bn). Eight of them were added within the last year. These were Udaan, Oyo, Freshworks, Swiggy, Paytm Mall, Policybazaar, Zomato and Byju’s. The average valuation per unicorn in India is around $2.4 billion. And, at least 30 startups have the potential to get into the Unicorn club by 2020.

unicorns in india from 2018
Indian Startups that became Unicorns in 2018

By participating in 12 funding deals, Sequoia Capital was reported to be the most active VC in 2019. It was followed closely by Matrix Partners and Blume Ven7 Lead Angelstures with 8 deals each. Angel investors like VC Karthic (Founder, Buzzwords), Sharan Agarwal (a member of the Mumbai Angels Network)  and Sachin Tagra (VP, Capital18) were the leaders with their contribution to multiple funding proceedings.

“The base has broadened up. Two years ago, Series B was a gap in the market and it continues to be today as well,” says Ashish Fafadia, CFO, Blume Venture Partners, “Companies that got funding over the last 2-3 years have done well. Indian startup economy is maturing which has resulted in more opportunities that are available for Series C players. We are moving towards a more holistic ecosystem over the next three years.”

Most prominent and sought-after startup sectors

Traditionally India was the back-end, customer service core for major global MNCs. However, India currently sports a tech-heavy landscape. This is because it has observed a 50% jump in the number of advanced tech startups since ’17. The country has more than 500 million internet users. It is also the second largest online market after China. We can expect an active implementation of blockchain, AI, IoT, and data analytics across multiple technology sectors. For example, IoT in India is presumed to reach a whopping $15 billion by 2020. It will account for approximately 5% of the total global market. On the other hand, AI is predicted to become as big as $ 15.6 trillion by 2030.

Entrepreneurs are also drawn towards the affordable healthcare, agricultural technology, and rural education sectors. They aim to solve India’s age-old problems by creating technology-enabled systems. While investors are eager to back ventures in these industries, it’s important for startups to first transform their ideas into scalable products and gain wider consumer acceptance  

Based on the investment trends, it’s safe to conclude the fintech, media and transport tech sectors will see more activity. On the other hand, eCommerce, hyperlocal, deep tech, and other cash-intensive sectors are expected to struggle a fair bit this year.

As a side note, with the introduction of the National eCommerce Bill, many eCommerce startups will be experiencing a downturn. It aims to terminate the strategic partnerships between marketplace platforms and sellers. This will level the playing field for smaller eCommerce vendors. They can no longer run frequent discounts, and cashback offers on their platforms which were previously responsible for driving up significant profits.

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City-Wise Growth

Talking of city-wise startup growth, Bengaluru (11,000), Delhi-NCR (8,500), and Mumbai (9,000) have witnessed the maximum growth. Out of which, Bengaluru has the third highest number of tech startups among all the global cities. In terms of funding, startups in these cities received $4.7 billion, $4.4 billion, and $914 million in 2018.

City-Wise Startup Growth
Source: Yes Bank (2016)

Several tier-1 and tier-2 cities, like Pune, Kolkata, Chennai, and Hyderabad, have also grown exponentially in the last few years. They are now home to 40% of the total number of startups in the country.

According to a NASSCOM-Zinnov report, India is the 3rd biggest startup hub in the world. Whereas, the Union Ministry claims that India has risen to the 2nd position in 2019. While several sources debate these rankings (and rightly so!), it’s pretty clear that the Indian startup ecosystem (valued at $130 billion in 2018) has been growing at a fast pace. In conclusion, now is an extremely good time for aspiring entrepreneurs to start their own ventures and for job seekers to be a part of a young startup.

If you’re looking for a job in one of the leading startups in the country, try Workship — a recruitment platform for techies, by techies, where you can discover positions that fit your profile.

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