What helped India to become the 3rd largest startup ecosystem in the world?
India is on its way to developing a model that is fueled by innovation and entrepreneurship, giving the rest of the globe tough competition. India’s startup firms are upending marketplaces by upsetting the status quo. In India, the year 2021 was a breakthrough year for private equity (PE) and venture capital (VC), with investment activity touching an all-time high of $63 billion. PE-VC investments have been steadily increasing year over year since 2017, which was also a record year. Exit activity hit an all-time high of $32 billion in 2021, which is expected to lure more money into India in the future.
As per Economic Survey 2021-2022, nearly 14000 new startups were recognized by the government bodies. The survey also recorded 44 Indian startups to have achieved the unicorn status in 2021 which took the overall tally of unicorns to 83.
According to the Indian Tech Unicorn report 2021, investments in startups were a distinguishing characteristic of 2021, with private investors committing over $30 billion to Indian businesses, up from $11.5 billion in 2020. The country has also been producing unicorns at an extraordinary rate, adding 46 in the last year alone, bringing the total number of unicorns to almost 90. Startup growth in India is accelerating. The first 37 unicorns took 10 years to be established, and the next 37 unicorns might come up in the next 10 months, signifying the aggressive growth in the ecosystem.
There has also been an increase in ‘unicorns,’ who did not reach the $1 billion level to become unicorns in the previous year, lining up for 2022 to be their breakout year. Jupiter, Cleartax, Dunzo, Zapto, and FreshtoHome are just a few of the ‘unicorns’ to look out for in 2022.
Role of government in boosting the growth Indian startup ecosystem
The Indian government, on the other hand, is on a mission to build a robust startup ecosystem, which is indeed laudable from sharing the best practices from around the world, providing mentorship, access to markets, and access to funds aboard, the government has already undertaken several initiatives and introduced many schemes to promote and support the entrepreneurs. Such that PE-VC investments in India have broadened, with the proportion of startup investments continuously growing over the last decade. It’s encouraging to see a slew of new businesses spring up, not just in the technology sector but also in consumer goods, financial services, logistics, and other areas.
The ‘startup India’ initiative of the government has been launching and running numerous programs to support the startups in the areas of Tax, patent filing, easy compliance, relaxed norms for procurement, funding, credit guarantee, industry and academic programs, and recognition events.
The future of India’s startup ecosystem
According to a few research made by ResearchFox, the startup ecosystem is based on three important aspects – universal access to the components needed to build the startup, access without distinctions of language/education/gender, and access to investment no matter wherever you are! And at the same time there have been a few entrepreneurial challenges as well, in front of the Government, such that- how to survive in the face of critical cataclysmic events, how to survive disruptions in the global supply chains, how to accommodate strong nationalism, and how can development be sustainable and environmentally friendly.
Also, according to TiE chapters, to solve the mentioned problem, there must be a collaboration between the Centre, State, and bodies like TiE Global to ensure, the development of startups in India. As the central and state government and their agencies are very much aware of startups and their potential, they together can change the Indian Economy.
Over the last decade, India’s start-up ecosystem has changed significantly as the country’s corporate environment has grown more receptive to entrepreneurship. This has resulted in a thriving start-up environment that is humming with new ideas and technology, producing jobs, and celebrating entrepreneurship. The Government is working on different policy measures to boost entrepreneurship and the Startup ecosystem as well. 2022, is a great year to see many changes beyond our imaginations!
The exponential growth in the number of emerging startups is indicative of a fundamental shift in the Indian ecosystem. This change has brought in both opportunities for the startup ecosystem to generate both white and blue-collar employment across industries and challenges to cater to emerging and dynamic consumer needs.
As a market research and consulting firm, we are working as a strategic consulting partner with many Indian startups, helping them right from the planning to execution phases to discover and analyze new market potential, find investments and accelerator programs, test products and platforms with real users, and optimize human and capital resources.