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India: The land of technology-led start-ups!

IBEF, Knowledge Centre

Jun 14, 2018 11:13

The Indian technology start-up domain is proudly placed at the fourth largest position in the world. The industry was sized at US$ 35 billion in FY18. Last decade saw emergence of several thousand start-ups in India, rise of unicorn start-ups (a unicorn is a privately held startup company valued at over US$ 1 billion) and growth of segment leaders in categories like robotics, analytics, edu-tech, health-tech, legal-tech and fin-tech. In fact, many of these start-ups solved challenges faced by grassroot level Indian industries like healthcare, education, finance, energy and agriculture, to mention a few.

The Government of India defines a start-up to mean an entity with an annual turnover of not exceeding INR 250 million in any preceding financial year. This entity should be working towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property.

Location-wise, Bengaluru (27 percent), Delhi NCR (25 percent) and Mumbai (16 percent) form around two third of the start-up base in the country. One of reasons for this location skew is that Delhi-NCR and Bengaluru continue to garner a mammoth 75 percent plus share of the overall funding value. Other prominent cities where start-ups are located are Hyderabad (6 percent), Chennai (4 percent) and Kolkata (2 percent). Upcoming cities are Pune, Ahmedabad, Jaipur, Indore, Chandigarh and Kochi.

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Out of various verticals, investors continue to remain bullish on aggregators, e-commerce and fin-tech. While the key focus amongst advanced tech start-ups is on analytics, artificial intelligence and internet of things. Actually, there has been an impressive growth of more than 30 percent in the number of these new-age advanced technology start-ups over the last few years. Some of these high-tech segments are named blockchain, AR/VR, 3D printing, robotics, internet of things, artificial intelligence, analytics and advanced analytics. These advanced tech start-ups garnered more than 20 percent of the total start-up funding as of 2017.

The overall investor-mix study also reveals that there is an increasing traction from foreign investors, especially from non-US geographies.

Some of the prominent Indian start-ups during the last decade are Flipkart, Quikr, Simplilearn, Paytm, Shopclues, OYO, Swiggy, Inmobi, BYJU’S, Mobikwik, Snapdeal, Urban Ladder, Grofers, Rivigo, Goibibo, Zomato, CarTrade and OLA.

In terms of the demographics of the founders of these tech start-ups, roughly than 50 percent of them are in the 31-45 age bracket. Half of the total founders are engineers by qualification. Roughly one-fourth are MBAs. Women entrepreneurs are rising in the start-up domain, with more than 10 percent of total founders being ladies in 2017.

Indian government has been supporting establishment of successful start-ups with its well-thought of policies, over the years. Its main policy pillars are funding support and incentives, industry-academic partnership and simplification & handholding. Some of these supportive schemes are named Startup India, Pradhan Mantri Mudra Yojana, IREDA Scheme for discounting energy bills, Credit enhancement guarantee scheme, Stand up India, End to end energy efficiency scheme, high risk high reward research scheme, Atal incubation centers scheme and Infrastructure development scheme.

Despite huge success of start-ups in India, some challenges continue to remain crucial for growth. These are, in order of importance, seed stage funding, availability of advanced tech challenge, access to customers, testing and R& capabilities, to mention a few.

Indian tech start up industry is a big target for visionaries like Google, who has recently launched an India-focused mentorship and boot camp program for start-ups building both business-to-consumer (B2C) and business-to-business (B2B) tech products.

The mentorship initiative named ‘Solve for India’ was initially launched in pilot mode in India last year along with participation from Google Developers’ Launchpad Accelerator team.

Launchpad Accelerator is a global project that helps start-ups build and scale their products through mentorship from Google network of investors, mentors, industry professionals and representatives from Google Inc.

Around 10 Indian tech start-ups are a part of this initiative, which are working on products around Indic languages, healthcare, fintech, agritech and online content among others. Some of them are Nebulaa, SlangLabs, PregBuddy, LegalDesk, PaySack, Vokal, FarMart, Meesho, Pratilipi and M-Indicator.

Additionally, there is also an increasing advent of corporate initiatives focused at nurturing the start-up ecosystem. For instance, the Bosch Ventura Arm setup a fund of US$ 170 million to nurture advanced tech start-ups in India. PayPal set up innovation labs in India to ride the Fin-Tech and emerging tech wave. HDFC organized India’s first insurance-tech hackathon to tap talent from start-ups and institutes. Unilever launched Foundry which is acting as a platform connecting Unilever brands with advanced tech start-ups.

Leading Indian IT association NASSCOM is running the “10000 start-ups program’ to scale up the start-up ecosystem in India by 10 times through incubation, funding and support for 10,000 technology start-ups in India over the next ten years. The program will foster entrepreneurship and build capabilities at scale.