In recent years, India has rapidly emerged as a global powerhouse in the startup ecosystem. With a vibrant entrepreneurial spirit, a massive pool of skilled professionals, and a growing appetite for innovation, India has transformed into a hub for startups across various sectors.
The country's startup ecosystem has witnessed an unprecedented surge, supporting a culture of innovation, risk-taking, and technological advancements. India's remarkable journey to becoming a global startup hub can be attributed to a combination of key factors, which have propelled its growth trajectory to new heights. India is fast emerging as a start-up nation. The Indian technology landscape has seen tremendous growth towards the creation of innovative startups and has emerged as the 3rd fastest-growing hub for technology startups with more than 4,200 start-ups creating over 80 thousand jobs.
At the heart of India's emergence as a global startup hub lies the unwavering support and encouragement from the government. Realizing the potential of startups as a powerful engine of economic growth and employment generation, the Indian government has implemented a series of policy reforms to nurture and boost the startup ecosystem. Initiatives like "Startup India," launched in 2016, have provided startups with a conducive environment to thrive. These policy reforms have laid a solid foundation for startup growth through tax exemptions, fast-track patent registrations, and access to government-aided funding.
Furthermore, the surge in investor confidence has been a game-changer for India's startup ecosystem. Domestic and international investors have displayed a keen interest in funding innovative and promising startups across diverse sectors. This influx of capital has fuelled growth and empowered entrepreneurs to think big and scale their ventures.
Indian Startup Ecosystem witnessed exponential growth in the past few years (2015-2022):
Indian Unicorns are flourishing in the fast-paced and dynamic economy of today. These startups are not only developing innovative solutions and technologies but are generating large-scale employment. Till FY17, approximately one unicorn was being added every year. Over the past four years (since 2017-18), this number has been increasing exponentially, with a whopping 66% year-on-year (y-o-y) growth in the number of additional unicorns being added every year. As of May 31, 2023, India is home to 108 unicorns with a total valuation of US$ 340.80 billion. Out of the total number of unicorns, 44 unicorns with a total valuation of US$ 93 billion were born in 2021 and 21 unicorns with a total valuation of US$ 27 billion were born in 2022.
The years 2021, 2020, and 2019 saw the birth of the maximum number of Indian unicorns with 44, 11, and 7 unicorns coming each year, respectively. COVID-19 has caused a great amount of socio-economic suffering globally, but it is during this time that resilient Indian Entrepreneurs have worked effortlessly to not only contribute to the economy but also contribute toward COVID-19 relief efforts. In 2020, there was the birth of more than 10 unicorns. It's raining unicorns has been the motto of the year 2021 with 44 unicorns pumped in the ecosystem and many unicorns waiting in line.
Ccumulative Unicorn Count in India (As of May 2022)
Source: India Briefing
India's startup ecosystem has come a long way, from obtaining its first unicorn in 2011 with "Inmobi" to reaching 100 in just over ten years. Moreover, 50% of Indian firms achieved unicorn status within five years of their founding, thanks in large part to widespread digitalization during the period immediately following 2016. This marked a significant uptick in the startup sector.
Mensa, GlobalBees, and Cred Avenue became the fastest startups to enter the coveted unicorn club in record time – at six months, seven months, and 1.5 years, respectively. Other startups that achieved a billion-dollar valuation in record time include Paytm Mall, Glance, Ola Electric, Spinny, PharmEasy, etc.
India added 44 unicorns in 2021 alone, significantly more than the 37 companies that passed the US$ 1 billion value threshold in the ten years prior put together. In addition, India produced 14 more unicorns in the first four months of 2022, including LEAD School, Fractal, DarwinBox, XpressBees Logistics, Cred Avenue, etc. In the first quarter of 2022, Indian entrepreneurs raised over US$ 10 billion in funding, up from US$ 5.7 billion in the corresponding period of 2021, according to statistics from Venture Intelligence. Despite the doubts of private market investors who favour a "wait and watch" strategy because of global challenges, this is significant growth.
India's rich talent pool has played a pivotal role in its rapid startup growth. The country's education system churns out a vast number of skilled engineers, developers, and business professionals annually, providing startups with a steady stream of talent. The technological process of India's workforce, particularly in information technology and software development, has enabled startups to harness cutting-edge technologies and develop groundbreaking products and services.
The digital revolution in India has opened boundless opportunities for startups. With the widespread adoption of smartphones, affordable internet access, and digital payment platforms, startups have been able to reach a vast and diverse consumer base. The "Digital India" initiative has further bolstered digital infrastructure across the country, creating a favourable environment for startups to thrive in the digital era.
India's startup culture is vibrant, dynamic, and inclusive. An array of startup events, networking forums, and incubators/accelerators have fostered a spirit of collaboration, learning, and mentorship. Major cities like Bengaluru, Mumbai, and Delhi-NCR have emerged as bustling startup hubs, attracting talent from every corner of the nation. The presence of co-working spaces and startup campuses has created a sense of community and camaraderie, driving collective progress in the ecosystem.
In terms of startup hubs, Bengaluru took its spot back as the top startup hub from Mumbai, with Bengaluru-based startups raising US$ 285 million, slightly higher than US$ 241 million raised in August 2022.
Mumbai slid to the third spot with US$ 92 million, having secured pole position in August 2022 with US$ 585 million. Delhi NCR rose to the second spot, with the startups based in the region raising US$ 251 million in September 2022.
As of February 28, 2023, the government has 92,683 startups recognised under the Department for Promotion of Industry and Internal Trade (DPIIT).
The start-up India project was launched by the central government on January 16, 2016, to foster a strong ecosystem for the promotion of the country's expansion of innovation and entrepreneurship. There are formal policies in 31 out of 36 states and union territories in India. There is no specific policy in the two states of Ladak and Arunachal Pradesh. Post the launch of the Startup India Project 2016, there was a huge development in the startup policies in India. Such regulations are important to ease the process of following rules and providing incentives which eventually creates a favorable atmosphere for entrepreneurs. Many of these regulations talk about the entire development of the startup ecosystem in the country by offering incentives to various startup actors like incubators, colleges like the IITs, and other higher education institutions.
India lays the foundation for government support to create a vibrant startup ecosystem in the country. Such as "Simplification and handholding," "Funding support and incentives," and "Industry-academia partnership and incubation" are covered. As part of the Start-up India Initiative, the government implemented the Fund of Funds for Startups (FFS) and the Start-up India Seed Fund Scheme (SISFS) to provide financial help at various stages of a start-up business's lifecycle. Both programmes are in place across India and are reportedly assisting startup founders in getting a foothold in their respective industries.