India Retains Third Position as the World's Largest Startup Base, Expected to Double by 2020
Amidst the popular belief of the Indian startup ecosystem’s slowdown, India continues to harbor the third largest start-up base, marginally behind the UK as per the NASSCOM-ZINNOV start-up report titled “Indian Start-up Ecosystem Maturing – 2016”. The report further states that the ecosystem is poised to grow by an impressive 2.2X to reach more than 10,500 start-ups by the year 2020. The report was launched on the side-lines of NASSCOM Product Conclave 2016 in Bengaluru today in the presence of Mr. C.P. Gurnani, Chairman, NASSCOM; Mr. R. Chandrashekhar, President, NASSCOM, Mr. Ravi Gururaj, Chairman, NASSCOM Product Council and Mr. Pari Natarajan, CEO, Zinnov.
KEY HIGHLIGHTS
* 1400 new start-ups expected in 2016, up by 8-10% from last year
* 80+ M&A deals expected in 2016; ~60 already successfully executed; 95% of the deals by Indian organisations – start-ups, unicorns and corporates
* 140+ Accelerators/ Incubators(Over 40% YoY growth in 2016
* 100,000 employed at startups
* 350+ active angels, up 20% from 2015; new breed of angels with domain experts
* 8% increase in no. of deals, more investment in B2B;
* 8-10% of start-up from tier 2/3 cities – broad basing the start-up ecosystem
* 2x growth of core technology (IoT, ML/AI, Robotics) start-ups
Some of the notable findings of the report include; continued growth in the number of startups in 2016, with Bengaluru, NCR, and Mumbai continue to lead as the major start-up hub for the nation. In terms of vertical growth, investors are looking at domain like health-tech, fin-tech, and edu-tech. With a total funding of approximately ~USD 4 billion, close to 650 start-ups were funded signifying an aware and healthy growth of the ecosystem.
Speaking on the side-line, Mr. R. Chandrashekhar, President, NASSCOM, said, “Technology start-ups are creating a new identity for India and its technological prowess. They are defining the way the world operates making life better and easier for people and businesses alike. Our start-up report is a testimony to the potential of the start-up landscape and the scope of growth and opportunity that India presents. NASSCOM has always been working towards creating a heterogeneous bond between all stakeholders and craft a conducive and innovative environment for start-ups to grow.”
Mr. CP Gurnani, Chairman, NASSCOM, while talking about the growing start-up ecosystem in India said, “The start-up landscape in the country is becoming the epitome of innovation, with companies bringing out solutions that are aimed at solving locally relevant issues. Today, India is brimming with new ideas which need the right guidance and funding to be scalable for the market. It’s a great time to be an entrepreneur in India with opportunities abuzz – both globally and in domestic markets. NASSCOM believes that the contribution by start-ups has been growing at a rapid rate and the landscape has a huge potential in terms of business stability, revenue growth and further innovation.”
Mr. Ravi Gururaj, Chairman, NASSCOM Product Council, said, “The start-up landscape is undergoing great churn with fast-paced changes happening across the board. Owing to focused funding and a growing need of scaling up capabilities, Indian entrepreneurs will continue to attract global attention due to a perfect mix of talent, technology, traction and transactions. With Indian start-ups now churning out critical services and solutions for large multinationals, riding on the digital revolution which is encompassing the world; the situation for Indian start-ups is only going to get better.’
Further, according to the report, the number of tech start-ups in India is expected to grow by 10-12% to over 4,750 start-ups by the end of 2016. Interestingly over 1400 new startups have emerged in 2016 denoting that that the ecosystem is becoming prudent with both investors and start-up founders focusing on profitability and optimizing the overall spend. With this impetus, India will become home to over 10,500 start-ups by 2020, employing over 210,000 people reveals the report.
Furthermore, incubators and accelerators are playing a substantial role in strengthening the startup community throughout India. The report highlights the significant rise in number of accelerators to improve startups’ outcomes and provide them with a support that they require. With impetus from Government and Corporates, there is a 40% increase in the number of active incubators and accelerators in 2016 with over 140 active incubators, helping entrepreneurs experiment with new ideas by offering them functional expertise and resources. Over 30 new academic incubators have been established under the Government’s ‘Start-up India Stand-up India’ initiative this year. With the country showing signs of increased interest in entrepreneurship, Tier-II/III cities have established 66% of the new incubators.
Unbound by the fear of failure or downturns, a new breed of ‘young’ entrepreneurs is unleashing an incredible wave of start-up movement in the country. The report reveals an increased interest from student entrepreneurs this year. A remarkable growth of 25% has been witnessed in 2016 with 350+ start-ups founded by young students. Median age of start-up founders has reduced marginally from 32 years in 2015 to 31 years in 2016.
Talking about investments, the report states that investors are increasingly looking at opportunities in start-ups in areas other than online retailing. The sentiments are high for ventures in verticals like Fintech, Healthtech, Edutech, data analytics, B2B commerce and artificial intelligence.
