Startup Ecosystem in India

The startup ecosystem in India has seen tremendous growth over the last decade or so. A few decades ago it was highly unlikely that a college graduate would leave a high paying job in some multinational company and launch a startup. However, the situation is completely different now. According to NASSCOM’s most recent report, India now ranks at an impressive third position globally in terms of fastest growing startup ecosystem with over 3100 startups. According to the report this number will increase to 11,500 by 2020.

Traditionally, companies in India have taken a conservative approach to build and grow their business; a route that takes several years before the business is profitable. However, the new breed of “startup entrepreneurs” are more fearless and are not afraid of taking risks and experimenting. Startups in India are penetrating all kinds of markets, ranging from products to services. Not only has this made easier for consumers to access these products and services but the large customer base has also meant huge profits for these relatively young companies. Moreover, local startups are taking on incumbents. For instance, Flipkart and Ola are competing with international giants such as Amazon and Uber respectively for market share.

There are a number of reasons that have fueled this exponential growth of startups in India, such as urbanization, busy schedules, and improved lifestyle among others. As more people are moving to cities the demand for on-demand home services has increased. This demand has given birth to startups such as HouseJoy, Taskbob, Mr. Right, UrbanPro, Qyk, and Doormint that provide services ranging from plumbing to health and wellness to event planning.

The government has also played an important role in creating a conducive environment for start-ups. Programs like Make in India and Digital India are assisting the startup ecosystem in the country. The government last year announced the “Startup India” program. The Startup India campaign is expected to boost the startup ecosystem by introducing key reforms.

This boom in the startup ecosystem has also attracted a lot of investors. As a result there has been an upswing in funding. In 2015 alone, more than $9 billion was invested in startups. To put things into perspective, this is equivalent to the cumulative funding in the period 2010 – 2014. The number of active investors in India too has increased manifolds.  However, it is not just Indian investors who are taking notice of this revolution. A number of foreign investors have started investing in India as well. With entry and exit strategy becoming easier because of key reforms, foreign investors are more willing to make investments. Making big bets on Indian innovation has become a global point of interest.

In conclusion, the future of startups in India looks very promising. India right now has the right mix of factors to support and sustain startups. It remains to be seen which of these startups goes on to become the next big idea. It would not be unfair to say that India is definitely a country to watch out for in the future.

Saharsh Sinha
Tulane MBA Candidate, 2016