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India's transition from obscurity to emerging as the third largest startup ecosystem in the world

India's transition from obscurity to emerging as the third largest startup ecosystem in the world
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With many unicorns taking form, it has instilled confidence in the young dreamers who want to make it big in this space. A recent NASSCOM report substantiates the fact that India has taken giant strides on this front and has become the third largest startup ecosystem in the world. Three to four startups are born in India every day and funding of a remarkable $5 billion has already been pumped in so far this year.

What’s more exciting is that according to a recent report by World Bank, India’s ranking in the ease of doing business has improved remarkably. It has jumped 12 ranks to reach 130 as compared to 142 last year; its biggest leap ever. Last year, India’s ranking had slipped a few notches and had reached 142. The government aims to bring India in the top 50 lists in 3 years time. World Bank focused in its report that India is one of the countries that have made the most improvement.

It is very motivating for the Indian startup ecosystem to reach this stage from obscurity.  While the Internet penetration and growth in consumer base has been one of the important factors that have given a big push to the startups, there are several other factors that are equally important. Right from various government initiatives to growing number to venture capitalists, accelerators, mentor network in India and the massive funding that is coming in the country are major factors favoring the startup scene like never before.

Let’s first talk about the government initiatives to boost the startup ecosystem that has found mention in the World Bank report as well. Government of India in the Union budget announced special Budget of Rs. 10,000 crore for startups to show how important this sector is for the economy. Make in India and Design in India Campaign is another initiative that has given a major fillip to Indian startups especially the ones who were looking to set up manufacturing base in India, attract foreign investment or tie-up with foreign companies and reach out to consumers globally.

To reduce the red tape in the affiliation of businesses that required up to 8 forms earlier, the government launched a single form registration for new business in May this year. Other initiatives like Digital India aim to further increase internet penetration in the country while the Skill India initiative aims to train more than 40 crore people in India by 2022 to leverage the new opportunities that created, thereby strengthening the ecosystem further.

The startup scene in India is also on a roll because of the sudden surge of VCs, angel investors, accelerators, mentors and the incubators in recent years, both foreign and domestic. The kind of valuations that Indian startups have been witnessing and the huge investments they have been getting have never been heard of in the system before.

Between Q1-Q3 this year, more than 7.3 billion dollars were put in Indian startups across approximately 639 deals. The access of capital flow has increased all the more with the Indian ecosystem attracting even savvy investors like Softbank and DST Global apart from the big foreign VCs.

Then there are platforms like Applyifi that are actively involved in helping startups raise funds, those like iSpirt that offer opportunities to startups to collaborate with global giants and many mentors out there who are helping young dreamers reach their milestones.

Even local investors who were extremely cautious a year ago are in no mood to miss the party, and have hopped onto the bandwagon. Even initiatives like the Nasscom 10,000 Startups have ensured that budding entrepreneurs in the tech segment get the right environment and support to not only grow, but also scale globally.

What’s interesting is that even corporate stalwarts like Narayan Murthy, Ratan Tata and Azim Premji, SD Shibulal, Kris Gopalakrishnan etc. too are pumping in huge money in startups and lending them their invaluable expertise. Entrepreneurs of successful startups too have taken on the role of mentoring and investing in new startups and acquiring the ones, which are in sync with their business. To add to it, many HNIs and individuals are actively considering them as an attractive investment option, parking their hard earned money via crowd funding and other platforms in startups.

A point to be noted is that the Indian startup ecosystem has also managed to catch the attention of global investors. A case in point is the Japanese investor interest in India. I had mentioned in the beginning of 2014 that this year will see around $350million worth of PE/VC deals in e-com and tech space by Japanese investors.  Surpisingly, it over shot this with over 1 billion (via VC’s) by October 2014!

The entrepreneurship fever has already hit youngsters as young as school or college students. To encourage the entrepreneurial streak in them and foster innovation, most universities and colleges now have their own entrepreneurship cells as well. Right from IIMs to IITs and BITs, and even the lesser known educational institutions, fostering entrepreneurship is taken very seriously and they are even connecting with startups to help their students get on-the-job experience of working with new ventures.

All these factors together have been instrumental in putting the Indian startup ecosystem on the world map…and this is just the beginning of a whole new era for startups in the country!