Startups

India's Startup Ecosystem Now Boasts of 7,700 Tech Startups

According to NASSCOM's report, Bengaluru is the third biggest startup ecosystem in the world
India's Startup Ecosystem Now Boasts of 7,700 Tech Startups
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Entrepreneur Staff
Features Writer
4 min read

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India’s startup ecosystem has become a talking point for the entire world. With hundreds of innovative youngsters choosing to pursue the path of entrepreneurship instead of joining the multinational corporations and government ventures, the business world has witnessed an explosion of ground-breaking startups providing solutions to the real problems at a mass level in the past years.

2018, in particular, was the year of Indian startups venturing into the unicorn club. 8 Indian startups - Freshworks, Oyo, Swiggy, Zomato, Paytm Mall, Policybazaar, Udaan and Byju’s – crossed the $1 billion valuation mark this year and joined the league of 18 Indian unicorns, most new entrepreneurs look up to. The credit for such massive growth could be given to the jump India observed in funding.

Apart from Indian venture capitalists, a high range of global investors showcased interested in the activities of homegrown startups and pumped huge amounts in the system to further capitalize their activities. India, today, proudly stands as the third largest startup ecosystem in the world after the United Nations and the United Kingdom with a total of 7,700 tech startups.

A recent report by the software lobby NASSCOM on the state of startups in India has shed light on the tempo at which the nation’s business ecosystem is growing and notably, the figures are positive from all the aspects. Still, there are concerns which were also addressed in the report.

Startup Addition

The Indian government has been taking conscious efforts to push the startup ecosystem in the country by hand-holding at various stages. From ideation to funding and more, the Startup India programme launched by Prime Minister Narendra Modi was a step to ensure the continuous creation and working of innovative startups in the country. Technology, specifically, garnered the major limelight throughout.

While India observed a slowdown in 2017 when only 1,000 tech startups were added to the system, the nation caught up in 2018 with the inclusion of 1,200 new tech ventures. In terms of advance tech, startups seemed 50 per cent more active this year. Notably, the pace of growth has doubled to 15 per cent year-on-year with respect to startup addition in 2018 along with the total funding that has reached $4.2 billion so far.

Funding Growth

While startups struggled through 2017 to garner a respectable amount of funds, 2018 has been the year of aggressive investments. India witnessed a 108 per cent growth in the total funding scenario from $2 billion to $4.2 billion. While investments at the later stages witnessed a massive growth of around 250 per cent from $847 million in 2017 to $3 billion in 2018, a decline was observed in funding for companies at the seed stage.

The seed stage funding has declined from $191 million in 2017 to $151 million in 2018 for Indian startups, which is a matter of concern. "In terms of overall funding, it is a good story. However, we are seeing a continuous decline in seed stage funding of startup companies. If you fall at the seed stage, innovation is hit. It is the area, which needs protection," said NASSCOM president Debjani Ghosh to the reporters.

Job Creation

The addition of new startups to the system obviously increases the number of employment opportunities available. NASSCOM report suggested that the growth in the ecosystem led to the creation of 40,000 new direct jobs whereas indirect jobs also increased threefold. The total employee base in the Indian startup ecosystem today stands at 1.7 lakh.

As the nation witnessed an explosion of female voices calling out powerful men and women for exploiting their rights, women took over the reins in their own hands. The number of women entrepreneurs increased to 14% from 10% and 11% in the previous two years respectively. While enterprise software, fintech, healthtech marketplace and edutech remained the key drivers of employment, data analytics, artificial intelligence and IoT startups are also witnessing a fast growth.

Global Potential

India has the potential to become a startup hub due to the enormous opportunities present in the current scenario. Globally, the nation stands as the third biggest startup ecosystem in the world and Bengaluru has become the birth point of major tech ventures. The report has identified India’s IT hub has the third city with the highest number of startups after Silicon Valley and London in the world.

It also noted that 40% of the startups are formed outside Bengaluru, Delhi NCR and Mumbai, showing a rise in the number of startups in Tier 2 and Tier 3 cities. The year also witnessed more than 400 plus startups expanding globally including travel and hospitality company Oyo, cab aggregator Ola, edutech Byju's, Zomato and Wittyfeed, the report mentioned.

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