3 Factors That Led to an Increase in Indian Start-ups The number of start-ups in the country has jumped from 471 in 2016 to a gigantic 72,993 in 2022. Building a start-up is no longer a theory or dream. It is very much a reality.
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Ten years ago, no one knew what entrepreneurs or start-ups meant or what they did. Simply put, it was a lowly choice that one made if they did not make the cut for other socially accepted choices such as government or multinational company jobs.
Cut to the present; it will not be an exaggeration to say having a start-up is the first choice for a majority of our youth. Inmobi became the first Indian Unicorn in 2011; the number has now reached an impressive 108 as of 31st May 2023. Molbio Diagnostics is the latest to join the club.
"The success of the young entrepreneur will be the key to India's transformation in the new millennium," once said Dhirubhai Ambani, an industrial titan who kick-started Reliance Industries in 1958, which has now spawned into a $107 billion group of companies.
Minister of State for Commerce and Industry, Som Parkash, stated that the number of start-ups had jumped from 471 in 2016 to 72,993 as of June 30, 2022, which is a whopping increase of 15,455.80 per cent. He shared the statistics as a reply to a question in Rajya Sabha in July 2022.
So, what led to the increase?
1. Indian mentality finally chose chance over comfort
The employee-turned-founder mentality has been on the rise. Infamously termed the "Start-up Mafia", Flipkart, for instance, has singlehandedly given rise to 12 mafia start-ups. Top names in this include Paytm, Zomato, Flipkart, and Zynga.
But the biggies of the space feel it is all for good in the longer run. Vishesh Khurana. Co-Founder, Shiprocket appreciates the clarity, "When they join, they say teach us for three years, then we want to do our own thing."
"Start-up used to be a sector, which means most start-ups used to be fairly homogenous, some form of consumer technology etc, etc. Cut to today, it's become very different. Today's start ups is not a sector; today every sector has a start up. We are seeing start ups as regional as sector as health, agriculture, logistics, finance, etc. And as a result, the capital needs of start-ups have also changed," shares Rohit Bansal, co-founder, Snapdeal, AceVector, and Titan Capital.
2. Impetus by government
Government decisions and policies pertaining to start-ups have been lauded at large. Infrastructures such as UPI, GST, legal and investment, and grassroots schemes such as the Dairy Entrepreneurship Development Scheme, Credit Guarantee Fund Trust for Micro and Small Enterprises, and High Risk and High Reward Research are helping individuals take a high risk to follow their entrepreneurial dreams.
"I don't think our democracy has ever been valued so much from a business and international standpoint," shares Jaideep Singh Kalra, Director and Region Head, North India, HSBC Business Banking.
Asish Mohapatra, co-founder, OfBusiness, feels that the lack of government interference has to be one of the most integral parts, which is giving the ecosystem a push towards prosperity. Bansal echoes the feeling and believes that the Indian government has a huge intent to make the start-ups work.
Union Minister Rajeev Chandrasekhar is an active member when it comes to celebrating the start-up ecosystem in the country. He believes the country has the ability to scale to one lakh unicorns and almost 10-20 lakh startups in coming times.
3. Spotting opportunities
Finding a market which is still hidden and betting on it is an investor favorite recipe of success.
"I remember when Mamaearth started, everyone used to only buy Johnson & Johnson. Like 70-80 per cent of the market share was J&J. Baby products meant Johnson & Johnson. But what started happening was that people started getting richer; they said why should we buy what everyone buys? That created an opportunity which many large companies thought was too small, that there were a very few who would want to buy toxin-free products. But for a new company which is starting with zero, that small is large. And then in few years, what was a small population became a large population," shares Bansal on how budding entrepreneurs can identify changing incomes and create opportunities.
PayTM, Freshworks, Zerodha, Snapdeal, and ideaForge are a few notable players to have got the first movers advantage.
Bonus: Way ahead on Corporate Governance
One cannot go without discussing start-ups without mentioning corporate governance and its recent cases. It broadly is defined as mechanisms, processes and relations by which corporations are controlled and operated. All's good, but this elephant in the room is scaring investors and potential start-up founders. What should the founders keep in mind?
Mohapatra lists out four points- compliance, governance, ethics, and morals, "I personally feel the institution that you build will be good to great depending where you are on the spectrum."
The comments were made at the sidelines of Recur Club's event Building in Bharat2.0 with the theme "How startups of today can be Industries of tomorrow."