The newfound startup revolution in the country has been offering innovative solutions and the much needed technologies, along with generating large-scale employment. Within the last five years, since the launch of Startup India Campaign on January 16, 2016 by Prime Minister Narendra Modi, the country has become the third-largest startup ecosystem in the world with 61,400 DPI IT recognised startups spread across the 636 districts of the country as of January 10, 2022. India today, with 90 unicorns, is the third largest unicorn hub, behind the US (487) and China (301) and ahead of the UK (39).
Bangalore Beats Chinese Startups
Bangalore has beaten Beijing and Shanghai in terms of startup funding. Bangalore's startups have raised more funds in 2021 than those in any Chinese city including the Chinese premier startup hubs of Beijing and Shanghai. In 2021, Banglore's startups raised $18.6 billion (Rs 1.39 lakh crore) in funding. In comparison Beijing's startups raised a total of $13.8 brillion (Rs 1.03 lakh crore), while Shanghai's startups raised a total of $13.4 brillion (Rs 1 lakh crore). Indeed, work from home during the pandemic fuelled the growth of digital businesses in India and worldwide.
Three factors – a thriving digital payments ecosystem, large Smartphone user base and digital-first business models – have contributed immensely. Moreover, the tech companies as well as smartphone penetration and digitisation of commerce have also contributed a great deal. Besides Fintech, e-commerce grocery, SaaS and marketplace players have also helped the unicorn revolution.
Diverse and Exponential Growth
The Indian startups have come of age and rank 2nd in their quality of innovativeness for solving the problems in almost more than 56 diverse industry sectors. The major sectors of their presence and outreach include IT services (13 per cent), healthcare and life sciences (9 per cent), education (7 per cent) professional and commercial services (5 per cent), agriculture (4 per cent), food and beverages (4 per cent). In the last six years between 2015-21, the total funding in startups has increased seven fold. The number of incubators also increased sevenfold and the number of investors to nine fold.
Rise in Indian Unicorns During COVID Times
The preceding three years 2021, 2020, and 2019 have witnessed the birth of the maximum number of Indian unicorns 44, 10, and 9 unicorns respectively. COVID-19 has caused an economic downturn at home and abroad, but during this same time the resilient Indian startup promoters have endeavoured effortlessly to contribute to the economy as well as towards COVID-19 relief efforts.
In 2020, the country witnessed the birth of 10 unicorns. But, it was a downpour of unicorns in 2021 with 46 unicorns pumped in the ecosystem and many more queuing in line for 2022.
What is Startup?
What is Unicorn?
Till FY 2016-17, approximately one unicorn was being added every year. Over the past four years from FY 2017-18, this number has been increasing exponentially, with a 66 per cent annual growth in the number of additional unicorns being added every year. As of now, India is home to 90 unicorns with a total valuation of over $ 285 bn. A miraculous number of 46 unicorns with a total valuation of $ 94 bn has been added in 2021 alone.
Incubation Centres Strengthening Startup Ecosystem
Incubation centres hold the key to enhance the pace of startups. The survival rate of startups is markedly better supported by incubators or incubation centres
Growth of startups has also been throwing new opportunities for the components of the startup ecosystem. All the constituents of the startup ecosystem viz. Angel investors, venture capital funds, media, startup clubs, various service providers, mentors and training companies are also going to thrive. Incubator or incubation Centre, which facilitates them to bring their business in shape, before they reach out to the world, is an important component of the startup ecosystem.
In India, most incubation centres are hosted by an academic institute, and funded by the Department of Science and Technology. They give them access to Government agencies, as well as easy reach to experts, angel investors, venture capitalists etc.
PM Declares Jan 16 as Startup Day
To give a strong boost to India’s growing startup ecosystem, Prime Minister Narendra Modi announced that January 16 will be celebrated as National Startup Day. It was on January 16 in 2016 that the Startup India Campaign was launched.
PM Modi announced on this day that startups will be the backbone of new India. He suggested many areas where the startup fraternity can play a major role including EV charging infrastructure, defence manufacturing, chip manufacturing offers and drone industry while interacting with over 150 startups during the Startup India Innovation Week. It was organised by the Department for Promotion of Industry and Internal Trade (DPIIT).
The PM highlighted those 46 startups which turned unicorns last year – more than doubling the total tally to 90 in a year. Thus, the country is soon going to hit a century. He also mentioned that India has now reached the 46th spot in the global innovation index, up from the 81st rank earlier
The PM had interaction on January 16 with the founders of startups operating in sectors like the EV charging infrastructure, defence manufacturing, chip manufacturing and drone industry etc. The PM highlighted those 46 startups which turned unicorns last year – more than doubling the total tally to 90 in a year. Thus, the country is soon going to hit a century. He also mentioned that India has now reached the 46th spot in the global innovation index, up from the 81st rank earlier. There are more than 50 Government schemes for support to the startups in India, which would give further impetus to startups in the country.
Indian Startups Alleviate Poverty
There is a huge need for innovative solutions, particularly those that alleviate poverty and benefit a large number of people. Indian startups have developed this potential due to the post-COVID-19 resource constraints. They have developed potential to offer low-cost and high-impact solutions needed in the current markets. Over the last few decades, technological change has reduced the cost of building digital products and has provided access to consumer markets. Technology startups play a crucial role in accomplishing this, because of their potential for scalability and exponential growth.
Addressing Needs of Domestic and Foreign Customers
India’s huge diversity in culture, language and ethnicity has proved to be a blessing for startups. Indian startups are well innovative and the solutions developed by them are highly successful and effective in addressing the needs of diverse customers pan-India. Out of their creative innovativeness they can find market uptake in other polities such as Africa, Latin America and even in the developed world. Many innovative and tech startups from India focus and endeavour at offering customised solutions for markets abroad. Indian startups often do pilots and serve customers in the United States and Europe and tap wider markets with a higher ability to pay.
To sum up, the startups have almost taken the world by storm, and the Indian startup scenario is no less buoyant. It has been achieving an impressive year on year growth, and there seems to be no stopping anytime soon. If we take a look at the Indian Startup ecosystem, it really looks quite diverse. The startup sectors in India have wide presence and can be broadly divided into two segments- (i) tech-based startups and (ii) non-tech based startups. The tech-based segment includes sectors like Fintech, E-Commerce, Edtech and Healthtech, whereas the non-tech based segment includes agri-products, construction, textiles, etc. Sectors like e-commerce have become mature and seen a lot of growth. However the industry sectors like Fintech, Edtech and Healthtech have now been coming into the limelight. It's going to grow at an accelerating pace with more diversity and innovations. India already ranks at number of MSMEs, almost 6.33 crore. Soon India would emerge as number one in the startup ecosystem as well.