Startup Scene India: Stats, Successes and Struggles

Over the past few years, India has seen a sudden mushrooming of startups across various industries, specifically in the technology sector. Further, as many of these new ventures have been attracting millions of dollars in funding, there is an air of optimism and growing confidence in the Indian startup community.

Statistics shared by NASSCOM, Techniasia and WorldStartup Report clearly highlight the presence and growth of startups within an economically emerging India.

• India is the 3^rd largest and fastest growing startup ecosystem in the world
• On average about 970 technology related startups come up every year in India, of which about 380 incorporate the entity as a corporation
• By 2020, an estimated 11,500 startups would be set up, employing over 250,000 personnel
• Over 20 mergers and acquisitions worth approx. USD 1 billion have taken place in the last 3 years
• While 61% startups are focused on business oriented offerings, about 39% are geared towards consumer applications such as mobile apps, social networks and e-commerce among others
• With over 300 venture capital / private equity firms and more than 225 angel investors, recent years have seen funding deals worth approx. USD 2 billion
• On the downside, there is a high mortality rate of new ventures, with over 60% startups pivoting or going dormant within 12 to 18 months

The profiles of Indian entrepreneurs range from young inspired students to older experienced executives. Although the everyday problems faced by Indians often become the fuel of innovative solutions, most entrepreneurs would acknowledge the regulatory and technological challenges that impede their success. As per World Bank data, where it takes only 6 days to start a business in the United States, the official duration in India is 28 days. Also, India ranked 166^th among 183 countries in terms of ease of doing business. Lack of credit, paucity of exits, thick bureaucracy, deep-seated corruption, poor infrastructure and sluggish technological integration are some of the major challenges crippling the startup movement. A Gallup survey revealed that perceptions of widespread corruption in the business community are particularly high among current business owners (72%) and those who plan to start a business in the next 12 months (80%). Ironical to the nationwide enthusiasm for information technology, India has only 10% Internet penetration, 72% mobile penetration (mostly prepaid), and 3% smartphone penetration, in a population of over 1.2 billion.

Learning to take these problems of an emerging economy in their stride, several successful ventures have been able to cut through the red tape and focus on innovation to produce products with domestic and global relevance. E-commerce, matrimony and travel startups have seen much glory in India. E-commerce, which happens to be the most prevalent offering, has become a fierce battlefield. Flipkart (which acquired fashion retailer Myntra for close to INR 2000 cr. in mid 2014) has been the poster child of Indian startups since being founded in 2007. Other major players in this segment include Snapdeal, LimeRoad, UrbanLadder, Yebhi and Homeshop18 among others. Lured by the growing demand, US e-commerce giant Amazon made inroads into the Indian market in 2013 and is sure to use its experience to its advantage while adapting to the local context. Another impressive story is that of food review site Zomato that bought US rival Urbanspoon for USD 5 million. Other successes in diverse categories include CaratLane, FirstCry, YepMe and Hike.

Alongside budding startups, there is a growing presence of incubators, accelerators, angel investors and venture capitalists. These include AngelPrime, Startup Village, 500 Startups and SeedFund among several others. Publicizing new ventures and connecting entrepreneurs, the media and startup events have played a significant role as well. The noteworthy mentions here include VCCircle, NextBigWhat, Startup Digest, NEN, Startup Weekend and StartupSaturday among others.

Overall, the startup scene in India is on an upward trend, changing professional stereotypes, questioning redundant procedures, and learning from global benchmarks. Hopefully in the years to come, new ventures would grow beyond being local mimics of internationally successful startups and expand outside the Indian context.

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