As India continues to take swift steps towards digitalization, fuelled by policy reforms, technological innovation and digital transformation, India’s start-up ecosystem is looking at the threshold of the next wave of growth by leveraging new technological innovations. The National Association of Software and Services Companies (NASSCOM), has launched their report on the Indian Tech Start-up Ecosystem – Leading Tech in the 20s, at the side-lines of the of the 16th Anniversary Edition of NASSCOM Product Conclave 2019.The report has been commissioned along with Zinnov.
Adding over 1300+ start-ups in 2019, India continues to reinforce its position as the third largest start-up ecosystem across the world, taking the total number of tech start-ups to 8900-9300 in the last five years. According to the report, investment in start-ups were steady with USD 4.4Bn in Jan to Sep 2019 across 450 start-ups at a 5 percent year on year growth trajectory. Funding saw a huge spike at the early stages (Series A, B) as well, with USD 1.6Bn being recorded at 70 percent y-o-y growth. The trend witnessed over the year was that start-ups are driving focus more towards the B2B space and almost half of the country’s start-ups are offering enterprise focused services.
India also witnessed the addition of 7 Unicorns in 2019 till Aug, taking the total tally up to 24, which is the third highest number of Unicorns in a single country in the world. Among the new unicorns, it was commendable to see that sectors such as gaming, SCM & logistics and automotive are receiving the recognition they deserve. There are also over 50 potential unicorns in the country at present that have received cumulative funding > USD 50 Mn; pool grew 3X over last year with 35 new additions in 2019.
Speaking on the occasion, Debjani Ghosh, President, NASSCOM, said, “The start-up landscape in the country is becoming the epitome of innovation, with companies bringing out solutions that are aimed at solving locally relevant issues. However, to simulate innovation, government and corporates need to focus on increasing their role as prominent stakeholders playing the part of venture capitalists and providing the appropriate market access, funding, and guidance to seed stage start-ups.
Today, India stands at a very exciting threshold, with the advent of several new technologies, newer avenues have opened. Deep-tech is no longer a mere conversation, but is already seen as a tangible, exciting prospect, enriching lives and enhancing the potential for innovation. There has been a rapid growth in the number of deep-tech start-ups as well as start-ups focusing on the underserved markets. Increase in internet penetration, better infrastructure for digital transactions and the Indian government’s push towards digital inclusion have evangelized start-ups. Entrepreneurs are now focusing on creating solutions using deep-tech such as artificial intelligence, analytics, augmented reality/virtual reality, blockchain and internet of things, among others. Over 18 percent of all start-ups are now leveraging deep-tech, which means there are over 1600 such companies in India. This number constituted only 8 percent of start-ups incepted in 2014 and has seen a 40 percent CAGR over the past five years.
Debjani Ghosh further added, “Indian start-up ecosystem has definitely come a long way in providing a level playing field for innovators to flourish by strengthening capabilities and fostering co-creation. The next wave of growth will be at the junction of convergence of technologies, where different sectors will embrace digital to re-define their operations.”
The country has over 335 active incubators and accelerators with a capacity to enable over 5000 start-ups every year. More than 65 percent share of incubators and accelerator programs were added in the last five years, out of which 57 percent are active outside Tier 1 cities. The robust start-up ecosystem of India is at a cumulative valuation of USD 95-101Bn and has given rise to 390,000 – 430,000 direct jobs with over 60,000 jobs in 2019 alone.
NASSCOM aims to accelerate this ecosystem significantly by 2025. This entails increasing the number of unicorns to 95-105 potentially and the cumulative valuation to USD 350-390Bn. The target is to also achieve 1100-1250k direct jobs in the start-up ecosystem by 2025. This can be done by improving certain capabilities in proving institutional support at the early stages, so start-ups can tap global markets as well as local markets with ease in public procurement norms and processes. NASSCOM also recommends building sector specific initiatives such as global centres of excellence (or innovation clusters) for each industry along with industry-specific physical and digital sandboxes. Another area that requires attention is increased corporate and equity investor participation at pre-seed and seed stages; expansion of CSR guidelines to increase capital availability and encouraging the establishment of corporate innovation labs. NASSCOM will continue its drive towards catalysing emerging tech start-ups, build category leaders and support them to create not only for India but also scale up and solve for the world.
If you have an interesting article / experience / case study to share, please get in touch with us at [email protected]