Indian Start-up Ecosystem Past and Present
Ancient Times ( till 18th century)
The concept of business and trade is not new to Indian land. Since the 1st century trading activities flourished in India till the 18th century contributing to 24-25 percent to world’s GDP. Only after the advent of the industrial revolution and invasion of the west, India’s share fell considerably. Thereby, the idea of starting, owning and running businesses is the genesis of every Indian.
Post-independence entrepreneurship started to take a new shape, starting a revolutionary change but due to lack of support from government, rigid policies, tax systems and lack of research initiatives led to the slow-down of the growth of entrepreneurship in India. In mid-80’s the ‘Liberalisation of Computer Industry’ was declared followed by NASSCOM in 1988 the Indian Start-up ecosystem gradually progress in economic and social sectors.
Era of internet and start-up
The dotcom era and emerging of VSNL’s first commercial business, in 1995 exposed Indians to ‘World Wide Web’ (www). The following year, Advent Net entered and boosted the IT economy. The people and the market took it’s time to understand the evolution of the market until India witnessed the birth of new business ventures such as Flipkart (2007) as a leading e-commerce company which were followed by BookMyShow, Zomato, Myntra and Quikr (2008). The economy was not completely ready but novelties for the idea yielded them high revenues through the years.
A tremendous landscape has evolved from the 80’s landscape and in 2015, 600 companies acquired funding through Private Equity and Venture Capitalists of over 2bn. The tech-start-up space was the experience a boom with Sequoia Capital and Steadview investing about USD 700mn in Flipkart, Alibaba, Softbank and others in Snapdeal and many other start-ups. Therefore, the cumulative income crossed USD 100mn mark.
Government and other agencies support
In 2013, National Association of Software and Services Companies (NASSCOM) initiated ‘10,000 Start-ups’ to aid 10,000 start-ups in the country over the next 10 years, to build entrepreneurial capabilities and bring in an evolution under F.A.M.E model: Funding, Acceleration, Mentoring and Enterprise Connect.
The involvement of organisations funding across the world, gained traction for NASSCOM, TIE, CII and growing support from micro players, incubators, flexible start-up policies and government intervention led the government to announce ‘Start-up India’ campaign, in 2016 urging 1.25 lakh bank branches across India to fund at least one start-up. Since the launch, as of June 2018, 10,272 entities have been recognised by the Department of Industrial Policy and Promotion (DIPP).
Third largest start-up ecosystem
December, 2018, India becomes the 3rd largest start-up community after the United Kingdom and the United States, with 14,600 start-ups recognised under start-up India. Maharashtra (2587), Karnataka (1973) and Delhi (1833) account to majority share of start-up concentration with industries ranging from Fintech to Food-tech, Robotics and Agri-tech.
The Union Budget, 2018-19, increased allocation of some of its flagship program. - Reduction of corporate tax to 25 percent for companies having an annual turnover of INR 2.5billion in FY 2017. - INR 2.8billion has been allotted to Investment Promotion startup India Scheme, which aims to facilitate and support 1000 startups by 2019. - INR 7.2billion has been allotted to 70 technology business incubators for innovation and technology development. - To enrich the entrepreneurial talent in the country, amount of INR 878million has been reserved for the development of entrepreneurship scheme.
In addition, they are few more initiatives that have proven beneficial Goods and Service (GST), ‘Skill India’, ‘Make in India’, ‘Digital India’ as such. Although, the government has taken the right steps, the slow implementation and lack of awareness of the available resources and options for the start-ups, the growth of start-up ecosystem is impacted.
Trends in start-ups
There is an increased focus of Indian Start-ups on advanced technologies i.e., ML, AI, IoT, Big Data. The most popular sector attracting most investors are the Fintech start-ups. Bangalore, Delhi NCR are leading start-up hotspots, though Tier 2//3 cities are not far behind.
An increased involvement of large corporations, private incubators and accelerators is adding as an asset to the ecosystem.
Although, a study by the IBM Institute for Business Value and Oxford Economics, “Entrepreneurial India’, reads about 90 percent of Indian start-ups are said to fail within the first five years. The reasons could be plenty in number but few reasons that stare at the economy are as follows: 1) Lack of innovation 2) Misunderstanding the targeted market 3) Lack of funding opportunities or 4) Understanding the basic bootstrapping, accounting and regulatory rules of the government.
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