India’s start-up ecosystem is beginning to show signs of scaling up, with the addition of seven new unicorns as of August 2019. This takes the total number of start-ups with a valuation of over $1 billion to 24, which is the third largest number of unicorns in a single country in the world.
According to a new report by Nasscom, titled ‘Indian Tech Start-up Ecosystem - Leading Tech in the 20s’, over 1,300 start-ups were added in 2019, reinforcing India’s position as a leading start-up ecosystem. This takes the total number of tech start-ups from 8,900 to 9,300 in the last five years.
According to the report, investment in start-ups was steady at $4.4 billion in January- September 2019 across 450 start-ups, at a 5 per cent year-on-year growth. Funding saw a huge spike at the early stages (Series A, B) as well with $1.6-billion investment being recorded at 70 per cent y-o-y growth.
The big trend witnessed over the year is that start-ups are focussing more on the B2B space and almost half of them offer enterprise-focussed services. The initial lot of start-ups was focussed on consumers and based on the heavy discounting model. The other major shift is there has been a rapid growth in the number of deep-technology start-ups.
Deep-tech companies are built on tangible scientific discoveries or engineering innovations to solve real-life problems. Entrepreneurs are now focussing on creating solutions using deep-tech such as artificial intelligence, analytics, augmened and virtual reality, blockchain and internet of things.
Over 18 per cent of all start-ups are now leveraging deep-tech, which means there are over 1,600 such companies in India; in 2014, only 8 per cent were working with this technology. As a result of these changes, there are also over 50 potential unicorns at present in the country.
Debjani Ghosh, Nasscom President, 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, governments and corporates need to focus on increasing their roles as prominent stakeholders playing the part of venture capitalists and providing the appropriate market access, funding, and guidance to seed stage start-ups.”
There is no dearth of initial funding, though.
The country has over 335 active incubators and accelerators with a capacity to enable over 5,000 start-ups every year.
More than 65 per cent share of the incubators and accelerators were added in the last five years, of which 57 per cent are active outside tier-1 cities. The start-up ecosystem of India, at a cumulative valuation of $ 95-101 billion, has created 390,000-430,000 direct jobs with over 60,000 jobs in 2019 alone.