Hailed as the third largest ecosystem in the world, the Indian start-up ecosystem has witnessed exponential growth in the past few years. With about 54,000 DPIIT recognised start-ups, over 50 unicorns and a beeline of IPO-bound companies — the 2021 start-up ecosystem is anything but small.
Amid growing valuations and accelerated digital adoption, Indian start-ups have made some eye-popping deals this year. For instance, decade-old Byju’s bought a 30-year-old company Aakash Educational Services for a cool $1 billion to strengthen its test-prep business. This was closely followed by healthtech start-up PharmEasy’s decision to acquire a 66 per cent stake in public-listed healthcare company Thyrocare.
Ever since April 2021, one or more start-ups have joined the $1bn valuation club, adding 23 new unicorns to India’s tally in just this year. But the start-up ecosystem was not always this vibrant. For many tech companies, the journey to this point has been a slow but steady sprint of 10 or more years.
Most tech companies like Zomato, CarTrade, MobiKwik, Paytm, Nykaa, PolicyBazaar have had to sustain through changing tech policy space, external shocks like GST, demonetisation, credit crisis, and two waves of a Covid-19 pandemic to arrive at this point of public wealth creation and investor exits.
This boom in the start-up ecosystem has also been equally driven by the Indian government’s efforts and vision of boosting entrepreneurship. After the announcement of Startup India in 2015, the Narendra Modi government has worked on a slew of start-up related policy reforms including funding support, State level start-up policies, and learning and development programs for start-ups, among other initiatives.
According to the government’s ‘Evolution of Startup India: 5-year report’, between January 2016 to December 2020, start-ups created 4.7 lakh jobs, ₹4,509 crore investments made in 384 start-ups through the ₹10,000 crore Funds of Fund, and 30 States and Union Territories have a dedicated start-up policy.
$5 trillion economy
Prime Minister Narendra Modi has time and again noted start-ups and innovation as a crucial contributor to India’s dream of becoming a $5 trillion economy. India is now the fastest tech start-up hub in the world and is already halfway ($2.7 trillion by GDP) towards the target of becoming a $5 trillion economy.
“Capital and oil are India’s two most significant imports. In order to build a $5 trillion economy by 2025, we will have to attract $100 billion of FDI into the economy every year. Our start-up ecosystem acts as a magnet for global and domestic capital and channels this capital into job creation and consumption. Start-ups have emerged as one of the principal engines for job creation, CAPEX, and consumption in the Indian economy.” said Gopal Jain, Co-founder and Managing Partner, Gaja Capital.
Entrepreneurship breeds economic development, and sustainable economic development has been the key driver of a better quality of life across history. Being the drivers of innovation, start-ups help countries find new ways to solve age-old problems and discover more efficient ways of operation.
Across disparate fields such as e-commerce, communication, software, AI, biotechnology, and mobility — entrepreneurs have taken it upon themselves to try and create better solutions for real-world problems. It is interesting to think that services like ride-hailing, food delivery, digital wallets, which we take for granted today, did not even exist ten years ago.
“Businesses that are driving India’s digitisation wave will push our economy in the right direction of technology adoption, enabling consumption and creating more job opportunities. And, thus undoubtedly play a pivotal role in boosting the economy,” said Sanjay Swamy, Managing Partner, Prime Venture Partners.
Adding to this, Siddarth Pai, Founding Partner of 3one4 Capital said that in this digital world, the wealth of nations will be defined not by property but by patents. “The sheer volume of IP being generated by start-ups, in the form of designs, codebases, new business models, will help India leapfrog years of economic progress and accelerate its rise to a global superpower. The problems that Indian start-ups solve will be the benchmark for solving the issues of the rest of the world. Silicon Valley built for the first one billion internet users – it’ll be India that builds for the remaining six billion,” Pai added.