In 2009, the movie Rocket Singh was released which portrayed the protagonist’s journey towards starting his own company, i.e. his startup. But, this movie was not commercially successful as it was much ahead of its time. The mass has just started to be acquainted with the concept of the startup. Had this movie released now, it would have been a blockbuster as everyone could relate to the travails of the central characters. At the beginning of this decade, the waves of the start-ups rose, and it reached climax by the end of the decade. As per the report of KPMG, the number of start-ups was 7000 in 2008 and it reached 50,000 in 2018.
The startup economy of India is growing at large; the metropolitan cities like Bangalore, Mumbai, Pune, Hyderabad have become the major centres of booming start-ups. There growth drivers behind start-ups in India are the increasing literacy rates, internet penetration, evolving needs and requirements of the vast and diverse user base, increasing urge to follow the passion and not continuing the regular 9-to-5 job, government support and initiatives, changing the perception of entrepreneurship and the digital transformation. The venture capital and the seed stage funding have also played an effective role in cushioning the prospects for start-ups in India.
In this decade, the startup has achieved a milestone in India. The reports of KPMG pointed out that, Mumbai ranked 7th globally in terms of venture capital (VC) deals in 2017. As per the “Startup India” initiative in 2018, Maharashtra has the highest number of start-ups in the country. Not only the tier-I cities but the tier-II and tier-III cities have participated in the startup explosion in the country, like Kochi, Patna, Lucknow etc. What else changed in the startup sector in 10 years? Let us scroll down to get the answer!
This decade has seen the growth of startup in all the sectors: service-based and product-based IT and non-IT sectors, finance, healthcare, biotechnology, education, agriculture, logistics etc. Have a glimpse in the chart below.
| Name of Start-up | Founded In | Place | Sector |
| Flipkart | 2007 | Bangalore | Ecommerce |
| Wow! Momo | 2008 | Kolkata | Food Chain |
| Ola Cabs | 2010 | Bangalore | Ride Service |
| Swiggy | 2014 | Bangalore | Food Delivery |
| Zomato | 2008 | Haryana | Food delivery |
| Shuttl | 2015 | Haryana | Ride Sharing Service |
| Treebo | 2016 | Mumbai | Hotel Chain |
| mFine | 2017 | Bangalore | Healthcare |
| Licious | 2015 | Bangalore | Meat Delivery |
| PayTm | 2010 | Noida | Online Payment |
| FreshtoHome | 2014 | Bangalore | Meat and Vegetable delivery |
| CoolBerg | 2016 | Mumbai | Beverage |
| RazorPay | 2016 | Bangalore | Payment Solution |
| DocTalk | 2016 | Mumbai | Healthcare |
| Vedantu | 2011 | Bangalore | Education |
| Cars24 | 2015 | Haryana | Car Insurance, buying second hand cars |
| PharmEasy | 2015 | Mumbai | Medicine delivery |
| PolicyBazaar | 2008 | Haryana | Insurance |
| UrbanLadder | 2012 | Bangalore | Home Decor |
| PopXO | 2013 | New Delhi | Women’s Fashion |
| UnAcademy | 2015 | Jaipur | Education |
| Bankbazaar | 2008 | Chennai | Finance |
| Myntra | 2007 | Bangalore | Ecommerce |
The above list of start-ups may seem to be a long one, but it is not even covering 0.0001% of the Indian startup economy. Now we know that the start-ups have expanded and it is not limited by the geographical boundaries of the nation. What is the reason behind this massive expansion? What changed in just one decade?
Growth Drivers of Startup
India is recognised as one of the largest and fastest-growing economies of the world, with its Gross Domestic Product (GDP) reaching US$ 2.726 trillion in 2017. As per the report by World Bank, in 2018 India’s GDP increased at a rate of 7%, thus making India one of the most prospective markets of the world.
India has the highest population of youth below 25 years in the world, which makes the nation thrive with young entrepreneurs and soloprenuers. The increasing literacy rates boost the per capita income of the masses, they are becoming educated and aiming to earn higher and climb the social ladder. The rate and type of consumption of upper-middle-class and higher segments are constantly evolving, giving rise to a gamut of demands. The diversity of India’s culture and language is a boon and a bane for the growth of start-ups.
Many start-ups concentrate in their local regions, whereas some aim for pan-Indian client base. Many start-ups are also able to reach global users via the Internet, like Latin America, Africa, Singapore and even developed nations like the USA where the clients are capable enough to make higher payments. The start-ups aim at fulfilling the demands of the consumers, giving them the highest priority. The online payment structures using digital platforms have gained the trust of the consumers across the Indian economy and this is the major reason behind the explosion of start-ups.
As mentioned in the post about the FMCG, Ecommerce and Retail sector, the start-ups are present across all industries, be it insurance, or healthcare, or pharmaceuticals or automotive. The entrepreneurs are making the best attempt to reach a larger spectrum of users fast and efficiently. The start-ups have their apps that can be downloaded and accessed via smartphones and other devices as per the convenience of the users.
Let us take an example of an app like Ola. There is an Ola app through which the users can book cabs, and make cashless transactions after the trip is completed by Paytm. All the actions are performed by the phone itself. The main aim of all the startup is to understand the demand of the consumers and design their service accordingly. Bulletproof and affordable payment structures help companies to gain trust. The social media explosion allows the start-ups to reach consumers at a closer and broader level. No promotion is bigger than the word of mouth, and social media is one such platform where the new-age consumers find their ideas from.
Technological Advancements In Startup
Since the economic liberalization and the invention of the Internet in the 1990s, the world has witnessed improved interconnectivity, leading to a greater scope of innovation. The domestic users are aware of whatever is happening globally, thus triggering their ideas and innovative techniques.
The growth of start-ups has defined the meaning of networking. Several start-ups, be it small or medium work solely via the Internet and other communication channels like phones and audio/visual mediums like video conferences. The first picture of a startup that comes to our mind is a group of people working day in and day out, glued to their desktops and phones in an office room.
The technological advances have made it possible for the start-ups to deliver cost-effective and fast services to the users hailing from diverse domains. With the government’s initiative of “Make India Digital” and “Digital Saksharta Abhiyaan”, cheaper internet charges with the introduction of Jio 4G and all other competitive mobile network brands, affordable price ranges of phones and desktops and digital transformation, the start-ups could overcome the market access barriers.
The number of Internet users rose from 259.88 million to 525.3 million in 2019, showing a great dependence of both the start-ups and users on Internet access. A day without a phone or a day without Internet is an absolute nightmare for the global as well as domestic population. The technological penetration is evident across all the demographics of the Indian population, and it has increased fast and steadily in this decade.
The top-funded sector as of 2018 was Fin-tech. The overnight introduction of demonetisation in 2016 has given the Fin-tech sector ample opportunities to target the convenience of the masses amidst a lot of chaos and confusion. The financial inclusion has been trending with the growing digital platforms for transactions, bill payments, investing in mutual funds, insurance etc, opening bank accounts and also applying for home loans, business loans etc.
At the beginning of the decade in 2009, the Adhar Biometric ID was made mandatory by the Indian government which is a step towards digitizing the authenticity and citizenship of every individual. The linking of Pan Number and Aadhar number with bank accounts also help in improving the financial security of the nation as a whole. The startups in the sector of Artificial Intelligence (AI), Internet of Things (IoT), Blockchain technology, machine learning, digital marketing, data analytics have achieved great momentum in recent years.
As per a report by Economic Times, “The key growth drivers were enterprise software, fintech, health tech marketplace and edu-tech. Data analytics, artificial intelligence and IoT startups have been witnessing fastest adoption across industry verticals. There was 120 per cent funding growth for AI startups with USD 150 million investments made in this field in 2018. The report said more than 400 plus startups expanded globally including travel and hospitality company Oyo, cab aggregator Ola, edutech Byju’s, Zomato.”
Government Initiatives and Employment Opportunities
In the year 2018, start-ups contributed 2.64% of the total job opportunities, and by 2020 more than 250,000 job opportunities will be created by the start-ups in 2020. Various micro, small and medium-sized enterprises (MSME) have grown up during this decade which has gradually narrowed down the high unemployment rate in India. Under the Modi Government since 2014, the start-ups have received the prime focus and the various initiatives and campaigns have proved to be conducive for the growth and development of the startup ecosystem.
The government has decided to provide financial support of Rs 100 billion to the startup firms for establishing tinkering labs, tax benefits and achieving fast and easy recognition of businesses among many others. According to the Department of Industrial Policy and Promotion, above 660 start-ups have received business support and 132 start-ups have received funds. As per the Budget of 2020, the entrepreneurs will have an easier investment clearance procedure for convenient business in India.
Many Startups which are dotted across the nation are facing a severe financial crisis since the outbreak of the pandemic Coronavirus. The financial crunch can oust several startups, thus adversely affecting the country’s GDP. To sustain and encourage the flourishing of startups, the Government of India has extended helping hand. The Small Industries Development Bank of India (SIDBI) is set to extend financial assistance to startups through schemes like COVID-19 Startup Assistance Scheme (CSAS). The aim of this scheme is to provide quick working capital to the startups within 45 to 90 days.
India is one of the prospective markets for start-ups and many of them achieved within a short period of time. These start-ups provide ample and innovative job opportunities to ambitious minds with very favourable work culture. The work ambience is starkly different from the much-coveted government jobs and the various traditional employment modes. The flexibility of working hours is often seen as a plus point by many resources.
The start-ups have also boosted the growth of freelancers in recent years. The freelancers are hired for long term or short term projects where they can work from home or remotely as per their convenience. The Gen-Y is more inclined towards following their passion, quite contrary to sticking to secured government jobs like their predecessors. The rising wave of freelancing and startups are going hand in hand and they are supporting each other’s growth in modern times. In the coming years, sectors like retail, remote healthcare, and education will dominate the startup trends in India.
Conclusion
Though the market of a startup is highly prospective one, still, NASSCOM has detected a decline in the seed stage funding since 2018. The nation as a whole should contribute to the growth of start-ups for overall economic development. In these 10 years, the shape and structure of the startup have changed and all the points cannot be covered in one post, needless to say.
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