Indian Start-Ups Ecosystem Records 4x Growth to $4.9 Billion in 2015

As per a recent report from Nasscom & Zinnov indicates that the start-up ecosystem in India has experienced a 4X growth in PE’s and VC’s funding of $ 2.1 billion in 2014 to $4.7 billion in 2015. Likewise, overall funding is estimated to grow by 12%, from $2.2 billion in 2014 to $4.9 billion in 2015. The other highlights of the report covers the number of deals from 224 during the previous year to 458 deals in 2015 and also that the new start-ups are moving away from the traditional e-commerce to leveraging technology to solve India’s urban problems like power, infrastructure, healthcare and financial inclusion.

With a 40 percent growth since 2014, the start-up eco-system in India now has scaled up to No 3 position only behind USA and UK in 2015.  Report indicate that India has about 4,200 to 4,400 start-ups spread mostly across the NCR, Mumbai and Bangalore while USA, the leader has 4,750 to 4,800 start-ups followed by UK 4,500 to 5,000. India has overtaken Israel that recorded about 3,900 to 4,100 during the same period.

Nasscom along with Zinnov launched the second edition of the start-up report titled “Start-up India – Momentous Rise of the Indian Start-up Ecosystem” on the side-lines of Nasscom Product Conclave 2015 in Bengaluru on Tuesday. The report was launched by R Chandrashekhar, President, Nasscom, Ravi Gururaj, Chairman, Nasscom Product Council and Rajat Tandon, Vice President, Nasscom 10 K start-up program.

The report also highlights that the Indian technology start-ups landscape has seen a tremendous growth in the emergence of innovative start-ups and creative entrepreneurs. In terms of providing a conducive ecosystem for the start-ups to thrive, India has moved up to third position and has emerged the fastest growing base of start-ups worldwide. India is one amongst the first five largest startup communities in the world with the number of start-ups crossing 4,200, a growth of 40 per cent, by the end of 2015. India's position as a global startup hub that is becoming attractive for investors, startups, & corporate.

Sharing his views, R. Chandrashekhar said, “The maturing Indian start-up ecosystem is now contributing to the Indian economy in many ways. Apart from positively impacting the lifestyles of citizens involved, start-ups are now creating innovative technology solutions that are addressing the key social problems that India is facing and creating significant growth opportunities for every stakeholders. To enable the next stage of growth for these start-ups, Nasscom will work closely with the government to ensure ease of doing business, by simplifying procedures and create a conducive environment for these start-ups to grow.”

With 100 per cent growth in number of private equity, venture capitalists, angel investors along with a 125 per cent growth in funding over last year, Indian start-up ecosystem has risen to the next level. The total funding in the India based start-ups is estimated to be nearly $5 billion by 2015. Various central and state government start-up initiatives are further supporting this progressive phase of start-ups in India.

The report also highlights certain ways and means to make starting-up further easy in India. Nasscom has recommended ease the rules and regulation for registration of a business in India, funding, and simplifying compliance procedures by minimizing licenses/permits/approvals/tax for start-ups. Removal of angel tax, simplifying norms for capital raising, enabling easier exit for entrepreneurs and requisite changes in the credit guarantee for loans to start-ups are few recommendations that will further enhance a smoother functioning of the start-ups in India.

Stakeholders across the ecosystem must also come together to create market access by way of guidance in regulatory requirements for project participation and specialized training for start-ups working in innovative areas. Steps must be taken to create an even more conducive environment by facilitating incubation, IPR, and innovation norms and also encourage academia-industry tie-up and collaborate to develop the right kind of talent and capabilities that will propel the growth further. Another important aspect will be to encourage and recognize these start-ups for the innovation and rapid growth by sharing their success stories on a national-level and awarding at relevant Indian and global platforms to help India build a reputation of a startup-friendly nation.

Ravi Gururaj said “India is the youngest start-up nation in the world with 72% of the founders are less than 35 years old, and 50% rise in share of female entrepreneurs in 2015 over 2014. We are thankful to the Government for the policies and initiatives that are aimed towards improving the overall start-up ecosystem. Nasscom has been partnering with the Governments for Start-up warehouses to create a micro-ecosystem where start-ups and entrepreneurs can work together, share their learning and best practices with each other. This is fostering an entrepreneurial culture contributing to the increased knowledge, employment and societal wealth.”

Rapid growth of Indian startups has created significant growth opportunities for every stakeholder within the ecosystem. Further, start-ups are providing an exciting work culture along with attractive financial benefits to attract new and retain existing talent. This maturing start-up ecosystem is contributing to the Indian economy in multiple ways.  There is a need to regularly nurture the startup ecosystem through regulations, branding, collaboration, mentorship and funding to stay ahead of disruptive growth.

The report identifies the current scale and size of the startup landscape, factors that are impacting the growth of the overall ecosystem and steps that need to be taken to make the environment more conducive for start-ups. It analyzes the existing scenario and evolving trends across the various dimensions that define the Indian startup ecosystem, and measure.