Even though the Indian startup ecosystem witnessed subdued funding in 2016, the year-on-year growth of startups getting funding grew by 8% in the same period, states a report by IT industry body Nasscom and research firm Zinnov.
Amidst the popular belief of the Indian startup ecosystem’s slowdown, India continues to harbor the third largest start-up base, marginally behind the UK as per the NASSCOM-ZINNOV start-up report titled“Indian Start-up Ecosystem Maturing – 2016”. The report further states that the ecosystem is poised to grow by an impressive 2.2X to reach more than 10,500 start-ups by the year 2020. The report was launched on the side-lines of NASSCOM Product Conclave 2016 in Bengaluru in the presence of C.P. Gurnani, Chairman, NASSCOM; R. Chandrashekhar, President, NASSCOM, Ravi Gururaj, Chairman, NASSCOM Product Council and Pari Natarajan, CEO, Zinnov.
Some of the notable findings of the report include; continued
growth in the number of startups in 2016, with Bengaluru, NCR, and Mumbai
continue to lead as the major start-up hub for the nation. In terms of vertical
growth, investors are looking at domain like health-tech, fin-tech, and
edu-tech. With a total funding of approximately US$4 billion, close to 650
start-ups were funded signifying an aware and healthy growth of the ecosystem.
R.
Chandrashekhar, President, NASSCOM, said, “The total quantum of funding has come down
to 30% during 2016. India has emerged as the third largest startup base and
such ventures are poised to grow 2.2 times to reach 10,500 by 2020, despite a
perception that the ecosystem in the country has slowed down in the last year."
The report states that the number of tech startups in India is expected to grow by 10-12%, to over 4,750 by the end of 2016, and will give employment to over 2,10,000 people.
"Technology startups are creating a new identity for India, and its technological prowess. Besides, solving India-centric problem these startups are also coming up with cutting edge solutions which are making a global impact," he adds.
When asked about the low ranking of India in the ease of doing business ranking, Nasscom President said it is a hugely worrying issue for the growth of startup ecosystem in the country. India ranks 130th position in terms of ease of doing business.
Ravi Gururaj, Chairman, NASSCOM Product
Council, said, “The start-up landscape is undergoing great churn with fast-paced
changes happening across the board. Owing to focused funding and a growing need
of scaling up capabilities, Indian entrepreneurs will continue to attract
global attention due to a perfect mix of talent, technology, traction and
transactions. With Indian start-ups now churning out critical services and
solutions for large multinationals, riding on the digital revolution which is
encompassing the world; the situation for Indian start-ups is only going to get
better.’
Further, according to the report, the number of
tech start-ups in India is expected to grow by 10-12% to over 4,750 start-ups
by the end of 2016. Interestingly over 1400 new startups have emerged in 2016
denoting that that the ecosystem is becoming prudent with both investors and
start-up founders focusing on profitability and optimizing the overall spend.
With this impetus, India will become home to over 10,500 start-ups by 2020,
employing over 210,000 people reveals the report.
Furthermore, incubators and accelerators are
playing a substantial role in strengthening the startup community throughout
India. The report highlights the significant rise in number of accelerators to
improve startups’ outcomes and provide them with a support that they require.
With impetus from Government and Corporates, there is a 40% increase in the
number of active incubators and accelerators in 2016 with over 140 active
incubators, helping entrepreneurs experiment with new ideas by offering them
functional expertise and resources. Over 30 new academic incubators have been
established under the Government’s ‘Start-up India Stand-up India’ initiative
this year. With the country showing signs of increased interest in
entrepreneurship, Tier-II/III cities have established 66% of the new
incubators.
Unbound by the fear of failure or downturns, a
new breed of ‘young’ entrepreneurs is unleashing an incredible wave of start-up
movement in the country. The report reveals an increased interest from student
entrepreneurs this year. A remarkable growth of 25% has been witnessed in 2016
with 350+ start-ups founded by young students. Median age of start-up founders
has reduced marginally from 32 years in 2015 to 31 years in 2016.
Talking about investments, the report states
that investors are increasingly looking at opportunities in start-ups in areas
other than online retailing. The sentiments are high for ventures in verticals
like Fintech, Healthtech, Edutech, data analytics, B2B commerce and artificial
intelligence.