Strengthening its
position as the third largest startup ecosystem across the world, amidst
intensifying competition from countries like UK and Israel, India continues its
momentum of being one of the most vibrant landscape for start-ups. Adding over
1000 tech start-ups in 2017, taking the total number of tech
start-ups to 5000-5200,
India is witnessing a rapid rise in the B2B tech
start-up landscape, focused on verticals like healthtech, fintech, and
ecommerce/aggregators. While Bengaluru, Delhi/NCR and Mumbai retained their
position as the key start-up hubs in India, 20% of the start-ups emerged from
tier II/III cities. These trends were discussed at the launch of the 2017
edition of the NASSCOM-Zinnov report on the ‘Indian Start-up
Ecosystem – Traversing the maturity cycle’, released on the sidelines
of the of the annual flagship NASSCOM Product Conclave 2017.
Sharing his
thoughts, Raman Roy, Chairman, NASSCOM, and CEO and MD,
Quatrro Global Services, said, “The Indian technology industry is renowned globally
for its pioneering innovation and the start-ups arena is no different. India is
one of the fastest growing start-up landscape in the world and every major
accelerator, investor, angel group, is participating in becoming a part of this
growth journey. Today, Indian ecosystem is flooded with innovative ideas and
needs the right channel and guidance in terms of acceleration, scaling up and
funding to continue to disrupt.”
ECOSYSTEM RIPE FOR
HEALTHY GROWTH THROUGH VERTICALIZATION AND INNOVATIVE BUSINESS MODELS
With 40% of startups
in the B2B segment, B2B’s share in the overall tech start-up funding is over
30%. Corporates are playing a vital role in supporting these with over 50+
collaboration programs, 20+ corporate accelerators (recording a 33% YoY
growth), and 30-40 active corporate investors, thus increasing their role in
the rise of the start-up ecosystem.
Fin-tech start-up base
is estimated to be 360 in 2017 indicating at 31% YoY growth with over $200 mn
funding received in H1-2017, recording a growth of 135% since H1-2016.
Sub-segments like digital payments and lending are maturing, while wealth
management and insur-tech emerging as growth areas. Implementation of advanced
technology also becoming prominent, with 33% of fintech
funding towards advanced technologies such as Artificial Intelligence
and Analytics.
Witnessing a 28% YoY
growth in 2017, Health-tech vertical has an estimated total base of 320
start-ups. The vertical also garnered a total funding of $160 mn in H1-2017, up
by 129% since H1-2016. Areas like health information management,
aggregator/ecommerce have continued to mature with growth in areas like anomaly
detection, disease monitoring, and tele-health/tele-medicine. As for advanced
technologies, 31% of health-tech funding went towards Artificial Intelligence,
IoT, and Analytics.
With over 60%
start-ups, the B2C tech start-up segment focused on creating innovative
business models and taking the vertical approach, securing close to 70% of the
overall tech start-up funding in H1 2017. Leading vertical in the B2C segment
are travel and hospitality, food-tech, fin-tech, and health-tech.
Speaking on the
occasion, R Chandrashekhar, President, NASSCOM, said, “The
Indian startup ecosystem is maturing, driven by young, diverse and inclusive
entrepreneurial landscape. This is leading to emergence of focused domain
solutions for verticals like healthcare, agriculture, and education. Findings
of the report is a testimony to the potential of the start-up landscape and the
scope of growth and opportunity that India presents. NASSCOM will continue its
drive towards catalysing deep tech start-ups, build category leaders and
support start-ups to create for India.”
RISE OF NEW-AGE
ADVANCED-TECH START-UPS
Growing at 5-year CAGR
of 30%, advanced tech start-ups focused on creating solutions in segments
like Artificial Intelligence, Analytics, Augmented Reality / Virtual reality,
Blockchain and Internet of Things, among others. Enterprise and SMB-focused
horizontal solutions start-ups, 90% of which is SaaS-based, are also witnessing
significant inflow of funding.
GROWING FROM
STRENGTH-TO-STRENGTH: DRAMATIC RISE IN UNICORN FUNDING AND M&A
Unicorn funding took
centerstage with big deals announced in the year. Investors from non-US
countries expanded their investments in Indian startups. Indian unicorns
in the B2C space continue to garner global funds and stir-up the competitive
landscape. With a growth of 167%, the funding of entire Indian start-up
ecosystem (led by unicorns) amounted to $ 6.4 bn in H1-2017. The average
funding for B2B tech start-ups in 2017 saw an increase of 5% while B2C tech
start-up average funding saw a decline of 10%.
Driven by the need to
enhance tech capabilities, expand markets and portfolio, global corporates are
now drawn towards the Indian tech start-up arena. H1-2017 saw 50+ M&A
deals, indicating at a growth of 25% since H1-2016. Over 325 start-ups
emerging, with YoY growth of 18%, catering to social challenges in the areas of
healthcare and education, and are thus building solutions for India, creating
social impact.
BUILDING A ROBUST WAY
FORWARD FOR GROWTH
Continuing the ‘By
India, For India, Of India’ movement, the Indian tech start-ups will continue
to innovate enabled by technology and newer business models and will have a
long-lasting impact in improving the quality of start-ups arising from India,
in the coming years. NASSCOM with continue to catalyze and support deep
tech Startups, and help build category leaders who can create solutions for
India. The top priorities for the various other stakeholders will be
as follows:
· For start-ups: Building products that address
need-gaps and challenges, defining a full-bodied go-to-market strategy to
scale-up, while building a team in the technology, domain, sales, and customer
experience.
· For incubators / accelerators: Provide deep
mentoring, help start-ups internalize organizational best practices, and help
establish global connects
· For corporates: Accelerate start-up
partnerships and help identify white spaces for innovation
· For Government: Enable ease of doing
business by minimizing regulatory impediments, remove asymmetry in
policies, provide access to government projects, and help secure early
stage funding
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