The Indian Startup eco-system is certainly maturing! Who can deny that? Total Tech startups in India by the end of 2016 should be more than 4700, a number which has veritably pitchforked the nation to third position after US and UK. Israel though remains a close contender. The growth in numbers, a recent NASSCOM – Zinnov study reveals, has been in the range of 10-12 percent which one would expect to be pretty good, given the hoopla doing rounds about funds drying up, and naysayers having a field day (weeks / months?) with wild speculations. But more of that later.
Fascination with the consumer business continues, notably reflected in 60 – 64 per cent market share, but most encouragingly, the B2B segment is seen to be making rapid strides to claim its own. This is healthy. A trend which is apparent in the NASSCOM Emerge 50 Awards as well.
Much as we hate to admit it but the overall funding has taken a dip (4.9 billion USD in ’15 to 4 billion USD in ’16E), but the silver lining is that the number of deals has gone up from 600 to 650 this year, signalling smaller ticket sizes and a wider spread. We want to look at it as a market rationalisation exercise after some of the unrealistic valuations seen in the past. In some ways this course correction was necessary to weed out the non-serious players, as strong fundamentals trumped over hype. It was also discernible that bootstrapping and crowdfunding were seen as viable alternatives – a fitting reply to muted sentiments. The eco-system has come to be synonymous with innovation so it is only natural that players will seek out new avenues to beat the market blues.
Cluster formation seems to be working well. Clearly the leaders are – Bengaluru, Delhi-NCR and Mumbai, followed by the “Emergents” – Hyderabad, Pune and Chennai and finally the Aspirants – upcoming cities such as Kochi, Kolkata and Jaipur. If you see overall, the spread has been pan India, a most encouraging sign.
At NPC in Bangalore, the Startup Report is going to be released. Might I add, the level of detailing done to dissect the trends has been quite remarkable. A comprehensive Ready Reference of sorts that renders great insights about the ecosystem and its players including the government, academia and incubators. At the end, there’s a particular slide called “Quick Facts” which I really liked. It collates several parameters like Global Innovation Index, time taken to startup, corporate tax rate, number of investors (VC and Angels), Unicorns and the number of Incubators, to give an overall perspective as how India matches up to the RoW – US, UK, Israel and China.
Without getting into granular aspects right now, let me urge you to get hold of this report, and decipher for yourself in which direction is the sector heading.