India now 3rd largest startup base in world

This triumphal entrepreneurial streak, demonstrated in software business and e-commerce dealings, needs to be nurtured robustly. Prime Minister Modi wants this dynamism, largely confined to tech companies, to spread to manufacturing sector too where there are huge opportunities for job creation to pep up the growth of the real sectors

The Prime Minister Narendra Modi’s motto of ‘Startup India, Standup India’ initiative declared in this year’s Independence Day address got an impetus with the country emerging as the third largest startup base after the United States and Britain.

A recent report by the Bengaluru-based National Association of Software and Services Companies (Nasscom), India has now become the youngest startup nation in the world with over 72 per cent of the founders less than 35 years old and 50 per cent rise in share of female entrepreneurs this year over 2014.

With more than 4,200 startups, India has also become the third largest startups base worldwide. In the first ten months of 2015, Indian startup founders have managed to raise capital of the order of around $4,900 million much higher compared to cumulative funding of roughly $3,200 million over the four year span of 2010-2014.

Interestingly, even as the overall venture capital funding has grown by 2.2 times, the seed stage funding has grown by 6.5 times. This implies the intentions duly getting into right earnest implementation stage despite initial teething troubles a startup company must contend with.

Bengaluru remains by far the hot spot for entrepreneurs to launch their business with more than 65 per cent of the startups being located there, besides Mumbai and the National Capital Region (NCR). Large Indian software enterprises have set apart corpus to invest in startups.

Infosys has established $500 million innovation fund, of which $250 million is dedicated domestically and Wipro has set up $100 million venture capital fund to invest in startups. Incidentally, venture capitals in India have notched up a noticeably higher growth of $1,400 million mark to reach $1,438 million for the first nine months of 2015, surpassing the previous historical high of $1,170 million for the full year 2014.

This reflects the spirit of entrepreneurial dynamism with foreign investors investing a lion’s share in such ventures as they see India as a sure fire spot for investments.The Nasscom report noted that the maturing Indian startup ecosystem is now contributing to the Indian economy in multiple ways.

Besides positively impacting the lifestyles of citizens, startups are now creating innovative technology solutions that are addressing the key social problems the country is facing and creating significant growth opportunities for every stakeholder, Nasscom President R. Chandrashekhar said.

Some of the important rounds of funding this year were $700 million by Flipkart from Tiger Global and Steadview Capital, Snapdeal’s $500 million round from Alibaba Group, SoftBank, Foxconn among others and Paytm $635 million. This triumphal entrepreneurial streak, demonstrated in software business and e-commerce dealings, needs to be nurtured robustly.

Prime Minister Modi wants this dynamism, largely confined to tech companies, to spread to manufacturing sector too where there are huge opportunities for job creation to pep up the growth of the real sectors. The Union government is keen to redirect and redeploy start-up energy towards 25 focus areas identified in Make in India programme, including employment–generating areas such as textiles, leather, gems and jewellery.

The government is toying with the idea of catapulting India into the global entrepreneurship league by duly providing an enabling milieu through tax breaks, incubation centres and easier approval processes. Plans are also afoot to encourage startups in tier II and tier III cities by weaning them away from too much concentration in the big metro cities only.

Moves are afoot to rope in premier engineering and technology schools such as the Indian Institute of Technology (IITs) and National Institute of Technology (NITs) with a view to reactivate incubation centres for providing a plug-and-play model for startups so that initial impediments for investors are overcome decisively and they are encouraged to experiment with their original ideas.

India is now undoubtedly the darling of startups in the world as it provides a vast market, a robust legal structure and a rule-based trading environment for the safety and security of investors in these turbulent times the global economy is transiting through, policy analysts contend.

By G Srinivasan