The Indian start-up landscape has been changing rapidly with more start-ups being launched across sectors at a regular, and fast pace. An integral part of the economy, they are now playing an instrumental role in fuelling job-creation and charting India’s economic growth.
In 2019, there was an increased focus on Business to Business (B2B) start-ups as many start-ups offered services in the enterprise services space. This was a big shift from the previous years where the major focus was on the Business to Consumer (B2C) space.
The total capital raised by start-ups in 2019 was USD 14.5 billion. This constituted of 1185 funding rounds.
In terms of funding, there was a significant growth of 25x compared to USD 550 million raised by start-ups in 2010. The growth is also impressive when compared to 2017 where the total funding raised was USD 10.4 billion.
Many Indian start-ups were publicly listed, and this trend is likely to continue in 2020 with more tech start-ups planning to go public in the next two years. Nine start-ups joined the coveted unicorn club (start-ups valued at USD 1 billion or more).
Maximum funding was raised by horizontal B2B e-commerce, logistics, and mobility companies.
As per a report titled ‘Early Stage Investment Insights Report-2019’ by Innoven Capital, 17% of the start-ups funded in 2019 were in the pre-revenue stage, as compared to 12% in 2018. Most of these start-ups that secured funding in the concept stage were founded by serial entrepreneurs or experienced founders.
56% of the early-stage investors expect significant slowdown or correction in valuations to happen in 2020.
Sequoia Capital, Accel, and Tiger Global Management were the most active Venture Capital (VC) investors and Steadview Capital, General Atlantic and FMO were the most active Private Equity (PE) firms. Favourable Government initiatives to boost the entrepreneurial ecosystem, growing mobile internet penetration, cost-effectiveness and rise of co-working spaces in Tier-2 & Tier-3 cities were instrumental in creating the entrepreneurship revolution beyond the metro cities.
Delhi NCR, Bengaluru, and Mumbai were the top-three cities from where most start-ups emerged in 2019.
Bengaluru was ranked as one of the world’s five fastest-growing cities in the world as per the Start-up Genome Project ranking for 2019.
An increasing number of enterprises realized the disruptive potential of start-ups and leveraged their expertise either by partnering or investing in those start-ups. In totality, there are over 335 active incubators and accelerators that can enable close to 5,000 start-ups every year.
The Government of India under the Start-up India initiative took important steps to build a strong start-up ecosystem. Some of the notable initiatives taken by the Government of India to facilitate the culture of innovation and entrepreneurship were incentives for Electric Vehicles (EVs) to support the growing number of EV start-ups, enhancements to the digital payments ecosystem to support fin-tech start-ups, easing angel-tax regulations, etc.
The Confederation of Indian Industry, CII, has been promoting start-ups and in 2018 it set the ball rolling on a novel concept called ‘Corporate Connect’ for start-ups. Under this initiative, corporates are linked to start-ups which are working in the same or similar/allied area of business, which results in a win-win for both. It also encourages start-ups through public recognition through the ‘Startupreneur Awards’.
The year 2019 has laid a formidable base for 2020 to gain new heights in the start-up landscape.