If someone was to narrate the success story of India’s startup system from seed stage to becoming a unicorn, e-commerce brand Flipkart and mobile advertising firm InMobi would top the list. InMobi scripted history when it became India’s first unicorn startup in 2011. A year later, Flipkart followed suit. Since then, the Indian startup ecosystem has witnessed the entry into the coveted $1 billion valuation club every year.
2021 was a landmark year when it gave birth to 42 unicorn startups, the highest ever for any year. BharatPe, Vedantu, Urban Company, and Mamaearth to mention a few were on this list. Five months into 2022, 15 startups have already achieved the unicorn tag, including neobanking startup Open, which has become the 100th unicorn startup of India. As of today, the combined valuation of these 100 unicorn startups stands at around USD 333 billion. This is indeed a no mean feat considering that investor sentiment had shrunk after the COVID-19 pandemic.
Given that India is the world’s third-largest startup ecosystem with more than 61,400 startups, it is remarkable how these 100 startups have evolved from seed stage to becoming a unicorn startup.
There is no doubt that India’s startup economy is experiencing exponential growth. There are four primary drivers behind this growth:
- Rise of Entrepreneurship
Entrepreneurship as a career has emerged and is the strong driving force behind the growth of the Indian startup ecosystem. The Indian demographic has broken age and gender barriers to take risks, embrace innovation and cultivate a startup mentality. As World Bank’s Data on Entrepreneurship, India ranks third in the number of new firms created since 2014.
- Government Initiatives
Since the launch of the Startup India initiative in 2015, the Indian Government has undertaken progressive steps to reduce financial, legal and administrative, infrastructure and knowledge gap complexities with an aim to support and promote startups. Policy endeavors such as Skill India, Make in India, Smart Cities and Digital India have also upped the innovation curve and paved the way for the growth of startups.
- Boost in Investor Funding
Factors like ease of doing business, massive market size, new business models, large and mature startups acquiring capabilities, startup-corporate collaboration, and potential for innovations are attracting both domestic and foreign investors. In the last one year, the annual funding including domestic investments to the Indian startups has risen from 4% to 6% and USD 11 billion to 36 billion. The first-time startup investors also grew by 95% in 2021.
- Increase in Incubators
The rise of startups has led to an increase in demand for incubators. Incubators have been instrumental in nurturing young Indian startups to grow and innovate and fostering an entrepreneurial culture. This is proven by the fact that the number of startup incubators in India grew by 15x between 2000 and 2020.
The Indian startup landscape has matured over the last decade. With expected YoY growth of 12-15% consistently, it has become an investment hotspot. This is an ideal time to invest in startups and expand your investment portfolio. Hence, you can join hands with Venture Catalysts (Vcats), India’s 1st integrated incubator, to create the world’s largest early stage startup ecosystem. Since its inception in 2016, Vcats has backed 110+ startups and successfully exited 35+ startups. Vcats was also the early backer of FinTech startup BharatPe which went on to become a unicorn.
Visit www.venturecatalysts.in to become a startup investor.
