Tech companies in India have created jobs, driven growth, and increased access to various resources, resulting in deteriorating poverty levels and enhanced lifestyles. The NASSCOM has already ranked India, as the 3rd largest startup ecosystem with 200 active angels, more than 100 accelerators, 150 VCs and around 4,200 startups operating in the nation. The country is at the vanguard of innovation, entrepreneurship, technology, and the last two years have only added more to the Indian startup ecosystem. Below is a snapshot of the deeds that took place with some insights on how it has evolved, and will continue to do so.
Upsurging Connectivity and Consumer Spending
In India, over 340 million people have access to the Internet, making it the second most connected nation in the world (behind China). India spent about three hours per day on their smartphones in last two years. The flood of low-cost smartphones and laptops, combined with relatively low cost mobile plans (wave of Reliance Jio) have inspired people across the country, especially in rural India to connect to the Internet.
Consumer expenditure has also been on the upsurge over the years. Driven by increased access, connectivity, convenience, employment and higher incomes, consumer spending is all set to hit 3.5 trillion by 2020.
Home to a Young and Vibrant Startup Space
With the average age of startup founders at a mere 28 years, the country is home to some of the youngest entrepreneurs in the world. The Indian ecosystem has witnessed a growing number of flourishing startups being churned out, displaying signs of a maturing ecosystem. This scenario has led to an escalation in high quality entrepreneurs, investors, and mentors with prior experience in helping shape and accelerate new businesses.
Indian startups have witnessed a rise in access to funding and a decrease in the cost of building a firm from the ground. Many of these firms are adopted from foreign equivalents, by incorporating strategies in the faiths of making a business model that would work locally. “We don’t see them as clones, we see them as mutants”, said Shailendra Singh from Sequoia Capital. There will be growth in more tech companies with local inventions emerging out of India, but surely this will take time.
Increasing Investments, Mergers and Acquisitions
Data from Trak.in — Indian Business Of Tech Telecom & Startups! and CB Insights indicates that in 2015, approximately USD 8.5 bn funding took place in startups in the country, with almost 1,000 deals sealed.
Interest from overseas investors, high net worth individuals, non-traditional investors and an increase in micro VCs have resulted in increased valuations. The participations from hedge funds and private equity funds in series C and D rounds were also the causes of this rise. Food tech, e-commerce, travel, FinTech and payments and startups based in Mumbai, Bangalore and Delhi are the highest funded verticals over the last 12 months.
However, the Indian tech companies have been making more acquisitions and mergers not only to expand the user base and operations, but also to have access to the best engineering talent available. Research suggests that more overseas tech giants will acquire Indian companies to enter the country.
Opportunities and Future Trends
- Increased tech adoption has given upsurge to the analytics industry in the country. Although IoT is yet to take the center stage, one can expect more startups from this space.
- There is an opportunity to bring global startups in India, targeting the Indian consumer. We have already seen a rise of global players, like Alibaba and Google, who want to capitalize on the country’s growth. Over the next few years, more Indian startups will go global while making acquisitions and breaking into new markets.
- Investments are expected to rise to a mark where valuations will reach its peak and rationality will kick in. A lot of speculation about a potential correction has been going on, and it may result in some companies downsizing or stopping operations. But companies which have strong fundamentals will strive through this period.
- More Indian cities will emerge in future, which will churn out entrepreneurs to create mini ecosystems. With access to accelerators and incubators, angels and co-working spaces, this will be important in the early stages.
Over the time, India has managed to beat multiple hardships, including the shift in economic environments, the dearth in infrastructure, and inefficiencies within the system with the addition of cultural and social barriers. The ecosystem has blossomed over the years and there are many platforms available for entrepreneurs to study, produce and develop great companies than ever before. The soaring middle class has also given the upsurge to a new kind of entrepreneurs: young, ambitious, educated, hardworking, smart and driven. The nation can only move forward from here.