The Unique Indian Story
Startup India, an initiative that the government set up in 2016, in many ways articulated the rise of a movement in India. The rise of young Indian entrepreneurs who were driven by mobile and data proliferation and were addressing new consumer problems, while leveraging the opportunities that technology opened up.
These companies were providing solutions for both the new and old consumers, creating a compelling story that put India on the global map. Many rounds of bubble bursts, valuation corrections and shake-ups have happened since, and on more than one occasion, the end of the startup story was also written. The reality however was consistent tech growth and India displacing the UK to become the third largest unicorn hub.
In a recently published report, the Union Minister of State for Commerce and Industry stated that the Department for Promotion of Industry and Internal Trade recognised a total of 72,993 startups, as of June 2022, under the aegis of Startup India. This number is especially interesting when compared to 2016 when India had 471 startups.
There is no doubt that Indian startups are battling unprecedented challenges. The investment winter reiterates the lack of funding, which perhaps tops the list. This can also be seen in the government numbers of the Fund of Funds for Startups itself. Including this and the Startup India Seed Fund Scheme, in June 2022, a total of 703 startups have been funded and 428 startups have been approved for funding. Not a small number but also not a big one against the backdrop of 72,993 recognised startups.
However, is it really a lack of funds or a systemic and efficient process? The total corpus of the government-provided fund is Rs 10,000 crore under the Fund of Funds. The government has not even made a move yet for considering other institutional funding avenues. Another cited challenge is the lack of talent but this is not the first time India is seeing a talent war and Indian talent is yet to lose steam in its attraction to investors.
The key point is that despite all such arguments and the negative stories implying that the Indian startup ecosystem is weak, the number of startups in India, and unicorns, is increasing. A whole genre of soonicorns has come into play showing how nuanced this sector is becoming even though it is still immature and fragile like all startup ecosystems.
The reasons for this growth are the same as they were six years ago, as evidenced by how tech startups and unicorns continue to rule. This aspect of the Indian market is not about to change in a hurry. Therefore, startups both in numbers and in size will continue to grow. Newer challenges will arise, the so-called hot companies may face the biggest battles of their existence and uncertainties will continue but nothing will stop the Indian startup growth story.
